Policy reform needed to diversify Paraguay’s energy mix

Paraguay hydropower and energy mix
Image credit: IRENA

The International Renewable Energy Agency (IRENA) has released a new report analysing the adoption of clean energy resources in Paraguay.

The Renewables Readiness Assessment: Paraguay report assesses the actions required to help the Latin American country diversify its energy mix for sustainability and secure energy supply.

Paraguay has a vast amount of wind and solar energy resources that can be tapped to diversify the energy mix and help the country to achieve its goal of reducing carbon emissions by 20% by 2030, according to the report.

However, there needs to be precise regulation that can pave the way for increased adoption of renewable energy resources, according to the study which was conducted in partnership with the Ministry of Public Works and Communications in Paraguay.

The study stipulates that favorable regulation should enable the country to:

  • Strengthen energy institutions and governance.
  • Enhance long-term planning for the renewable energy sector.
  • Develop policy instruments and implement initiatives to foster energy efficiency.
  • Promote the use of renewable energy beyond the power sector.
  • Foster investment in renewable energy technologies.
  • Reinforce the continuous creation of institutional and human capacities.

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As a first step, IRENA encourages Paraguay to establish an autonomous energy committee that represents stakeholders within the energy sector including parliament, legislators, and representatives from judicial institutions and industrial associations. The committee would provide key recommendations on energy policy development and management of energy institutions.

The establishment of the committee and the enactment of favorable policies would help Paraguay to address challenges the energy sector is facing including threats to energy security and the increased use of fossil fuels.

Threats to energy security and national income from electricity exports. Although Paraguay has been a net exporter of electricity in the past decades owing to its abundant hydro and biomass resources, drought affecting the region in the past few years is threatening stability in the country’s energy segment. However, adequate planning and supportive regulation have the potential to help Paraguay expand renewables adoption as a measure to address energy sector challenges.

The increase in the use of fossil fuels is a result of continued growth in energy demand especially in the transport sector in Paraguay, according to the report. The high solar energy potential throughout Paraguay can help decarbonise end-use sectors, including transport, and energise isolated areas of the country, particularly in Alto Paraguay, Boquerón and Concepción, states IRENA.

IRENA Director-General Francesco La Camera, said: “… with the share of fossil fuels in Paraguay’s energy mix growing and climate change bringing uncertainty to the reliability of its current hydropower fleet the country has a tremendous opportunity to create an enabling environment for the realisation of a more balanced, low-carbon energy future that supports both its economic and its climate objectives.”

In addition, Paraguay’s medium to high-quality wind potential in the north-western region can help address pressing energy sector challenges and ensure a secure supply of clean electricity, according to the report.

IRENA states that favorable policies can also help Paraguay to achieve its hydrogen deployment target, a roadmap for which was established in June 2021 in partnership with the International Development Bank.

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