How Much Does Latin America Gain from Enhanced Cross-Border Electricity Trade in the Short Run?
Regional or cross-border trade of electricity would be beneficial for all trading partners for multiple reasons. However, cross-border electricity trade in Latin America is limited, and the potential benefits have been forfeited. This study estimat...
| Main Authors: | , , |
|---|---|
| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2021
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/756421623173588257/How-Much-Does-Latin-America-Gain-from-Enhanced-Cross-Border-Electricity-Trade-in-the-Short-Run http://hdl.handle.net/10986/35729 |
| Summary: | Regional or cross-border trade of
electricity would be beneficial for all trading partners for
multiple reasons. However, cross-border electricity trade in
Latin America is limited, and the potential benefits have
been forfeited. This study estimates the potential savings
on electricity supply costs if 20 Latin American countries
allowed unrestricted trade of electricity between the
borders without expanding their current electricity
generation capacity. Two hypothetical electricity trade
scenarios—unconstrained trade of electricity between the
countries within the Andean, Central, and Mercosur
subregions and full regional trade involving all 20
countries are simulated using a power system model. The
study shows that the volume of cross-border electricity
trade would increase by 13 and 29 percent 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. More than half of this gain would be realized by
the Andean subregion under both scenarios. These are
short-term benefits without expanding the current
electricity generation capacities. In the future, when
countries add more generation capacity to meet their
increasing demand, the potential benefits of electricity
trade would be higher. A further study is needed to measure
the increased benefits in the long run. |
|---|