Technology-specific auctions have been one of the key drivers of renewables deployment in Peru, helping to promote diversification of the country’s matrix through contract awards to biomass, wind, solar and small hydro plants. The country also features a modest clean energy generation target, which is pending revision and a biofuel blending mandate.
In 2015, Peru generated 9.5% of its total 48TWh from renewable sources (biomass, wind, solar and small hydro). Large hydro accounted for 41.2%, natural gas for 30.8%, and coal, oil and diesel for the rest. To promote renewables, Peru offers priority dispatch and 20% accelerated depreciation for renewables projects.
Introduced in 2008, the auctions have been key in spurring project development. The Ministerio de Energia y Minas (MINEM) every two years evaluates the need for auctions, and the Organismo Supervisor de la Inversión en Energía y Mineria (OSINERGMIN) conducts the tenders. The auctions are technology-specific and contracts are awarded to developers who offer the lowest tariff per kWh for a given technology. Peru has held five renewable auctions, including one for off-grid solar capacity. In the on-grid tenders, OSINERGMIN has awarded power contracts to 64 projects for a total of 1,257MW from biomass, small hydro, solar and wind sources. The latest renewable energy auction winners were identified in February 2016. The average contracts awarded for wind and solar projects represented the lowest prices recorded on an unsubsidised basis in the Western Hemisphere at the time.
Peru is one of a handful of countries in Latin America with a mandatory renewable energy target, which is subject to revision every five years. Established in 2008 by MINEM, the first target for the 2008-2013 period was set at 5% of the country’s total electricity consumption. As of 2016, the target had not been revised.
Peru initially struggled to meet its biofuels blending target established in 2007, which mandated that 7.8% ethanol be blended into the gasoline stock and 5% biodiesel be blended with diesel fuel. Limited national biofuel production and a lack of operations and maintenance service providers to support the industry prompted the government to twice delay the blend start date in certain parts of the country. However, the blend has been in force country-wide since 2011.
In September 2015, the government of Peru submitted its Intended Nationally Determined Contribution (INDC) to the United Nations. The INDC does not establish a new renewable energy target, but indicates it will promote renewable energy sources and replace coal, oil and diesel with natural gas in thermal plants by way of GHG emissions reduction actions.
Peru scored 1.60 in Climatescope 2016 (an increase of 0.16), which placed it in 16th position overall, unchanged from the previous year. The country’s best performance was on Greenhouse Gas Management Activities Parameter IV.
It placed 20th on Enabling Framework Parameter I with a score of 1.56, up from 1.34 the year before. This relatively strong result reflects the country’s clean energy policies, such as energy auctions and tax incentives, as well as its moderately supportive power structure.
Peru fell seven places to 23rd on Clean Energy Investment and Climate Financing Parameter II. Investment has flowed into the sector at a high rate since 2011, and 2015 was no exception.
On Low-Carbon Business & Clean Energy Value Chains Parameter III, the country scored 2.11, unchanged from the year before. It took 24th place, three spots down from its previous ranking. There were fifteen clean energy value chains identified in 2015, and 10 service companies.
On Parameter IV, Peru earned its highest position, taking 5th place globally, up from 9th. It was engaged in a significant number of carbon offsetting projects, and has a GHG emissions reduction target in place, among other supportive policies.
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