Optimal scenarios for VRES deployment and grid interconnections in South America
A new research series, recently concluded by Enel Foundation in cooperation with the leading consulting company CESI, examined different scenarios for the development of Variable Renewable Energy Sources (VRES), particularly solar and wind, in South America.
The research confirmed the great potential for VRES deployment in the region thanks to the excellent availability of natural resources, the demand growth and the expected decrease of VRES technology costs. The optimal technical-economic penetration of VRES generation also considered the role of power grids, examining scenarios for cross border power exchanges in the specific set of South American countries analyzed i.e. Argentina and Chile, Argentina, Brazil e Uruguay, Colombia, Ecuador and Peru.
The optimal amount of VRES installed capacity at the target year (2030) in the Base Case can reach a combined total of almost 50 GW for PV and 71 GW for wind in the analyzed countries. These optimal values correspond to an increase of 150% for PV installed capacity and of 75% for wind capacity with respect to the targets and forecasts presented in the generation and transmission development plans of each country - used to formulate the Reference Scenario on which the research was based.
In this optimized scenario, at 2030 the relevant production exceeds 105 TWh for PV and 265 TWh for wind, covering together about 25% of the total demand in the seven countries studied. Notwithstanding that, the risk of VRES curtailments is very low and is limited to about 3% of the potential production.
The economic benefits due to the additional VRES plants can be estimated in about USD 3.6 billion at the target year, considering the fuel savings and the annuity of the investments needed for the additional VRES capacity.
Furthermore, the calculated optimal amount of VRES plants reduces the emission of about 85 Mt of CO2 in the atmosphere per year with respect to the Reference Scenario. The additional economic benefits deriving from this strong reduction in terms of negative environmental externalities have not been taken into account in the present analysis and would push for an even higher penetration of VRES plants.
Cross-border grid interconnections can also further contribute to reduce the risk of VRES curtailments while also improving the system resilience and security of supply, offering a better management of the system. They also allow to install more VRES thanks to an enhanced evacuation capacity from areas with best resource and to the possibility of mutual support and reserve sharing.
Increased VRES penetration in South America will ultimately unlock new opportunities for green energy generation sources to support the whole system, including participation in the market for ancillary services. A joint development with storage is beneficial for higher VRES penetration and perfectly fits with PV production, reducing congestions and shifting peaks towards evening hours.
However, in order to fully achieve the economic and technical benefits outlined in this Research Series, regulations that enable higher flexibility and coordination are needed at national and international level.