Regional Electricity Trade in Latin America Without Expanding Generation Capacities

The current cross-border electricity trade provision in Latic America is limited, only to about 4% of the total regional generation. This study estimates the potential savings on electricity supply costs if 20 Latin American countries trade electricity between the borders without expanding their current electricity generation capacity. We simulated two scenarios on electricity trade—an unconstrained trade of electricity between the countries within the Andean, Central, and Mercosur subregions and a full regional trade involving all 20 countries using a power system model. The study shows that the volume of cross-border electricity trade would increase by 13% and 29% under the subregional and regional scenarios, respectively. The region would gain US$1.5 billion annually under the subregional scenario and almost US$2 billion under the full regional scenario. The Andean subregion would realize more than half of this gain under both scenarios. The findings of the study are expected to motivate policymakers in the region and international development partners in fostering their dialogues to enhance regional electricity trade in Latin America.