IEEJ：August 2016 © IEEJ2016

IEEJ:August 2016

COUNTRY REPORT OF PERU

Edwin Ramirez Soto
Supervisory Agency of Investment on Energy and Mining (Osinergmin-Peru)
June, 2016

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CONTENTINTRODUCTION
1.GENERAL INFORMATION
2.CURRENT ENERGY POLICY AND MEASURES
3.PAST ENERGY DEMAND AND SUPPLY (STATISTICS)
4.OUTLOOK OF ENERGY DEMAND AND SUPPLY
5.MAJOR DIFFICULTIES AND BOTTLENECKS CURRENTLY FACED IN
FORMULATING ENERGY POLICIES
6.SUBJECTS TO STUDYIEEJ：August 2016 © IEEJ2016

Osinergmin is a public institution of Peru, whose functions are toregulate, supervise and oversee the energy and mining sectors
with autonomy, technical capacity, clear and predictable rules sothat activities in these sectors are held in conditions of safety andavailable with a reliable and sustainable supply of energy
Government

Protect the rights
population

Guarantee theInvestment

Company

Promote Economic
Efficiency

Population

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1. GENERAL INFORMATIONIEEJ：August 2016 © IEEJ2016

BASIC INFORMATION
Capital and largest city: Lima
High degree of economic concentration: LimaLarge economic difference between Lima and theprovinces
Official languages: Spanish 84.1%, Quechua 13.0%
and Aymara 1.7%
Geographic area: 1.29 Millon km2
Population: 31.1 Millon- Annual Growth: 1.1%
Urban population: 75%
Coastal area: 52%
Population with acces to electricity (2015): 93%

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GROSS DOMESTIC PRODUCTDOMESTIC DEMAND-----------------------------------The GDP has decreased between 2010 and 2016, because the country's economy has contracted

IEEJ：August 2016 © IEEJ20162. CURRENT ENERGY POLICY AND MEASURESIEEJ：August 2016 © IEEJ2016

SUPREME DECREE N° 064-2010-EM
APPROVES ENERGY POLICY OF PERU 2010-2040

VISION
Have an energy system that satisfies the national demand in a
reliable, regular, continuous and efficient way, which
promotes sustainable development; based on planning,
research and continuous technological innovation

http://www.minem.gob.pe/

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OBJECTIVES OF ENERGY POLICY
Have a diversified energy matrix with emphasis on renewable sources.

Develop the natural gas industry and its use in home activities,transportation, trade and industry as well as efficient power generation.

Strengthening of the institutions and transparency
sector.

Integratíon with regional energy markets, allowing the achievement oflong-term vision.

Have a competitive energy supply.
Universal access to energy supply.
Have a greater efficiency in energy use and on the production chain.
Achieve auto sufficiency in energy production.
Develop an energy sector with minimal environmental impact andsustainable development.

http://www.minem.gob.pe/of the energy

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ENERGY POLICY-MEASURES
1. Planning of the Electrical Transmission (Transmission Regulation)
 Expansion - Bids for Electrical Transmission (Law N° 28832-Efficient Generation) Convenedby PROINVERSION
Pay: Guaranteed Annual Remuneration (RAG US$/year)+COyM
2.

Development of the Electrical Generation

 Bids for Electrical Generation (Law N° 28832, Convened by PROINVERSIÓN)Investment commitment Contract of Hydraulic Power Plants Generation

Pay: US$/kW month and US$/MWh

Concession Contracts of Power Plants of Cold Reserve

Pay: US$/MW month and oil cost
Investment Contracts of Power Plants of Electric Node in the South of Peru

Pay: US$/MW month and oil cost

 Auctions for Electrical Generation with Renewable Energy Resources (D.L. N° 1002,
Convened by MINEM-OSINERGMIN)
Concession contracts for the supply of electrical energy with Renewable Energy Resources

Pay: US$/MWh

3. Long-term contracts up to 20 years (generation) and 30 years (transmission).
4. Energy policy heavily influenced by the economic conditions of the country.

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REGULATION BY AGENCY-REGULATION BY CONTRACT
 GENERATION:Regulationby contract

80%

Osinergmin

thesupplyoftheTRANSMISSION:o Tenders for the trunk system (guaranteed, principal).
 Concession Contracts of Transmission Lines andSubstations, convened by PROINVERSIÓN.
(BOOT-Build, Owner, Operate and Transfer).
 Additional charges: Cold Reserve, RER, Energy NodeSouth, Gas pipeline in southern Peru, etc.

Proinversión,
Osinergmin/Minem

Regulation
by agencyo Long-term tenders fordistributors demand.

20%•Distribution rates VAD (value added distribution)•Secondary/Supplementary

Rate toend
customers

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INVESTMENTS IN THE ELECTRICITY SECTOR

Source: OSINERGMIN

Investments in the electricity sector in 2014 totaled 2 413 million US$, of which 88% were private and
12% public (in 2015 the investments were 2 300 million US$).
The investment is the result of bidding on contracts awarded that guarantee the prices for energy orservices offered.

IEEJ：August 2016 © IEEJ2016MARGIN OF RESERVE ELECTRIC POWER AND TRANSMISIÓN LINE

Source: MINEM

 From 2011 to 2015 the power generated has increased by 2344 MW. This level of generation supply in thecountry has allowed ensure timely and reliable supply of demand for electricity in the country, whilemaintaining a reserve margin that ensures safety This provision against possible emergencies that occur
in the SEIN.
 Supply has always been greater than the demand for electricity and the reserve margin has risen from 26%
in 2011 to 38% in 2015.
 From 2011 to 2015 the length of transmission lines has increased by 2,518 km

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ELECTRIC GENERATION WITH RENEWABLE ENERGY RESOURCES
POWER
CONTRACT(MW)

PRICE
AUCTION(US$/MWh)INVESTMENT(US$ x 106)

OPERATION

C.B. Huaycoloro (Lima)

3.411010.5

06.12.2011

C.S. Panamericana (Ilo)

20215

94.6

31.10.2012

C.S. Majes 20T (Arequipa)

20

222.5

73.6

31.10.2012

C.S. Repartición 20T (Arequipa)

20

223

73,5

31.10.2012

C.S. Tacna 20 TS (Tacna)

20

225

94.6

31.12.2012

C.E. Marcona (Ica)

32

65.5

61.1

25.04.2014

C.E. Talara (Piura)

30

87.0

101.0

30.08.2014

C.E. Cupisnique (La Libertad)

80

85.0

242.0

30.08.2014

C.S. Moquegua FV (Ilo)

16

119.9

43.0

31.12.2014

C.B. La Gringa (Lima)

399.9

5.1

09.01.2015

C.E. Tres Hermanas (Marcona)

90

69.0

185.711.03.2016

PLANTSource: MINEM

Currently we have 5 solar plants and 4 wind farms in service. The biggest is the Tres Hermanas
Wind Power Plant which began operations in March 2016, with 97 MW of installed capacity.

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3.

PAST ENERGY DEMAND AND SUPPLY(STATISTICS)IEEJ：August 2016 © IEEJ2016

ELECTRIC GENERATION MATRIX OVER THE LAST 11 YEARS

Source:OSINERGMIN Over the last 11 years, energy production technologies with diesel has reduced from 13% to less than 1%.
The electrical energy with natural gas has grown (7% to 46%) while hydropower has decreased (76% to 50%)
 The 2015 energy matrix, comes mostly from Renewable Energy (about 50.4% of energy production was hydroelectric, 46.4% isbased on natural gas and 2.1% with other Renewable Sources-No Conventionals).
 In the period 2011-2015, electricity production had a cumulative growth of 23.9%, from 38 805 GWh in 2011 to 48 295 GW.h in 2015.
This represent an average annual growth of 5.6%.
 The wide availability of water resources and natural gas allowed to meet the growing electricity demand of the country.

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EVOLUTION OF THE PEAK OF ELECTRIC DEMAND
12.0%

6445
11%

6000

10.0%
9%

5000

8%

8%

8%

4000

8.0%
7%

3070

6.0%

6%

6%

5%

3000

4.0%
2000

3%

3%

3%
2.0%

1000

GROWTH RATEMAXIMUM DEMAND - MW

7000

0.0%

0
2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016
Source: OSINERGMIN

Over the last 10 years the maximum demand has grown on average by 6.2% and the total
growth is 50.2%.
In the last 5 years the maximum demand has risen 30.2%.

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AUCTION RESULTS RENEWABLE ENERGY RESOURSESAVERAGE PRICE OF THE PROJECTS AWARDED

Source: OSINERGMIN

 The prices of solar, wind and biomass projects, in the fourth auction have been greatly reduced, comparedto the first auction.
 Idem, the prices of hydraulic projects, in the fourth auction have been reduced, compared to the firstauction.

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NATURAL GAS INFORMATION
NATURAL GAS PRODUCTION FISCALIZED 2008-2015
500,000
450,000

401,169

418,795 430,559

456,408 441,244

Million Cubic Feet

400,000
350,000
300,000

255,608

250,000
200,000
150,000

122,218 125,299

100,000
50,000
02008

2009

2010

2011

2012

2013

2014

2015

Source: Petroperu



In 2015, natural gas production totaled 441 244 million cubic feet, driven by growing demand from power plants,increased consumption of vehicular (VNG), domestic and commercial natural gas.

Peru is the only sustainable source of natural gas in the South American Pacific area.

Peru has oil fields that have not been explored (29.97 million ha), making it a potential petrochemical hub.

The petrochemical industry integrates the production of natural gas and other liquid hydrocarbons, giving it asignificant added value.

http://www.minem.gob.pe/

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4.

OUTLOOK OF ENERGY DEMAND AND SUPPLYIEEJ：August 2016 © IEEJ2016

ELECTRICITY GENERATION MATRIX OF THE PAST AND OF THE FUTURE

 The Government’s efforts to raise the Renewable Energy Resources (NRE) contribution to the electricity
generation matrix will pay off in the long term.
 The Renewable Energy Resources share on total generation is expected to increase from 1% in 2010 to 5%
by 2020. The mostly likely Renewable Energy Resources developments will be wind, solar and biomass
power plants.

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HYDRO POTENTIAL
According to a recent study, usable potential forhydropower is about 70 000 MW (MINEM).
o86% comes from the resources of the Atlantic Ocean,
o14% is from the Pacific Rim
o 0.3% is from Titicaca Lagoon Basin.

Atlantic Ocean

Dam
C.H. Cerro del Aguila (525 MW)
Huancavelica

Pacific Ocean

Source: MINEMIEEJ：August 2016 © IEEJ2016

SOLAR POTENTIAL
Capacity not estimated in terms of solar power for
generation projects.
The Solar Atlas ranges contain records of average solar
radiation for each month of the year.
Mountain: 5.5 – 6.5 kWh/m2
Coast: 5.0 – 6.0 kWh/m2
Jungle: 4.5 – 5.0 kWh/m2
C.S. Repartición (20 MW)
Arequipa
Source: MINEMIEEJ：August 2016 © IEEJ2016

WIND POTENTIAL
The highest wind potential is located on the coast of Peru,
due to the strong influence of the anticyclone of the Pacificand the Andes, generating winds from the southwest acrossthe coastal region.
The Wind Atlas estimates a potential to be exploited of about
22 000 MW.
Source: MINEM

C.E. Cupisnique (80 MW)
La Libertad
Source: MINEMIEEJ：August 2016 © IEEJ2016

BIOMASS POTENTIAL
It is estimated that 177 MW of conventional
biomass and 51 MW using biogas will beexploited.
This is obtained from data records, taking into
account agro-industrial waste coming fromprocessing plants of sugar cane, rice husk,cotton, wheat, asparagus and sawmills forest
residues.

CB. Huaycoloro (3 MW)
Lima

Source: MINEMIEEJ：August 2016 © IEEJ2016

GEOTHERMAL POTENTIAL
It is possible to install geothermal plants inregions:Region I: Cajamarca, La LibertadRegion II: Huaylas
Region III: ChurínRegion IV: CentralRegion V: Southern Volcanic Chain
Region VI: Puno, Cusco

The estimated potential is 3 000 MW
The greatest potential is in the south of thecountry, especially in the departments of Punoand Cusco.
Source: MINEMIEEJ：August 2016 © IEEJ2016

5. MAJOR DIFFICULTIES AND BOTTLENECKS
CURRENTLY FACED IN FORMULATING ENERGYPOLICIESIEEJ：August 2016 © IEEJ2016

 In Peru for more than three decades there has not been a long-term energy policy. At present, we have anenergy policy that promotes the participation of clean energy (solar and wind); the problem is the increment of
the tariff for the users, because these technologies are expensives and the electricity generation based onthese resources do not provide the continuity and reliability of service that is required to strengthen security ofsupply in the SEIN..
 Currently there is no plan for power generation projects. There is no power generation plan in order to set
the projects that enter every year in the national electricity grid. The government seems to not give due
importance, because there is no national energy plan, nor do citizens show interest. Even though we will be
who we will be, favored or prejudiced, given to changes in electricity rates.
 Peru doesn’t have a plan to invest resources efficiently. We believe that before delivering energy to ruralzones, we have to promote a process of change that exploits the productive use of electricity to generate
wealth.
 There isn’t progress in the development of geothermal energy. In Peru we are in the stage of exploration;
the exploitation of this important energy resource has not been started, despite the significant potential existent.
 The time spent on the approval of environmental permits for the construction of power plants and powertransmission lines are excessive and generate delays in commissioning of projects.

1400

C.H. Machupicchu II

363

C.T. Santo Domingo de losOlleros

Source: OSINERGMIN
188

C.H. Tres Hermanas

200

C.H. Huanza

800

C.T. Chilca Fénix

400

C.H. Santa Teresa

1000

C.H. Cheves

C.H. Quitaracsa

Number of days

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DELAY TIME OF COMMERCIAL OPERATION -CENTRAL GENERATION
1292

1200

964
723

600

249323710IEEJ：August 2016 © IEEJ2016

6.

SUBJECTS TO STUDYIEEJ：August 2016 © IEEJ2016

SubjectPriority

ReasonImplementation of geothermal
Veryenergy in the energy matrix ofImportanta country

Geothermal energy can bring benefits to Peru, could reduce
oil consumption and carbon emissions.
It could also help to increase energy security, and leverage
the opportunities of the regional electricity market.
It is necessary to know the strengths and weaknesses of thistechnology, as for example, the high investment costs makeit risky to start the work on these projects, and it isnecessary to know aspects that could be useful in theperfection of the current regulations.

Smart Grids
SavingImportant

The control of energy and its efficient use is very importantto secure energy resources and reserves needed in thefuture.
To ensure the efficiency and sustainability of power systems
with low losses and high levels of quality, safety andreliability of electric service.

Implementation
Nuclear
Fusion and Nuclear Fission
Importantmust to be included in theEnergy Matriz

This Potential Source of Energy will to be important when
Fossil Fuels Run Out.

andEnergy

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Thanks for your atenttion
Edwin Ramirez Soto
Specialist of Supervisory Agency of Investment of Energy and Mining of Peru (Osinergmin)
Fixed Phone
Cell Phone
E-mail: (51-1) 2193400 Ext.1425: 990 334771: eramirezs@osinergmin.gob.peramirezsotoedwin@gmail.com
http://www.osinergmin.gob.pe

Contact : report@tky.ieej.or.jp