With most of its electricity demand met by three large hydro plants totalling 8.8GW, Paraguay has had little incentive to develop a policy framework for other renewable energy sources. In fact, the country is a net exporter of electricity. The only clean energy policy incentive in Paraguay is a biofuel blending mandate for gasoline and diesel.
Paraguay’s electricity market is overseen by the Department of Mines and Energy, which is under the Ministry of Public Works and Communications (Ministerio de Obras Públicas y Comunicaciones) and controlled by state-owned vertically integrated utility Administración Nacional de Electricidad (ANDE). ANDE allows the participation of independent power producers (IPPs) according to Law 3009. However, as of 2015, there was no independent power producer registered in the country.
Paraguay exports power from its large hydro plants to Brazil and Argentina. From the total 55.2GWh generated in 2014, only 18% was directed to national consumption. Besides large hydro, Paraguay has a small group of generators totalling 25MW that use diesel for fuel. In 2015, the country generated a total of 55.6TWh, more than neighbours such as Peru, which has a population four times the size of Paraguay’s 6.8m people.
The abundant availability of low-cost electricity has a direct impact on retail power prices, which are low: consumers pay on average $0.06/kWh to purchase electricity from ANDE. Paraguay mandates that all diesel sold commercially in the country should contain 5% biodiesel and gasoline must contain 18% to 24% ethanol, depending on octane requirements. In June of 2015, the Paraguayan Congress approved a law to support the consumption of biofuels in the country, requesting on-site pumps for ethanol.
Paraguay’s energy matrix (including energy for transport, heat and power), is constituted of biomass and waste (46%), oil and diesel (38%) and electricity (16%). In December 2014, the government released its National Development Plan 2014–2030, setting a target of a 60% increase in its annual renewable energy consumption. The country also aims to decrease by 20% its fossil fuels energy consumption and to achieve a 100% national electrification rate by 2030.
On 1 October 2015, the government of Paraguay submitted its Intended Nationally Determined Contribution to the United Nations, in which it committed unconditionally to cut greenhouse gas (GHG) emissions by 10% by 2030, compared to 2000 levels. Paraguay also committed to an additional reduction of 10% below the unconditional target by 2030, subject to international support.
Paraguay scored 0.62 in Climatescope 2016 (an increase of 0.13 on the year before), placing it 56th overall, above only Venezuela and Suriname. The country’s best performance was on Greenhouse Gas Management Activities Parameter IV, the only area in which it managed to break out of the bottom six countries.
It placed 54th on Enabling Framework Parameter I with a score of 0.73, up from 0.49 the previous year. This reflected the country’s lack of clean energy policies (save for a biofuel blending mandate) and unsupportive power sector structure.
Paraguay fell ten places to 53rd on Clean Energy Investment and Climate Financing Parameter II, a weak performance that reflected the less than $30m invested in the sector between 2010 and 2015.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, the country scored 0.26 and took 56th spot. There were just four clean energy value chains identified in 2015.
On Parameter IV, Paraguay earned its highest position, 32nd, thanks to its carbon offsetting activities.
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