-Analysis-

LA PAZ — As it stands now, half of Latin America's power is generated by hydroelectricity, an energy source that is also of vital importance worldwide, producing more electricity than all renewables combined.

Hydropower is especially beneficial for countries that depend on global commodity prices — particularly with regards to oil, natural gas and coal — as it allows for deeper and more affordable energy independence. It is also why Latin America currently has the world's cleanest energy matrix.

In addition, hydroelectricity projects provide important investment opportunities in the region. The International Energy Agency estimates that by 2035, Latin America's hydroelectric power grid will add 277 gigawatts of installed capacity at a cost of more than $250 billion.

This is a challenge for the public sector and a great opportunity for the private sector, which is gradually increasing its investment share in renewable energies and has already become a crucial financing component in the Latin American electrical market. Public-private partnership schemes must ultimately play an important role in bringing about these future projects and investments.

Latin America is well suited for hydropower. It has five of the world's most important rivers (the Amazon, Orinoco, Río Negro, Paraná and Río Madera), three of the world's biggest lakes and, in Brazil alone, a fifth of the planet's water resources. Brazil, in fact, is the world's second leading producer of hydroelectric power after China. And there's lots more power here that has yet to be tapped. Experts say that Latin American has so far developed just 20% of its total hydroelectric capacity.

The mighty Amazon — Photo: Wallygrom

Demand for electricity is rising in Latin America. And it must be met — with a safe and stable power supply of power, but with less reliance on fossil fuels. That's why hydroelectricity is so key. But there's a catch. For hydropower projects to really work, they must be done in a sustainable way.

This remains one of Latin America's greatest challenges, given the need to consider both economic, and environmental and social factors. It is essential, therefore, that all country's in the region join forces to face the challenges together. Only that way can we all benefit from this power source.

The good news is that we already have positive examples to draw upon. The Itaipú hydroelectric plant, for example, with a generating capacity of 14,000 megawatts, is able to supply around 17% of the electricity consumed in Brazil and 76% of the power needed in Paraguay. It has become an example of how to manage and improve the environment in which it functions, and is considered one of the world's top clean-energy projects.

Along those same lines, the Andean Development Corporation – Development Bank of Latin America, or CAF, as it's known, is working with national and regional authorities on a project to boost sustainable use of the region's water resources. The program helps countries identify untapped water resources, plan sustainable power projects, and improve and/or rehabilitate existing power plants to prolong their shelf-lives.

The message, looking forward, must be clear: We must work together to assure a stable and sustainable energy supply that will benefit all Latin Americans and ensure competitive use of our resources.