In a year marked by volatility in world energy markets, at the IDB we focus our support on low-carbon, fair and inclusive energy transitions in the region. We also continue to show that this transition to clean energy sources is compatible with energy security. We explain in this blog the four areas of progress of our work in Energy in 2022.
1. Thanks to our partners in the region and our great work team, we closed 2022 concluding new energy projects for US$1,200.0 million to advance the just and inclusive transition in Latin America and the Caribbean.
This amount includes resources from Bank financing sources, as well as from other partners who trust the IDB as the key partner in the region to support the energy sector, especially climate financing. In fact, more than 80% of this financing is directly related to promoting the decarbonization of the energy sector in the region, a record level for our sector.
- A good example of this effort is the collaboration with the Norwegian government to implement the first 33 MW large-scale solar system in Guyana. This project will take Guyana’s renewable energy contribution from nearly 0% to nearly 20%. This will represent a great leap and illustrates how the IDB helps to incorporate new technologies in countries where the transition of the electricity sector is still in its infancy.
- Another example is the approval of a line of credit and the first operation for Uruguay to consolidate its low carbon energy transition. We will support the implementation of energy storage systems to manage the variability of renewable sources in the country, which in 2021 managed to cover almost 100% of its internal energy demand with renewable sources such as hydroelectricity, wind, and solar energy.
2. We continued to promote the modernization and expansion of electricity networks and their regional integration as a tool to decarbonize and increase the resilience of the electricity sector.
- Transmission networks are essential to increase the strength of our electrical systems and implement renewable sources such as hydraulic, solar or wind power in places where potential exists. This also helps to displace the use of more expensive and polluting sources.
- An example of this was the approval of a US$1.140 million credit line to Argentina for the decarbonization of the energy sector. We will finance the construction of transmission networks that will displace the use of fossil fuels in different provinces of the country and will enable the transmission capacity for renewable energies, as well as the digitization of the management, control and supervision systems of the network, including cybersecurity measures. .
- Similarly, we approved a US$260 million loan to Paraguay for the expansion of the electrical transmission system. This intervention will allow the country to interconnect its system and increase its resilience, since its demand for electricity is fully covered by hydroelectricity.
- In addition to reinforcing and expanding national networks, we contribute to taking a fundamental step towards the interconnection of international networks. These interconnections help increase the resilience of electricity systems, as they allow countries to complement each other’s different energy resource profiles. With a US$125 million loan, the expansion of the interconnection capacity between Peru and Ecuador will be financed under a public-private participation scheme that will also have US$125 million from the European Investment Bank (EIB) and financing from the private sector for the Peruvian section of the interconnection.
3. We accelerated the decarbonization of new frontiers in the energy sector, such as electric mobility and green hydrogen.
- An agreement was approved with the Green Climate Fund (GCF) to create the first large fund and regional program to accelerate the promotion of electric mobility and green hydrogen in Latin America and the Caribbean. The project, for up to US$450 million, will have concessional and non-reimbursable financing for US$200 million from the GCF. Through this we will promote resilient solutions for the resilient integration of transport systems and electricity networks.
- Likewise, we continue to support the deepening of the policies and regulations necessary for the introduction of new technologies. Specifically, a US$300 million policy loan was approved for Chile, which includes actions aimed at accelerating the country’s fair, clean and sustainable energy transition process, as well as the adoption of necessary regulations for the deployment of charging infrastructure and the definition of plans for the development of green hydrogen.
4. We are advancing on the path to contribute to making the energy transition fair and inclusive
The energy transition is an opportunity to contribute to the reduction of gender gaps in the sector. According to IRENA, in the renewable energy sector, 32% of the workforce are women, which contrasts with 22% in the fossil industries. Likewise, according to a recent IDB study, renewable energy generation companies with greater relative efficiency in the capital-labor ratio have a greater participation of women.
100% of the energy projects approved in 2022 are aligned with the Bank’s gender and diversity policies, identifying barriers and designing concrete actions to reduce the gaps.
- For example, within the financing of policies in Chile, a public-private action plan was developed for the labor insertion of women, as well as the incorporation of gender criteria in public tenders.
Jobs in new technologies will not be given automatically and investment must be made in training human resources to adapt to the new economic landscape.
- Additionally, we support the creation of capacities in the understanding, operation and maintenance of new technologies. This includes the implementation of various electric mobility training programs for mechanics and different actors in the automotive chain in Jamaica and Guyana, among other Caribbean countries.
- Likewise, in Panama we support the Government to implement the program for indigenous women to acquire basic skills for the maintenance of solar systems used to provide access to electricity in rural communities for the first time.
5. In 2023, the uncertainty in the international energy markets and the value chains of the energy industry will continue. The challenges, but also the opportunities, remain enormous.
Through our work, we have been able to demonstrate the importance of including all the actors in the transition and contributing the capacities to take advantage of and capture the jobs of the future. We also reiterate that it is possible to align the energy transition with the lessons learned from continuing to advance it with a more inclusive approach that mitigates energy security risks.
Happy New Year 2023!