VRES and grid interconnection in South America: Colombia, Ecuador, Peru
As part of the research series, conducted by Enel Foundation in cooperation with the leading consulting company CESI, looking at different scenarios for the development of Variable Renewable Energy Sources (VRES), particularly solar and wind in South America, the third cluster covers Colombia, Ecuador and Peru.
The Reference scenario has been built starting from the available public domain information. The three main building blocks are: the yearly energy demand, the generation fleet and the structure of the transmission grid in Colombia, Ecuador and Peru. The optimal VRES capacity was calculated by adjusting the generation expansion pattern with the amount of new VRES generation (PV and wind), taking into account their potential across the territory, their costs and performances. In the optimization process, the system operational constraints in terms of reserve to be warranted in each hour of the year, the limits in the power transfer capacity, the requirements on inertia and system stability were taken into account. In addition, a development of VRES technologies and the introduction of storage plants have been assumed, in order to consider that in 2030 they will be able to provide auxiliary services, such as frequency and voltage regulation, hence avoiding the need for additional upward and downward reserve. In this context, VRES will contribute to the smooth operation of the power system, supporting with their resources and not requiring external ones, allowing a higher penetration, while keeping proper security of supply.
- In Colombia, wind results more competitive than PV from an economic point of view: the expected LCOE is 45.6 USD/MWh for PV and 34.5 USD/MWh for wind.
- In Ecuador the expected LCOE is almost three times higher - 95 USD/MWh - whereas PV is slightly more competitive with a LCOE of 85 USD/MWh: nevertheless, both technologies are still convenient if compared to the cost of replaced inefficient thermal plants.
- On the contrary, VRES are very competitive in Peru thanks to the excellent availability of natural resources and the low installation costs: the expected LCOE is around 30 USD/MWh for PV and 36 USD/MWh for wind.
In the simulated scenario:
- In Colombia, the installation of 2,400 MW of PV and nearly 2,700 MW of wind power plants, plus about 200 MW of storage systems represents the optimal economic amount of VRES in 2030. The calculated amount of VRES plants is able to cover nearly 16% of the Colombian load in the target year (15.7 TWh per year).
- In Ecuador, the optimal installed capacity in 2030 corresponds to 1,750 MW of PV and about 2,000 MW of wind, plus 280 MW of storage that helps to reduce overgeneration conditions that represent the main technical issue for the Ecuadorian system due to the strong dependency on hydro. High risk of VRES production curtailments (up to 20% of the energy generated by the additional power plants) is present, but this configuration still represents the optimal economic solution due to the high costs of thermal generation: the optimal amount of VRES plants can cover about 12% of the Ecuadorian load (almost 6 TWh per year).
- In Peru, the optimal installed capacity corresponds to 2,750 MW of PV and around 1,700 MW of wind in 2030, plus about 320 MW of storage systems. This capacity can cover more than 16% of the Peruvian load in the target year (13.2 TWh per year). For Peru, an assessment of the optimal amount of VRES plants has been carried out also under the assumption that natural gas market is not regulated by subsidies. In this scenario, it becomes advantageous to install more VRES plants even accepting higher curtailments, or to invest in network reinforcements to solve bottlenecks limiting VRES exploitation. In case no investments on transmission network are made, the optimal solution consists in increasing the wind capacity up to 3,500 MW and PV capacity up to 3,000 MW. Thanks to these additional plants, PV and wind power plants produce more than 20.5 TWh, covering about 25% of the demand. On the other hand, if network is reinforced, PV can increase more without being curtailed and the new optimal installed capacity for both PV and wind would be 4,000 MW. This amount would correspond to a total VRES production of 24.5 TWh (nearly 30% of the load).
It should be underlined that in the analysis, no environmental externalities are considered for thermal generation, and the assessment is based mainly on fuel costs. If cost of energy produced by thermal plants were increased to take into account externalities such as carbon emissions, the optimal amount of VRES also would increase, as there would be higher benefits deriving from the replacement of thermal generation. This applies in particular to the case of Colombia where there is presently significant availability of relatively cheap electricity generation from coal.
With optimized grid interconnections between Colombia, Ecuador and Peru, there are several benefits:
- an increase of the overall security of supply;
- a reduction of VRES curtailments risk;
- a reduction of the overgeneration conditions and related costs;
Although interconnections do not increase the optimal economic amount of VRES installed capacity, they will allow a better exploitation of the VRES plants – 1.8 TWh of additional green energy can be injected into the system – as the system constraints are partially relaxed due to the possibility to import/export energy and curtailments decrease by 80%. Moreover, they improve the security of the system and create the conditions for the exploitation of additional VRES capacity, which might be further introduced to reduce the environmental impact of thermal generation: the total maximum benefits for the interconnected system can be estimated in more than USD 300 million.