The Inter-American Dialogue’s daily Latin America Advisor covered the digitization of the energy sector in Latin America, as “digital technologies are set to make energy systems around the world more connected, efficient, reliable and sustainable, playing a key role in transforming distributed energy resources into valuable grid assets”.
The magazine featured a Q&A of some experts in the matter, including Arthur Deakin, Director of the Energy Practice at Americas Market Intelligence (AMI).
Here is what Deakin said:
When thinking about Latin America’s energy sector, investors need to consider that it is usually five to 10 years behind the most advanced European economies when it comes to technological maturity. Although this can’t be applied across the board, it is applicable when talking about energy digitalization. For example, smart meter penetration in the United States is nearly at 100 percent, while Americas Market Intelligence (AMI) estimates that the regional average is 15 percent. Some countries such as Colombia fare much better than others, like Brazil.
However, the need for more demand-side flexibility, energy storage solutions and ancillary services (more broadly) in the region is drastic. Without regulatory frameworks that provide a clear path toward profitability for these important tools that complement the grid, the region will continue to struggle with energy loses, a surge in electricity costs during droughts and manufacturing inefficiencies. The region also needs to reduce import tariffs for raw materials and provide financial incentives to promote the development of a local market. When it comes to distributed energy resources, Chile and Brazil are the clear regional leaders, with the latter adding nearly seven gigawatts in distributed solar energy just in 2022. These more ‘mature’ countries are now overseeing
the phasing out of distributed generation technologies and the introduction of storage frameworks—that is a positive development. Other less ‘mature’ markets such as Mexico, Central America and Colombia need to either retain or introduce incentives to promote the rapid development of distributed resources. In fact, due to market friendly regulations in Puerto Rico and Panama, AMI predicts that distributed generation will grow by three and 19 times in each location by 2030, respectively. Newly proposed regulations that make it less profitable for distributed generators to inject back into the grid, such as those recently proposed by the Energy Regulatory Commission in Mexico, will not only hurt short-term investment in the sector, but it will also require more investment into transmission infrastructure since the grid will depend more on utility scale power that is far from end users—the opposite of distributed energy.
Here you can download the whole article from Energy Advisor including Deakin’s opinion.
In leading AMI’s energy practice, Arthur oversees dozens of studies in the sector, focusing on market feasibility, ESG due diligence, market entry, opportunity benchmarking, partnering studies and other strategic areas for energy companies operating in Latin America.