Peru’s Electricity Sector: A Roadmap for Sustainable Growth
Lima, Peru, 10 February 2025.
The International Finance Corporation (IFC), an integral part of the World Bank Group, along with consulting firms PSR and UL Energía e Infraestructura, and backed by the Facility for Investment Climate Advisory Services (FIAS), has released a comprehensive report on Peru’s electricity sector. Entitled “Development of the Peruvian Electricity Sector: from SEIN to the Amazon,” this study provides an in-depth analysis of the market’s physical, regulatory, and commercial aspects, while predicting its future trajectory.
Accelerated Demand and Infrastructure Needs
The report reveals that Peru’s electricity demand has surged in recent years, primarily due to the industrial and mining sectors. An annual growth rate of 2.6% is projected from 2025 to 2050, necessitating substantial investments in power generation infrastructure to meet future needs.
Renewable Energy Integration
Currently, Peru’s power grid is primarily powered by hydroelectric and natural gas plants. However, the study anticipates a significant rise in non-conventional renewable energy sources such as solar and wind power. By 2050, these technologies are expected to account for 45% of the total installed capacity. To accommodate intermittent renewables, the grid will need to become more resilient, likely through the integration of battery storage systems.
Stabilizing Spot Prices Through Renewable Diversification
The research predicts that the diversification of the energy mix coupled with increased renewable energy participation will stabilize electricity spot prices in the long term. The study also suggests several recommendations to drive sector development, including financing mechanisms for solar and wind projects, improvements in transmission infrastructure, and increased rural electrification.
Rural Electrification and Inclusive Energy Access
Matilde Bordón, IFC Country Manager for Peru and Ecuador, stated, “This study provides a roadmap for the sustainable development of the Peruvian electricity sector, highlighting the importance of renewable energies and the need for strategic investments to meet the growing demand for electricity. Both recommendations are fundamental to ensuring a reliable and affordable energy supply in the future.”
The report emphasizes the need for inclusive electrification, noting that around 30% of rural populations in the Peruvian Amazon lack access to electricity. Fossil fuel-based solutions are economically and environmentally unsustainable, prompting a shift towards hybrid mini-grids that combine solar energy with battery storage.
Lessons from South American Neighbors
According to IFC, successful initiatives in Brazil and Colombia demonstrate the feasibility of similar models in Peru. The study recommends that policy measures should focus on attracting private capital through tax incentives, adaptive regulatory frameworks, and access to financing.
Workshop on Peru’s Energy Future
IFC plans to host a workshop to discuss the report’s findings with key public and private sector actors, fostering dialogue about the country’s energy future.
In summary, Peru’s electricity sector is poised for a transformative shift towards sustainable renewable energy sources and greater inclusivity in energy access. These changes will be critical in ensuring a reliable and affordable energy supply that meets the growing demands of industry and rural communities across the country.
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