Motivations

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JISEA 9th Annual Meeting

Golden, Colorado

March 13th and 14th, 2019

NREL/PO-6A50-73430

Ensuring Reliability and Resilience in South American Power Markets 

Josue Prado1 and Jeffrey Logan2

1Joint Institute for Strategic Energy Analysis (JISEA), 2Strategic Energy Analysis Center

This work was authored by the National Renewable Energy Laboratory, operated by Alliance for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DE-AC36-08GO28308. Funding provided

by U.S. Department of Energy Office of International Affairs (IA-32). The views expressed in the article do not necessarily represent the views of the DOE or the U.S. Government. The U.S. Government retains and the publisher,

by accepting the article for publication, acknowledges that the U.S. Government retains a nonexclusive, paid-up, irrevocable, worldwide license to publish or reproduce the published form of this work, or allow others to do so,

for U.S. Government purposes.

Methodology

• The global electricity sector is undergoing a

period of rapid change as power systems move

towards decarbonization, digitalization, and

decentralization.

• This transformation has significantly changed the

way power systems are designed, planned, and

operated.

• Power system flexibility has been receiving

increasing attention as variable renewable energy

(VRE) and demand-side technologies are widely

adopted.

Power System 

Transformation

Decarbonization

Digitalization Decentralization

Fig. 1. Key drivers of global power system transformation.

• Primary countries of focus:

- Argentina

- Brazil

- Chile

- Colombia

Flexibility Market 

Efficiency Reliability Resiliency

= + + Optimal management of 

variable and uncertain 

supply and demand over 

different time horizons. 

Cost-effective balancing 

of supply and demand 

with maximum social 

welfare.

Capacity to withstand 

disturbances and 

failures while keeping 

security and adequacy. 

Capacity to adapt to 

changing conditions 

and rapidly recover 

from eventual 

disruptions.

Fig. 2. Components of power system flexibility.

0

100

200

300

400

500

600

700

Electricity Generation in Brazil (TWh)

Hydro (TWh) Gas (TWh) Oil (TWh) Coal (TWh)

Nuclear (TWh) Biofuels (TWh) VRE (TWh)

Significant El Niño occurrences VRE growth

Fig. 3. El Niño events and VRE growth in Brazil. Source: IEA (2018).

• Select countries in South America that rely heavily on

hydropower are facing increasing risk and reliability

concerns during drought (El Niño/La Niña) years.

• VRE and natural gas (NG) are becoming important

generation options in many South American power

markets, especially in drought years.

• There is an increasing need to expand emphasis on

flexibility due to reliance on hydropower and VRE

supplies.

Preliminary Work

• Key tasks:

- Understand how the generation mix in key countries varies

depending on hydropower resources.

- Study how VRE can be used to minimize overall costs when

hydropower is plentiful and how NG can complement hydropower

and VRE.

- Identify opportunities, challenges, and needs for domestic NG and

VRE production options in South America.

- Examine new market designs to keep NG plants profitable during

years of plentiful hydropower.

- Evaluate the potential for more LNG exports to the region.

Fig. 4. Primary countries of focus.

Hydropower VRE

Affected by El 

Niño/La Niña 

events

Monthly/Yearly

concerns

Intermittent 

and uncertain 

by nature

Hourly or 

below 

concerns

How to ensure long-term 

reliability and resiliency?

Market 

Dynamics

Financing

Planning

New 

Technologies

NG

Domestic

Global 

LNG

VRE

Brazil

Argentina

Colombia

Chile

Fig. 5. Main issues of hydropower and VRE. Fig. 6. Main areas of focus.

Fig. 7. Generation mix. Sources: IEA(2018) and NOAA (2018).

Country Most significant event Complementarity sources

Argentina La Niña NG and oil

Brazil El Niño NG, oil, coal, and VRE

Chile La Niña NG, coal, and VRE

Colombia El Niño NG

Table I. Most significant events and complementarity sources

Country NG Proved 

Reserves (Bcm)

NG Production 

(Bcm)

NG Consumption 

(Bcm)

Argentina 336.6 40.9 49.0

Brazil 377.4 24.0 34.3

Chile 98.0 1.2 5.1

Colombia 113.9 10.0 10.1

Table II. NG in 2017. Source: CIA (undated).

• South America is well endowed with NG resources.

However, the lack of investments in exploration and

production has prevented larger domestic production.

• The continent is a net oil and coal exporter but has

been a net NG importer since 2008.

• LNG imports have become a source of flexible supply to

meet peak demand during dry seasons.

Fig. 9. LNG imports. Source: GIIGNL (2018).

Fig. 10. Hydropower and LNG in Brazil. Source: MME (undated).

• The Global LNG market is evolving rapidly and moving

towards higher liquidity, flexibility, and commoditization.

• LNG market trends include “gas-on-gas” prices, shortterm, lower-volume, and destination-free contracts, and

increasing integration of portfolio players.

• New technologies are enabling cost-effective and fast

delivery of LNG storage and regasification. Floating

Storage Regasification Units (FSRUs) are more

affordable than onshore terminals and enable LNG

importers to enter the market faster.

• LNG imports under emerging business models and

contracts may help key South American countries to

ensure long-term reliability and resiliency.

References

• IEA. (2018). IEA Electricity Information 2018. Paris,

France: IEA.

• NOAA. (undated). Cold and Warm Episodes by

Season. Silver Spring, MD: NOAA. Accessed on

November 2018. https://origin.cpc.ncep.noaa.gov/

products/analysis_monitoring/ensostuff/ONI_v5.php

• CIA (undated). The World Factbook. Langley,

McLean, VA: CIA.

• GIIGNL (2018). GIIGNL Annual Report 2018. Neuillysur-Seine, France: (GIIGNL).

• MME Website (undated). Accessed on February

2019. http://www.mme.gov.br/

Fig. 8. VRE production. Source: IEA (2018).