Written by Asier Aramburu Climate Change RENEN Manager,.
It is estimated that approximately one billion people around the world do not have access to electricity. This fact slows down their socioeconomic development since it affects both their potential economic growth and key aspects of well-being such as health, nutrition and education.
In recent years, the countries of Central and South America have achieved high levels of electrification, but this evolution has moderated when they have reached to 90% -95% electrification. This is due to the fact that the remaining areas are difficult to access or they face some social or security difficulty. In the case of Colombia, these areas are concentrated in the so-called ZNIs.
The Non-Interconnected Zones (ZNI, acronym in Spanish) are formed by the Colombian territory that is not connected to the Central Interconnected System (SIN, acronym in Spanish). According to the latest data provided by the Superintendency of Home Public Services, it includes 52% of the country’s territory, with an estimated population of 1,900,000 inhabitants. Colombians living in these areas do not have public electricity service through the national grid and, therefore, depend on local generation solutions. These solutions are based mostly on diesel generators (96% of the total). The use of this fuel not only implies a considerable environmental impact, but also causes significant diseconomies of scale since 80% of the capacity is concentrated in plants with a capacity lower than 100 kW. Moreover, they have to deal with the high cost of the diesel and its volatility.
However, the electrification of these areas has been limited by geographical obstacles and conflicts in some regions, as well as the following barriers:
- The population density is extremely low (an average of 3 inhabitants/km2), which makes the logistics of service attention difficult (high investment and operating costs per user).
- Poor logistics and transportation infrastructure, and in some places non-existent.
- Low level of average consumption.
- Low payment capacity by users and therefore low level of collection of the companies’ portfolio.
- High levels of losses.
Therefore, a vicious circle that has not yet been broken is created. Getting out of this circle is even more important for Colombia if it is considering that the ZNIs concentrate most of the territory that has suffered most of the violence. Thus, ensuring their access to electricity is a necessary step to allow their development and advance in the resolution of the conflict.
As stated before, the traditional method of promoting electrification, the expansion of the national grid, has proven insufficient to achieve 100% of national coverage. For this reason, distributed generation has become the most suitable solution for the electrification of these areas. Although the electricity supplied with minigrids under normal conditions has a cost substantially higher than the average cost of the interconnected system, minigrids are competitive in those locations where extending the main network is even more expensive. In addition, in order to complete the cost-benefit analyses, the social cost of not having a basic minimum supply of electricity and the lack of reliability in the supply should be included as externalities. By including these costs, these projects would be more feasible and the considerable social benefit would be measured in economic terms. In contrary, not including them will lead to a minimum cost solution: not to incur in any cost, that is, not to electrify the area.
Furthermore, based on this alternative, the non-interconnected areas of Colombia have enormous potential to switch from fossil fuels to clean energy. And it is that, although Colombia is experiencing an accelerated expansion of its generation capacity from non-conventional renewable energies, most of these projects are focused on supplying energy to the SIN.
As previously stated, developers (both private and public) must overcome numerous difficulties to implement generation projects in the ZNIs. These regions are supplied by independent operators that do not have enough volume to launch massive electrification projects. Furthermore, the have serious difficulties in accessing financial markets due to limitations in the payment capacity of their users. Thus, these projects are generally not attractive projects for private investors and additional resources are required. The carbon market is one important source of income that can support these projects development.
ALLCOT has led the validation of the Inírida Solar Farm project (Inírida, Guainía), the largest solar project developed in the ZNI (2.5 MW). This project represents a fundamental milestone for these regions and offers a referent that can be replicated to allow the transition of these networks to renewable energies.
The Inírida Solar Farm project consists of a photovoltaic solar plant that covers around 22% of the municipality’s energy demand and allows an annual reduction in emissions of approximately 2,800 tCO2e. This reduction is achieved thanks to the fact that this plant replaces part of the energy generated by the diesel fuel plant that fed the entire local distribution network of Inírida. Now, this network will benefit from a hybrid generation system (solar + diesel), in such a way that the reliability of the system will be ensured due to the diesel generation when is needed.
The electrification of the ZNI through mini-grids powered by renewable energies will be key in achieving the Sustainable Development Goal (SDG) 7 and for universal access to energy in Colombia. Thanks to this important milestone, a gap that slows down the improvement in the quality of life of almost two million people will be closer to be overcome. We invite you to consult more information about the project at the following link.
Written by Enrique Lendo, Business Development Mexico Advisor.
While the results in Gorgia and Arizona secured Joe Biden´s Victory, Tabasco faces the worst flooding in its history and uncertainty regarding potential support to rebuild it´s towns and economy. What happened in the states of Tabasco, Chiapas and Veracruz in the past days is not the result of atypical rain but a direct consequence of Mexico´s vulnerability to climate change. It is ironic to confirm that being Mexico an oil country, climate change is now collecting the bill.
According to Mexico´s Natural Disasters Trust Fund (FONDEN), 91% of the monies spent in disaster relief between 1999 and 2017 went to climate related events. Climate vulnerability is based on geographic and physical factors, but lack of urban planning and a culture of prevention, as well as weak capacities to reduce and manage the crisis, exacerbates the impacts. The economic cost of hurricanes and heavy rain events between 2002 and 2015 amounted to 18 billion dollars; while the flooding from last week surpassed 200 thousand people affected and 50 thousand homes damaged.
Mexico contributes with less than 2% to greenhouse gases global emissions. However, given our condition of highly vulnerable country it is imperative to flag that we are being part of the solution. What happens in other countries, especially high emitters, is particularly important. Joe Biden´s victory is a cause for celebration because it confirms the strategy that will drive the world towards decarbonization through green economic growth.
Never on the history, a president elect had such a clear environmental mandate. According to one exit poll, 74% of Biden´s voters considered climate change as especially important for its choice. Other poll concluded that 67% of all voters, not just Biden supporters, are in favor of increasing public investment in clean and renewable energy.
It is in this context that Biden proposes a “Green Deal” that will take the US to reach carbon neutrality in 2050 and its electricity sector to become 100% clean by 2035. In order to reach such goal, they will invest $2 trillion dollars of public funds that will leverage $5 additional trillions from the private sector and subnational governments; and also create 10 million new jobs. They will rejoin the Paris Agreement and consider trade sanctions to polluting countries.
After the electoral results in the US, there is no doubt that the preferences of citizens, consumers and investors are leaning towards decarbonization and green growth. A few days before the elections, China, Japan and South Korea joined the European Union with net zero emission targets by midcentury. With a similar target about to be announced in the US, 60% of the global emissions will be neutral by 2050. In the private sector the story is not too different, the value of oil and gas companies within the S&P 500 has gone from 15 to less than 3% over the last decade, predicting its eminent extinction.
With the US as its main trading partner, opportunities to develop Mexico´s low carbon potential are greater than ever. From investing in clean energy production to supply national and binational electricity markets, to manufacturing of goods and technology to service the growing demand of renewable energy, to propelling carbon emission offsets in the forest and agricultural sectors, possibilities are unlimited. Mexico is on the verge of the conditions that will define its future.
Article originally published in Reforma news paper.