Business & Economy

Peru faces challenge of finding its own path towards energy transition

Lima, Feb 11 (EFE).- Peru, like the rest of the planet, must address the energy transition challenge in the coming decades, a test for which it will have to find its own path and for which natural gas, abundant in the country, could still play an important role, according to several experts.

The Sustainable Development Goals (SDGs) set by the UN for 2030 include “taking urgent action to combat climate change and its impact,” which has prompted countries to start talking in depth about the energy transition.

This involves shifting from the current fossil fuel-based system to a low-carbon or zero-carbon system based on renewable sources, a major global challenge that countries must embrace.

In this regard, the executive director of the Videnza Institute and former Peruvian Minister of Economy, Luis Miguel Castilla, has identified what he calls “the energy triangle dilemma.”

“There is usually a tension between the objectives of trying to maintain energy at a competitive, accessible cost, on the one hand, and on the other, that energy sources should be environmentally sustainable, less dependent on fossil fuels, in line with environmental commitments, and the most complex thing is always to maintain security of supply,” he explained to EFE.

In his opinion, “this is the central issue, and there has to be an appropriate balance between these three aspects, which can sometimes have friction between them.”

“If you look at the Peruvian energy matrix, it is a relatively clean matrix. 54% is hydro, 38% is thermoelectric, dependent on natural gas, and the remaining 7% is between alternative (renewable energy resources).”

He concludes that “92% of the Peruvian energy matrix is relatively clean.”

However, Castilla commented on the challenges posed by renewables in a country like Peru: “With solar energy, for example, if a cloud passes over there is a dip. The cost of storage is high.

“The idea is to be able to capitalize on the fact that we start from a base of having a high hydraulic component that is renewable, that we have a non-renewable source (…), which is the cleanest (natural gas) of fossil energy sources, compared to other countries that depend on coal or have to burn diesel,” he explained.

Castilla said that the major sources of CO2 in Peru “are elsewhere,” not in energy generation.


Against this backdrop, Willem Van Twembeke, CEO of Inkia Energy, the parent company of one of Peru’s main power generators, Kallpa, explains that the “energy transition in every country in the world signifies something different.”

“It depends on the geography of the country, it depends on the natural resources and where the country is located on the globe, that changes the situation in each country enormously. So, a solution in one country does not apply to another country,” he stressed.

“In that sense, Peru is a country that really has a privileged situation to achieve ‘net zero’ emissions by 2050. Peru can easily reach this goal,” he said.

In Van Twembeke’s opinion, this privileged situation is based on the fact that “it has many natural energy resources,” for example, for the development of hydropower or areas “with a lot of wind for wind power generation” and “it also has gas,” without the need to import it.

“Gas is important because, if you want to get to ‘net zero’, (with) renewables you don’t control how much you generate in a day”, so you need “the flexibility of gas-fired plants”, he said.

It is possible to do the same “with batteries, but it is too expensive to replace gas plants now.”

“I think gas is going to be needed for about 20 more years in Peru, during this period I think we will have cheaper batteries and at the end of this gas transition period we will be able to replace gas generation with batteries and equivalent things. I think this is the natural evolution,” he said, adding that the economic aspect of the energy transition should be remembered.

“There is a difference between a developing country and a developed country. It is a little irritating that Europeans, who have made so many mistakes in the energy sector, as we have seen over the years, always give lessons to other countries. They think that the solutions for Europe and the United States are the solutions that developing countries like Peru should use,” Van Twembeke said.

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