Renewable Technological Base Line Product 2 - Observatory for

PA12PORENGAUGUST 2011
Product 2: State of Art
Final Report Product 1: Renewable Technological Base Line
Product 2: State of Art
www.purelysolarpower.comC
EDUARDO BOHN
The opinions expressed in this document are those of the author and do not necessarily reflect the views of the sponsoring organizations: the Latin American Energy Organization (OLADE) and the United Nations Industrial Development Organization (UNIDO).
Accurate reproduction of information contained in this documentation is authorized, provided the source is acknowledged.
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CASE OF PARAGUAY
Product 2: State of Art of Renewable Energies
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INDEX OF CONTENTS
2.1. Introduction ............................................................................................................ 11
2.2. Methodology .......................................................................................................... 11
2.3.1. General information of the country ................................................................ 12
2.3.2. Statistical analysis of the energy sector .......................................................... 13
2.3.2.1. Energy consumption in the country ........................................................ 14
2.3.2.2. Energy consumption according to purpose. ............................................ 15
2.3.2.3. Energy consumption by sector ................................................................ 19
2.3.2.4. Electric balance. ...................................................................................... 21
2.3.2.5. Greenhouse gases emissions (GHG) and Clean Development Mechanism (CDM). 23
2.3.3. Generalities regarding energy technologies in the country ............................ 24
2.3.3.1. Biomass ................................................................................................... 25
2.3.3.2. Liquid fuels. ............................................................................................ 30
2.3.3.3. Electric Energy ........................................................................................ 36
2.4. Legal and institutional framework for renewable energy in the country ............... 44
2.4.1. Electric Sector................................................................................................. 45
Case of Paraguay - Part I y II
2.4.4. Procedures to initiate and develop renewable energy projects in Paraguay. .. 52
2.5. Information of the most relevant renewable energy facilities by type of technology 55
2.5.2. Biofuels Sector ............................................................................................... 56
2.5.3. Biomass Sector ............................................................................................... 56
2.6. Lessons Learned. ................................................................................................... 57
3. STATE OF ART OF RENEWABLE ENERGY TECHNOLOGIES IN PARAGUAY (CASE STUDY)60
3.1. Introduction: ........................................................................................................... 60
3.2. Methodology: ......................................................................................................... 60
3.3.1. La Patria Project: “Energy for rural indigenous populations” ........................ 61
3.3.1.1. History and overview of the project ........................................................ 61
3.3.1.2. Description of the selected community ................................................... 62
3.3.1.3. Objectives of the project. ........................................................................ 65
3.3.1.4. Related regulations and national strategies on the energy sector ............ 65
3.3.1.5. Costs and financing ................................................................................. 65
3.3.1.6. Analysis, contributions and roles of the stakeholders (Pulfer, 2009)...... 67
3.3.1.7. Technologic aspects – Components of the project .................................. 68
3.3.1.7.1. Value chain for the exploitation of carob. (Pulfer 2006, 2009) .............. 68
3.3.1.7.2. Improved stoves for families (Pulfer, 2006) ........................................... 76
3.3.1.8. Positives impacts (Pulfer, 2009).............................................................. 79
3.3.2. Eurosolar Project ............................................................................................ 80
3.3.2.1. History and general description............................................................... 80
3.3.2.3. Description of selected communities (Fabio Lucantonio) ...................... 84
3.3.2.4. Project objectives .................................................................................... 87
3.3.2.5. Related regulations and strategies on the energy sector .......................... 87
3.3.2.6. Costs and financing (See interview Fabio Lucantonio) .......................... 87
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3.3.2.7. Project Development ............................................................................... 88
3.3.2.9. System guarantees (Fabio Lucantonio) ................................................... 97
3.3.2.10. Positives impacts (See interview Jean Claude Pulfer) ............................ 99
3.3.2.11. Replicability in others countries ............................................................ 100
3.4. Interviews with the most relevant entrepreneurs ................................................. 100
3.4.1. "La Patria" Project ........................................................................................ 100
3.4.2. “Eurosolar" Project ....................................................................................... 102
3.5. Interview and/or statement from a Minister on the most relevant projects ......... 105
3.6. Lessons learned from the projects ....................................................................... 108
4. ANNEXES ................................................................................................................. 110
4.2. Annex 2: Table 2 .................................................................................................. 111
4.3. Annex 3: National Electricity Balance 2009 ....................................................... 115
4.4. Annex 4: List of Eurosolar beneficiary communities .......................................... 116
4.5. Annex 5: Complete list of the elements that form the Euro-Solar Kits. .............. 118
5. Bibliography ............................................................................................................... 120
Illustration 2: Outdoor storage of firewood for industry. 25
Illustration 3: Coal furnace in operation and truck carrier. 26
Illustration 4: Coal ovens in the Paraguayan Chaco 26
Illustration 5: Cooking on an “open fire” 27
Illustration 6: Cultivation of Mbokayá palm 27
Illustration 7: Mbokayá palm fruit bunches 28
Illustration 8: Mbokayá kernel in industry. 28
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Illustration 9: Furnace fed with mbokayá husks 30
Illustration 10: Electricity map of Paraguay 38
Illustration 11: Map of the "La Patria" locality 62
Illustration 12: Typical house in the area. 66
Illustration 13: Typical house with a cistern for water 67
Illustration 14: View of the house interior 67
Illustration 15: Meeting with the inhabitants of the area 68
Illustration 16: Constructed pre-drying and storage centre 69
Illustration 17: La Leona drying centre and mill shed 69
Illustration 18: Details of the carob drying trays 70
Illustration 19: Hammer mill 71
Illustration 20: La Leona bakery shed with ovens 72
Illustration 21: Baking equipment in La Leona 72
Illustration 22: Training for radio use 73
Illustration 23: Tower with antenna 73
Illustration 24: Extended housing at the La Leona plant 74
Illustration 25: Stove under construction 75
Illustration 26: Test of the improved stove 76
Illustration 27: House with stove and chimney 76
Illustration 28: Eurosolar program countries 80
Illustration 29: Number of installed kits by country. 81
Illustration 30: Graduate School Nº 4.539 San Isidro, District of Capiibary,
Department of San Pedro
Illustration 32: “Sonnenschein” Solar Block batteries 89
Illustration 33: LIEBHERR CT 2051 refrigerator 90
Illustration 34: STENCO water purifier. 90
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Illustration 35: ESPRIMO Mobile V6535 FUJITSU SIEMENS computers 91
Illustration 36: Photosmart C4480 HP multifunction printer 91
Illustration 37: IP telephone & WRT110 RangePlus Linksys wireless router 91
Illustration 38: Junction box 91
Illustration 39: Inverters 92
Illustration 40: SOLETEL-S Solar Regulator 94
Illustration 41: Different prototypes of Euro-Solar kits installed in the ITER
headquarters for evaluation.
Illustration 42: ITER technician inspecting the panels. In Situ Verification,
Itakyry, May 2010
Graphic 4: Renewable and non renewable thermal energy consumption 16
Graphic 5: Renewable and non renewable transport energy consumption 17
Graphic 6: Renewable and non renewable power and lighting energy
consumption sector
Graphic 8: Transport energy consumption 20
Graphic 9: Industrial energy consumption 20
Graphic 10: Electricity generation by source 21
Graphic 11: Electricity exports 22
Graphic 12: Electricity consumption by sector
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34
88
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INDEX OF TABLES Page.
Table 2: Structure of sales of motor fuels 2008 32
Table 3: Proposed goals for biofuels blends 33
Table 4: Capacities and production of ethanol in Paraguay 34
Table 5: Production capacities of biodiesel plants in Paraguay 35
Table 6: Reference tariffs of ANDE 40
Table 3: Equivalence of energy in KWh prices of various fuels in Paraguay 43
Table 4: Estimated costs of RES generation in Paraguay 43
Table 5: Non conventional generation projects in development 56
Table 6: Matrix summary of Competitive Renewable Energy in Paraguay 58
Table 7: “La Patria” project investment proposal 63
Table 8: “La Patria” population composition 66
Table 13: Technical characteristics of inverters
93
INDEX OF DIAGRAMS Page.
Diagram 2: Commercialization & distribution of fuels in Paraguay 31
Diagram 3: Institutions linked to the Paraguayan energy sector 44
Diagram 4: Structure of project organization 82
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Acronyms used
Ah Amp hour
AT Technical Assistance
BE Electric Balance
CEPAL Latin American and Caribbean Economic Commission
DEAG Directorate of Agricultural Extension
DGEEC General Directorate of Statistics, Surveys and Census
DRE Directorate of Energy Resources
€ Euros
IDH Human Development Index
INDERT National Institute for Rural and Land Development
INDI Paraguayan Indigenous Institute
INTN National Institute of Technology and Normalization
JATI Head of Technical Assistance
kWp Thousands of Peak Watts
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MAG Ministry of Agriculture and Livestock
MDL Clean Development Mechanism
MERCOSUR Southern Common Market
NBI Unsatisfied Basic Need
OLADE Latin-American Energy Association
ONG Non Governmental Organization
PETROPAR Paraguayan Petroleum
SEAM Environment Secretary
USAID International Co-operation Agency of the United States of America
VDC Direct Current Volts.
Wp. Peak Watts
1 EXECUTIVE SUMMARY
The conditions in Paraguay for the implementation of renewable energy technologies are very good considering its abundant renewable natural resources. This can be seen in the energy matrix, which is principally characterized by the generation of electricity through hydroelectric power plants. Despite this advantage that the country has of its renewable natural resources, in its energy matrix, there is still a great participation of fossil fuels, which are mostly used by the transport sector.
There is a greater potential and thus there is a greater window of opportunity of developing renewable energy technologies that are related with biomass and liquid biofuels, which can gradually replace oil and its derivatives. For the development of these energy sources (liquid biofuels) it has been identified several technical and economically viable processes that have be implemented, but their development has generally been delayed.
The improved management of biomass for direct combustion also represents a great opportunity for increasing energy efficiency. The objective of this is to substitute oil and to have technological improvements for cooking in the residential rural sector, where inefficiencies are presented that affect in a greater manner the health of the population and the sustainability of the resources of the forest.
Despite the fact that there is a great potential for energy generation in the country from renewable energy sources, like photovoltaic (PV) solar energy; given the wide coverage of electricity from hydroelectric sources of energy (the country's largest energy wealth), non- conventional energy sources can only play a marginal role. In this manner, the feasibility of installation of these energy sources is restricted only to certain specific areas or sectors of the country (rural areas where there is no electricity coverage or other peculiar cases).
However, from the analysis of the case studies presented in this document, it can be concluded that these projects of renewable energy can collaborate as "catalysts" and thus create synergies between the beneficiary communities and state institutions, providing resources and skills to the population and thus opening opportunities for sustainable human development in areas or sectors were previously it was not possible. The experiences and lessons learnt of the analyzed projects within the case studies´ section can be very valuable as antecedents for considering similar projects anywhere in the region.
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2 BASELINE OF ENERGY TECHNOLOGIES
2.1.Introduction
The purpose of this component is the identification and analysis of the factors that determine the development of the renewable energies that exist in the Republic of Paraguay. That is the reason why in this section, it is described and analyzed the actual situation and the conditions that influence in the adoption of new renewable technologies. In this document, an analysis of the status quo of the energy sector and the different elements and key actors of this sector will be presented. Alternatives for the development of the existing potential and its conditions will be observed. Finally, it will be identified renewable energy projects that already exist and it will be analyzed certain case studies that leave behind lessons learnt that need to be considered if new sustainable energy initiatives are undertaken.
2.2.Methodology
The basic methodology of this component is based on collecting and analyzing data and information regarding energy and related technologies. In order to accomplish with such information gathering, an investigation was first undertaken of the National Energy Balance (BEN-VMME) and several other recognized publications on the energy topic. Complementary, information was obtained from various public and private actors that work in the field of energy, especially in renewable energy. Among the institutions that provided data, it can be mentioned the following: Vice Ministry of Energy (VMME), National Administration of Electricity (ANDE), Paraguay Oil (PETROPAR), the Ministry of Industry and Commerce (MIC), and the Environmental Secretary (SEAM). All the information gathered describes in an orderly and systematic manner the energy situation in Paraguay and its makes emphasis on renewable energy sources. This analysis is finalized with the identification and a brief description of the renewable technologies that have greater competitiveness and possibilities of development. Besides, the installations and projects of renewable energies that deserve a more detailed description are described and analyzed.
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2.3.General energy information of each country
2.3.1. General information of the country
The Republic of Paraguay has a land area of 406,752 km2; a population estimated of 6,160,000 inhabitants, from which 43% are living in rural areas. The population is mostly young, almost 66% of the population are below 30 years old (Permanent Household Survey - EPH 2009). The indigenous peoples make up less than 2% of the total (87,100 people), and are distributed among 20 ethnic groups. (UNDP, 2008) The country is divided by the Paraguay River into two clearly distinct and unique regions. The Eastern region, inhabited by over 98% of the population holds 39% of the land area (159,827 km2), and the Western or Chaco region which has 61% of the area (246,925 km2) only has 2% of the total population. The country is divided politically into 17 departments, which are subdivided into 218 Districts. The Eastern region is divided into 14 Departments and the Chaco is divided into 3. In Paraguay there are two different types of climates: temperate rainy (Cfa) in the eastern part of the eastern region and tropical humid (Aw) found in the western region and northwestern part of the eastern region. The climate is defined by hot and humid springs and summers; mild and humid autumns and cold dry winters. Due to its mediterranean location, the climate in Paraguay is mostly continental. The average annual temperature is 23°C. The absence of mountain barriers allows for warm air masses from the equatorial region to reach the country, as well as cold air masses that come from the southern regions. Paraguay is still an underdeveloped country. In 2008, its Human Development Index was of 0.755. Despite the fact that the HDI has increased positively since 1975 (0.667), the country occupies one of the lowest positions in the HDI index list in South America. Poverty affects 35.6% of the total population (2.2 million) while 19.4% (1.2 million) are in extreme poverty, including indigenous people, who are the most impoverished and lacking social group in regards to public services. (UNDP, 2009) The Paraguayan economy is based on the primary sector (agriculture, livestock, forestry), which accounts for 22% of GDP, employs 37% of the economically active population and contributes 65% of exports. The export of electricity is the second largest source of foreign exchange earnings in the country, after soybeans and derivatives, reaching USD$ 672 million in 2009. (BCP, 2010) The electrification rate at the national level is very high, reaching a total of 96.7%. The National Interconnected System (NIS) of ANDE covers virtually all the national territory. There are also other private regional networks that are connected to the energy power network of ANDE.
Paraguay is a net exporter of electricity due to times lower than the available generation. T three generation plants: Acaray bi-national projects with Argentina and Brazil respectively (Table is currently the world's largest
2.3.2. Statistical analysis of the energy sector
In this section, an analysis of the is presented, which has been elaborated according to the information gathered National Energy Balance - Vice Min
The supply of primary energy
Graphic 1: Gross Domestic Supply of Primary Energy, 2009 (Based on
The fuels derived from biomass resources are the primary sources of energy within the supply matrix of primary energy. It is important to highlight that the production of biomass and hydropower is 100% national, thus there is no import of any kind.
Gross Domestic Supply of Primary Energy 2009
Petróleo
Carbón
mineral
Hidroenerg
ía
Leña
Case of Paraguay
Paraguay is a net exporter of electricity due to the fact that domestic consumption is several r than the available generation. This generation is hydroelectric, and
three generation plants: Acaray,a dam owned nationally and Yacyretá and Itaipu gentina and Brazil respectively (Table 1). Itaipú
is currently the world's largest damn that is currently generating electricity. (Table
Statistical analysis of the energy sector
n analysis of the country situation of the supply and the demand of energy , which has been elaborated according to the information gathered
Vice Ministry of Mines and Energy, 2009. (VMME, 2009)
of primary energy can be seen in the chart below.
Gross Domestic Supply of Primary Energy, 2009 (Based on BEN 2009)
The fuels derived from biomass resources (like wood and plant residues) and hydropower are the primary sources of energy within the supply matrix of primary energy. It is important to highlight that the production of biomass and hydropower is 100% national,
of any kind.
Total: 8222,5 kTEP
domestic consumption is several his generation is hydroelectric, and comes from
and Itaipu; which are (14,000 MW)
. (Table 2)
the supply and the demand of energy , which has been elaborated according to the information gathered from the
2009. (VMME, 2009)
and hydropower are the primary sources of energy within the supply matrix of primary energy. It is important to highlight that the production of biomass and hydropower is 100% national,
The supply of secondary energy can be seen in Graph
Graphic 2: Gross domestic supply of secondary energy
As can be seen in the graph from above that derive from the ¨centers of transformation¨. It is highlighted the supply of electric energy, plant residual, oil derivatives and cane alcohol (ethanol).
2.3.2.1.Energy consumption in the country
In the following graph, it can be observed the energy consumption matrix organized according to renewable and non
Liquid Gas
Carbón
Vegetal
Gas
licuado
energy can be seen in Graph 2.
supply of secondary energy 2009 (BEN 2009)
in the graph from above, it can be highlighted that there are several products that derive from the ¨centers of transformation¨. It is highlighted the supply of electric energy, plant residual, oil derivatives and cane alcohol (ethanol).
Energy consumption in the country
e following graph, it can be observed the energy consumption matrix organized according to renewable and non-renewable energies.
Charcoal
8%
Total: 2193 kTEP
it can be highlighted that there are several products that derive from the ¨centers of transformation¨. It is highlighted the supply of electric
e following graph, it can be observed the energy consumption matrix organized
Energies
1%
Graphic 3: Renewable and non renewable energy consumption (BEN 2009)
From this graph, it is noted that the energy by having a greater proportion of renewable energy sources than non renewable. In fact, 66% of the total energy comes from renewable energies; situation which differentiates this country from others.
2.3.2.2.Energy consumption according to purpose.
In the following graphs, it is shown the classification of the end-uses of energy
1. Thermal purposes: includes all types of fuel us or residential sector.
Charcoal
5%
Plant
Residues
14%
Total: 4037 kTEP
3: Renewable and non renewable energy consumption (BEN 2009)
From this graph, it is noted that the energy consumption matrix in Paraguay is characterized by having a greater proportion of renewable energy sources than non renewable. In fact, 66% of the total energy comes from renewable energies; situation which differentiates this
consumption according to purpose.
In the following graphs, it is shown the distribution of several energy sources uses of energy (based on BEN 2009):
includes all types of fuel used to generate heat, at the industrial
Liquid Gas
Total: 4037 kTEP
consumption matrix in Paraguay is characterized by having a greater proportion of renewable energy sources than non renewable. In fact, 66% of the total energy comes from renewable energies; situation which differentiates this
according to a
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Graphic 4: Renewable and non renewable thermal energy consumption 2009 (Based on BEN 2009)
From Graph 4, it can be mentioned that almost 93% of energy consumption for heating is from renewable energy sources. The graphic does not include electric energy as a source to generate heat considering that there is no information available that can give detail of the amount consumed of this energy source. However, according to the Permanent Households Survey 2008 (Encuesta Permanente de Hogares 2008), the participation of energy sources for cooking in homes is detailed in the following table (DGEEC, 2008). Electrical energy for thermal purposes is not included as there is no information that directly measures this consumption.
Wood
60%
Charcoal
9%
Plant
Residues
26%
Alcohol
Total: 2163 kTEP
Table 1: Use of
From the table above, it can be concluded that the use of electricity (principally for cooking) is still not widespread in the coun for this purpose is probably also
2. Transportation: includes use of vehicles such as cars, trucks, mo includes the vehicles from the machinery specifically related to
Graphic 5: Renewable and non renewable transport energy consumption (BEN 2009)
Renewable & non renewable transport energy
consumption
Table 1: Use of fuel for cooking (DGEEC, 2009)
can be concluded that the use of electricity for heating purposes is still not widespread in the country and therefore consumption
also very marginal nowadays.
includes all forms of transport of goods and people is vehicles such as cars, trucks, motorcycles, trains, ships, etc. This
vehicles from the farming sector: tractors, harvesters and other machinery specifically related to agriculture or industry.
5: Renewable and non renewable transport energy consumption (BEN 2009)
Alcohol
LPG
1%
Gasoline
19%
consumption
for heating purposes and therefore consumption
is through the torcycles, trains, ships, etc. This also
farming sector: tractors, harvesters and other
Alcohol
4%
It is noted the participation of renewable energies in the portion, as can be seen from the graph above. This corresponds to only 4% of the transport sector energy consumption in Paraguay. Also, it can be highlighted the high external dependence on fossil fuels, which are predominant sector. These fuels are imported from several markets.
3. Motive power and lighting: are primarily fixed, such as electric motors
Graphic 6: Renewable and non renewable power & lighting energy consumption sector 2009 (
All the consumption from fixed motive power installations (electric motors) and lighting is It can be said that currently all consumption from (electric motors) and lighting is powered by electricity derived from hydro, leaving only a tiny percentage of thermal generation (diesel) in isolated communities or support systems and very special individual case
Renewable & non renewable power & lighting
energy consumption Total: 555 kTEP
Case of Paraguay
It is noted the participation of renewable energies in the transport sector in a separate portion, as can be seen from the graph above. This corresponds to only 4% of the transport sector energy consumption in Paraguay. Also, it can be highlighted the high external dependence on fossil fuels, which are predominant in the energy matrix of the transport sector. These fuels are imported from several markets.
Motive power and lighting: includes the energy used in power installations that such as electric motors, lighting systems, among others
6: Renewable and non renewable power & lighting energy consumption sector 2009 (Based at
All the consumption from fixed motive power installations (electric motors) and lighting is at currently all consumption from fixed strength motive power installations
(electric motors) and lighting is powered by electricity derived from hydro, leaving only a tiny percentage of thermal generation (diesel) in isolated communities or support systems and very special individual cases.
Electricity
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transport sector in a separate portion, as can be seen from the graph above. This corresponds to only 4% of the transport sector energy consumption in Paraguay. Also, it can be highlighted the high external
in the energy matrix of the transport
the energy used in power installations that , lighting systems, among others.
Based at BEN 2009)
All the consumption from fixed motive power installations (electric motors) and lighting is motive power installations
(electric motors) and lighting is powered by electricity derived from hydro, leaving only a tiny percentage of thermal generation (diesel) in isolated communities or support systems
Renewable & non renewable power & lighting
energy consumption Total: 555 kTEP
2.3.2.3.Energy consumption by sector
In the following graph it is shown the distribution of energy consumption by sector on BEN 2009).
Graphic 7: Residential & commercial energy consumption 2009 (BEN 2009)
In Graph 7 it can be observed that biomass (wood and charcoal) and electricity (hydroelectricity) are the two main energy sources within the residential and commercial energy consumption matrix. Among the non although liquefied petroleum (LPG) only constitutes 5% of the overall consumption of within these sectors, this energy source is of great importance, strata and urban areas1, where for reasons of practicality (ease of use, little nee absence of smoke and ash) it is a difficult fuel to replace
1 50% of Paraguayan households use LPG for cooking, acco
Residential & commercial energy consumption
Case of Paraguay
onsumption by sector
In the following graph it is shown the distribution of energy consumption by sector
7: Residential & commercial energy consumption 2009 (BEN 2009)
In Graph 7 it can be observed that biomass (wood and charcoal) and electricity (hydroelectricity) are the two main energy sources within the residential and commercial energy consumption matrix. Among the non-renewable energy sources, it its noted that
hough liquefied petroleum (LPG) only constitutes 5% of the overall consumption of within these sectors, this energy source is of great importance, especially in high
where for reasons of practicality (ease of use, little nee absence of smoke and ash) it is a difficult fuel to replace nowadays.
50% of Paraguayan households use LPG for cooking, according to PHS 2009
Wood
62%
Carbon
In the following graph it is shown the distribution of energy consumption by sector (based
In Graph 7 it can be observed that biomass (wood and charcoal) and electricity (hydroelectricity) are the two main energy sources within the residential and commercial
renewable energy sources, it its noted that hough liquefied petroleum (LPG) only constitutes 5% of the overall consumption of
especially in high-income where for reasons of practicality (ease of use, little need of space,
Graphic 8: Transport energy consumption 2009 (BEN 2009)
It can be observed that the relationship inverse of the case of the residential and commercial sector. gasoline as the main components.
Graphic 9: Industrial energy consumption 2009 (BEN 2009)
Kerosene/jet fuel
8: Transport energy consumption 2009 (BEN 2009)
It can be observed that the relationship between renewable & non renewable is almost the inverse of the case of the residential and commercial sector. It highlights diesel and gasoline as the main components.
9: Industrial energy consumption 2009 (BEN 2009)
Liquid Gas
non renewable is almost the It highlights diesel and
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From Graphic 9, it can be mentioned that approximately 97% of the matrix consists of renewable energy sources, which are all of domestic origin. However, it can be mentioned that nowadays fuel oil is a vital non-renewable energy source for the cement industry in the country, the INC (National Cement Industry).
2.3.2.4. Electric balance.
In this section, it will be analyzed the electric energy sector, for which data was taken from the Electrical Balance of 2009 (BEN 2009). (Annex 3) Electricity generation by source
Graphic 10: Electricity generation by source (Based at BEN 2009)
It can be seen in the chart above that virtually all the electricity generated in the country is of hydroelectric origin, coming more than 99% of this electricity from the large multinational hydroelectric dams, Itaipú and Yacyretá and the rest from the national hydroelectric dam, Acaray. A minimal portion is generated by thermal diesel generators (less than 1 part per million).
Itaipú
84%
Yacyretá
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Exports of electric energy.
Graphic 11: Electricity exports (BEN 2009)
About 82% of the electricity generated is exported to the Brazilian and Argentinean markets. All the electricity generated that is not consumed within the country is exported. Electricity consumption by sector
Graphic 12: Electricity consumption by sector (Based at BEN 2009)
45122,6
6283,4
38390,3
0,0
5000,0
10000,0
15000,0
20000,0
25000,0
30000,0
35000,0
40000,0
45000,0
50000,0
Residential
42%
Commercial
19%
Industrial
23%
General
8%
Governmental
6%
23
From the graph from above, it can be mentioned that the highest percentage of electricity consumption in the country is in the residential sector (42%). In the industrial sector the percentage is relatively low (23%), thus demonstrating that there is a low level of industrialization within the country. In Table 1 it can also be seen that the electricity supply to the population on a national level is greater than 97%. This situation is a demonstration of the efficient use of one of the greatest wealths´ of the country, derived from large hydroelectric dams, Itaipú, Yacyretá and Acaray. However, it becomes difficult to cover the electricity supply in certain isolated regions in the country due to technological and economic reasons, where it is being studied the installation and in some cases being implemented other renewable energy alternatives for electricity generation. (See interview with Vice Minister of Mines and Energy)
2.3.2.5.Greenhouse gases emissions (GHG) and Clean Development Mechanism (CDM).
Paraguay presents a considerable delay in the identification and quantification of greenhouse gas emissions (GHG). Official data is outdated and it only includes the carbon dioxide (CO2) emissions from the transport sector. In addition, there are doubts about the methodologies used in such time of the investigation. The estimated number is 2.777 tones equivalent of CO2 for the year 2000 (Sacco, 2010). The necessary methodologies and procedures to undertake a new quantification of the green house gas emissions (GEI) in the energy sector are still not developed. (Sacco, 2010). CDM Projects: Advances of potential beneficiary projects in Paraguay linked with emissions trading are progressing relatively slow. Recently, in the year 2004, with the establishment of the national Office of CDM projects, Paraguay has taken its first steps to being a country to host projects. The “Secretaría del Ambiente” (SEAM) has been appointed as designated national authority (AND). Despite the several initiatives and the effort implemented to develop such projects in Paraguay, this type of projects have not had a positive outcome yet due to the lack of human capacity and experience in the subject matter (ONMDL, 2009).
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Few projects have been submitted under the CDM framework in Paraguay, and there are only 4 projects, each at different stages: validation, applying for inscription and registration in the "pipeline" (UNEP 2010). The only approved and executed project within the framework of CDM project is a reforestation with eucalyptus and pine in 215 hectares of land, which was occupied by crops and grasslands (degraded lands). The owners are poor producers from the districts of Acahay and San Roque González de Santa Cruz, Department of Paraguarí. (Caballero, 2010) This project is developed by the Japan Agency of Green Resources (J-Green), and the goal is to reduce 365 thousand tons of carbon dioxide (CO2) in a total of 20 years of accreditation. This initiative was validated by the International Research Center for Agricultural Development of Japan (JIRCAS) and accredited by Tüv Süd Industrie Service GmbH, Carbon Management Service from Munich, Germany with its pair of Japan the 8 of June of last year. (Caballero,2010) The only project directly linked to the use of energy of biofuels in Paraguay which is found in the "pipeline" is the "Production of vegetable oils for use in vehicles". This project obtained a favorable opinion of the independent certification, so that it has realistic prospects to be finally approved (UNFCCC, 2010).
2.3.3. Generalities regarding energy technologies in the country
From the analysis undertaken, the following can be concluded:
1. There is relatively little diversity of energy technologies developed in the country; those existing can be summarized into 3 main categories:
a. Biomass, which satisfies most of the thermal energy demand (firewood, charcoal and crop residues) from the industries and the domestic sector and a small portion of the transport sector (biofuels); b. Liquid and gaseous fuels (oil derivatives) meet the demand of the transport sector and agricultural production, and liquefied petroleum gas (LPG) satisfies the demand for thermal energy (cooking gas in urban areas) and transportation (LPG for automotive activities). c. Electricity: comes from hydroelectric sources, and satisfies over 99% of current consumption in the country and most of which is exported to neighboring countries.
25
2. It should be noted that there is an absence or obsolescence of other technologies in the country, like natural gas for thermal and electric purposes, and other technologies such as nuclear power generation, mini-hydro and wind. Additionally, the presence of photovoltaic and biogas technology is very incipient and therefore these energy sources do not appear yet in the national energy balances.
3. With the exception of liquid and gaseous fuels derived from petroleum, the energy technologies identified in the country are mostly from renewable sources.
In the following section, it will be described and analyzed each of the above mentioned categories; their role and the prospects of renewable energies.
2.3.3.1. Biomass
Summary of the market situation of firewood and charcoal Situational Analysis ¨Even though the country uses huge amounts of biomass as fuel for the industrial and residential sectors (50% of the total of households use wood or
charcoal to meet their basic needs and nearly 70% of industrial energy consumption comes from wood or plant residues), the economic importance of biomass as an energy source is a subject that is very little-known in the country Firewood is an important source of energy in Paraguay, however, its market is characterized by being not organized due to the inherent characteristics of wood consumption. Much of the forest resource is obtained through direct consumption of the consumer. Therefore, the consumption of firewood or charcoal is identified as an informal sector of the economy.¨ (FAO, 2002).
According to the aforementioned, one can conclude that despite the use of firewood or charcoal is highly used in the country, both in the residential and industrial sectors, these resources are still part of a
Illustration 1: Transport of firewood to industry (E.
Bohn)
industry. (E. Bohn)
very informal market. This is why it is very difficult to quantify the consumption of these resources and hence also the amount of the remaining forests. However, it can be concluded that there should be a method of consumption of these resources that is environmentally and economically sustainable.
Forest resource situation
Paraguay has 406,750 km ² and vast areas that were covered by forests. The country is divided by the Paraguay River into two clearly defined regions: The Eastern Region of the country, which borders Brazil in the north and east counts with approximately 40% of the surface, and its where most of the population lives. The Western Region, which in the past was called the "Green Hell" due to its large green areas and the vast amount of forests. Nowadays, there is not as much of forest areas as before, there is between 185,000 km ² and 74,300 km². (INFONA, 2009)
As there is no clear definition of forest, the numbers are difficult to verify. However, it is certain that the levels of deforestation are increasing and the majority of forests are heavily exploited due to a lack of a sustainable management of the forests in Paraguay. The
remaining forests are in constant danger of being transformed into land for agricultural purposes and grazing (Mautner Markhof Keg Consulting, 2008). A substantial part of the firewood production comes from forest logging. The wood is a very important energy source for private residences as well as for industry. 45% is used for self consumption and is not commercialized on the market. The rest is equally split between industrial and small
consumers, including residences in rural areas, small shops and businesses.
Therefore, there are signs of shortages in certain regions, especially in the eastern and central regions of the country. Besides the forest logging for non-forestry purposes, wood fuel is also produced by small producers and sold to intermediaries/ traders. These small producers are not organized and do not have access to tools that can improve their living conditions, for example access to market information systems, loans (and investments to add value to their products and
Illustration 3: Coal furnace in operation and truck
carrier. (E. Bohn)
Illustration 4: Coal ovens in the Paraguayan Chaco (E. Bohn)
27
services), knowledge and experience in terms of reforestation and forest management, among others (Mautner Markhof Keg Consulting, 2008). In addition to tools, which should be developed for the small producers, other efforts also need to be undertaken to improve the business environment of the firewood markets. This entails to develop norms and standards for biomass-derived fuels, considering that these do not exist yet (Mautner Markhof Keg Consulting, 2008). The future energy policy should re-introduce incentive schemes for reforestation and plantations for energy purposes. Some support measures already exist due to the creation and approval of certain laws, but in practice these are not executed due to a lack of financial means (or political will). The forestry sector requires medium and long term plans, which can lead to successful outcomes, like in Uruguay and Chile. The market for firewood needs security of supply of raw materials, more transparent market activities and better environmental performance (Mautner Markhof Keg Consulting, 2008).
Role of renewable technologies in biomass sector.
a) Improved efficiency in use of biomass as fuel.
The most feasible application of renewable energy technologies in the field of thermal energy in Paraguay
should be aimed mainly at improving energy efficiency and
sustainable management of forest resources. The use of firewood and charcoal as fuel for thermal energy (industrial and residential use) can significantly improve in efficiency, especially in the rural residential area. Since the consumption of firewood mostly coincides with rural families, who typically have low-income and who mostly also extract firewood for cooking and heating from their surroundings without any apparent cost, it is difficult to incentivize this sector of the population to use other energy sources such as electricity or LPG. Therefore it is not to be expected
that this will change, especially in rural areas.
Illustration 5: Cooking on an "open fire"
(La Patria records)
(Agroenergías 2009)
Hence, one of the public strategies in thermal energy must aim to convert this exploitation of wood into a sustainable method (forestation and reforestation), through the development
and implementation of technologies that are appropriate to the existing socio-economic conditions and which seek to improve the efficiency of biomass (STP, 1986). The highest consumption of wood per capita occurs among the poorest social strata, who usually burn firewood on an "open fire", where the useful energy for cooking varies between 5 and 10% of the energy value of the wood used (STP, 1986). Traditionally, no importance is given to the inefficient consumption of forests due to the perception in
rural areas that this fuel has no cost (wood consumption). Successful experiences in other countries demonstrate an increased efficiency of 2 and up to 5 times. (ERTC, 2006) These numbers imply a reduction in fuel consumption, thus reducing the use of the forest resource by 20% and up to 50% (in a baseline scenario). To move towards these environmentally beneficial methods and practices would entail a significant relief to the current deforestation situation. Besides, a policy of reforestation and sound forest management would lead the country towards a sustainable use of this energy resource.
b) Promoting the use of plant residues
Another method for improving and thus accomplishing a sustainable practice in the use of forests (wood) is to incentivize and stimulate a greater use of plant residues within the industrial sector. An example of such plant residue is the rice and coconut husks and the sawdust briquettes. In the first two cases, their use does not involve logging. It may be noted in particular the potential of the palm Acrocomia totai (coconut or mbokayá). Previous studies (Bohn, 2008) mention that there is a generation of industrial solid residues of 7 and up to 10 tons per hectare/per year (coconut husks and kernels) in crops of mbokayá palm. It is mentioned that the production of one hectare of this crop produces the same amount of solid biomass as three hectares of degraded native forest (Loup, 2005)
Illustration 7: mbokayá palm fruit bunches
This palm is native of the country and has been oils for industrial use (pulp and kernel oils, cosmetics, soap Nevertheless, these industries exploit low controlled and rational crops for For the multiple use of industrial byproducts, the mbokayá would be an excelle material for biorefineries, considering that of derivatives ca be obtained from in order to satisfy different markets such as food, energy and others (Agroenergías, 2009). In the energy sector, solid biomass biofuels and even biogas derived from husks country’s kernel and husk is absorbed by other indus
Diagram 1: Concept of “Bio-refinery” with "Mbokayá" palm (E. Bohn)
2 Between 17 and 25 TEP/year, equivalent to about 55,000 tons of husk and kernel of industrialized mbokayá.
Case of Paraguay
the country and has been traditionally exploited for the extraction of oils for industrial use (pulp and kernel oils, cosmetics, soaps) for over 70 years.
these industries exploit low-yielding wild palms without having developed for industrial purposes (Loup 2005).
of industrial byproducts, the mbokayá would be an excelle aterial for biorefineries, considering that like crude oil, from this material a derivatives ca be obtained from in order to satisfy different markets such as
food, energy and others (Agroenergías, 2009).
solid biomass can be used for thermal energy generation, els and even biogas derived from husks. Nowadays, virtually all the production of the
is absorbed by other industries to replace wood and other
refinery” with "Mbokayá" palm (E. Bohn)
Between 17 and 25 TEP/year, equivalent to about 55,000 tons of husk and kernel of industrialized mbokayá.
29
exploited for the extraction of for over 70 years.
without having developed
of industrial byproducts, the mbokayá would be an excellent raw from this material a wide variety
derivatives ca be obtained from in order to satisfy different markets such as chemical oil,
generation, oils for production of the
tries to replace wood and other fuels2.²
Between 17 and 25 TEP/year, equivalent to about 55,000 tons of husk and kernel of industrialized mbokayá.
30
The cultivation of this palm is very well suited to natural conditions and to simple technologies that are necessary by small farmers, who constitute the majority of agricultural farmers in the country (Bohn, 2008). The development of new crops of mbokayá would have minimal adverse environmental impact, considering that their cultivation is viable in open areas and because it is possible to cultivate mbokayá with other crops (multi- cultivation). Furthermore, the use of "mbokayá" at the farm level is an ancient national tradition.
The fibers from yarn leaves are used to make threats, baskets, hats, winter fodder, "in natura" consumption of the ripe fruits (sweet), consumption of raw or cooked almonds, consumption of fruits by pets etc.; in this manner contributing directly or indirectly to the food security of the farmers and thus to their respective economy (Loup 2005; Agroenergías 2009) The development of this chain of production with an emphasis on social inclusion and social rural development, with a focus on the enhancement of energy subproducts as its main objective, can be a major step towards the sustainable use of biomass, while potentially leading to a significant economic impact on the country (Bohn, 2008)
2.3.3.2.Liquid fuels.
Situational Analysis:
a) Scheme of commercialization, distribution and sale volumes in the country.
The current scheme of commercialization and distribution of liquid fuels in the domestic market is structured by well-defined players, to whom the laws recognize as active stakeholders and thus regulate its participation in the market, as can be observed in the following diagram. (MIC, 2009)
Illustration 9: Steam boiler fed with mbokayá husks (E.
Bohn)
The fuel market in Paraguay, according to the current law, is market is held by private companies, fuel -diesel or gasoil.3 The market has suffered policy prices and the subsidies implemented successively by the government. In this manner, there has been a great economic impact, considering that the consumption of represents 74% of the total consumption of fossil fuels (Bohn, 2008). As can be seen in Table 2, t therefore Paraguay is a market in which more than 74% of the vehicle fleet runs on gasoil. This situation has originated first, due to the maintenance of at very low levels with respect to taxes on gasoline; agricultural and service sectors. has caused diesel to have economic advantages in relation to other types of gasoline which are commercialized to the public among retail traders (Bohn, 2008). Private distributors (called "Emblems") situation of trade policy previously mentioned, they almost exclusively buy all
3 PETROPAR is the greater importer of diesel and petroleum in the country.
Diagram 2: Commercialization & distribution of fuels in
Case of Paraguay
The fuel market in Paraguay, according to the current law, is a free market. While the retail rivate companies, the government only sets the price of
The market has suffered major distortion of prices, considering the policy prices and the subsidies implemented successively by the government. In this manner, there has been a great economic impact, considering that the consumption of
the total consumption of fossil fuels (Bohn, 2008).
seen in Table 2, the percentage of gasoline in the market is about 25% and therefore Paraguay is a market in which more than 74% of the vehicle fleet runs on gasoil.
has originated first, due to the maintenance of the ISC (Excise Tax) on at very low levels with respect to taxes on gasoline; policy aimed at agricultural and service sectors. Second, the maintenance of prices below the regular costs
diesel to have economic advantages in relation to other types of gasoline which are commercialized to the public at international market levels and with free co among retail traders (Bohn, 2008).
Private distributors (called "Emblems") are free to import all products; but previously mentioned, they almost exclusively buy all
PETROPAR is the greater importer of diesel and petroleum in the country.
Diagram 2: Commercialization & distribution of fuels in
Paraguay (MIC 2008)
. While the retail the most used
of prices, considering the policy prices and the subsidies implemented successively by the government. In this manner, there has been a great economic impact, considering that the consumption of gasoil
line in the market is about 25% and therefore Paraguay is a market in which more than 74% of the vehicle fleet runs on gasoil.
the ISC (Excise Tax) on gasoil assisting the
below the regular costs diesel to have economic advantages in relation to other types of gasoline which
free competition
but, due to the previously mentioned, they almost exclusively buy all diesel from
32
PETROPAR and distribute to petrol stations. It is worth mentioning that since 2004 the commercialization of leaded gasoline has been removed from the market and the consumption of the so-called green gasoline is being promoted. This green gasoline contains alcohol from sugar cane in volumes ranging up to 24%, depending on the availability of alcohol, according to the cycles of the cane harvest. (Bohn, 2009)
STRUCTURE OF SALES OF
Type of fuel
Diesel 1,049,667,720 73.8
Pure Alcohol ** 73,000,000
Source: Own calculations based on data from the Directorate General of MIC's Fuels. 2008
* Liters of absolute alcohol used are already incorporated in the gasoline total . ** Pure Alcohol consumption is an estimate from the MIC on the basis of established mixes.
Table 2: Structure of sales of motor fuels 2008. (MIC 2008)
b) Important factors to consider
In Paraguay, there is little use of renewable energies (represented by bioethanol and biodiesel) in this sector. Besides, there is a high dependence on imported petroleum fuels considering that Paraguay lacks a hydrocarbon production sector and the only refinery is currently inactive. These factors have been of great consideration at the national level due to the effects that this entails in terms of energy security and sovereignty and due to the macroeconomic impacts on the country's balance of payments (Bohn, 2009).
The role of renewable technologies in the fuel sector:
The implementation of renewable energies in this sector aims at biofuels, bioethanol for the motor vehicle (Otto cycle) market, and the biodiesel market for diesel cycle engines. This strategy seeks to exploit the high potential of the country in terms of biomass production (energy crops: oleaginous & sucrose plants) and the competitive advantages that the country has in the factors of production.
33
In both cases, and like the experience in other countries, the strategy of making biofuel blends in fossil fuels has been chosen, with disparate developments in terms of production targets and use (Bohn, 2009)
a) Adopted goals of substitution.
According to Resolution Nº 235/07 of the MIC, the biodiesel blend was fixed at a minimum rate of 1% (B1) until December 31, 2007, 3% (B3) in 2008 and 5% (B5) in 2009. The MIC Resolution 235/07 establishes the mixture of gasoline and pure alcohol at a minimum of 18% and a maximum of 24% for gasoline of 95 octanes or less. Based on the final consumption of diesel (gasoil) and gasoline, the production targets are the following: PROPOSED GOALS FOR BIOFUELS MIXTURES
(In cubic meters)
Biodiesel (m3) 9,900 29,800 49,813 - -
Ethanol (m3) - - - 40,400 53,800
Table 3: Proposed goals for biofuel blends 4 (Bohn, 2009)
It is important to mention that although the goals are established, the mixtures are only realized in case there is an effective and competitive production of biofuels. In others words, the mixture is only mandatory if these are available and at the prices set by PETROPAR; in case the costs of biofuels are higher than these, there is no obligation to purchase on the part of PETROPAR. The latter means that in practice the production of biofuels is only competitive in Paraguay in the case their prices are lower than the prices of imported PETROPAR fossil fuels, so unlike many other countries, there is no policy or legislation to subsidize the development of the sector.5
4 4Bohn, 2009. "Balanced Scorecard for the promotion of Biofuels in Paraguay"
5 Art. 14, subsection a) y b) Decree N° 7.412/06, by which it is regulated Law N° 2.748/05, “De fomento de
los biocombustibles”.
b) Description of the biofuels sector The biofuel plants can be classified into ethanol and biodiesel plants, with the exception of only one distillery.6 Moreover, all domestic plants are privately owned and the majority of these have a sugar factory; in this way, being able to choose between the greatest or lower production of ethanol according to the decisions based on the economical situation of these products in the market. It is important to mention that the biodiesel power plants, with the exception of the PETROPAR pilot plant, are all privately owned. (Bohn, 2009). Tables with detailed information of several biofuel projects are presented in Annex 2.
c) Actual output and production capacity
The production capacity and the actual production are shown below:
Companies
SAN LUIS SACI 20,000,000 17,000,000 85.0
ALPASA 15,000,000 6,000,000 40.0
ALCOTEC 10,000,000 4,000,000 40.0
PHOENIX 10,000,000 2,000,000 20.0
ALMISA 5,000,000 1,000,000 20.0
TOTAL 236,000,000 113,000,000 50.0
Source: Own database MIC, 2008
Table 4: Capacities & production of ethanol in Paraguay (Friedman A et atl,2009)
6 Mauricio José Troche Distillery, Petropar.
35
Table 5: Production capacities of biodiesel plants in Paraguay (Friedman A et al, 2009)
In general, the technical and economic conditions in recent years have favored the production of ethanol, mostly from sugar cane, resulting in an almost continuous distillation. However, in the case of biodiesel plants this is not the same. Most of the plants are currently inactive or are working below their capacity. The main problem is due to the lack of an abundant raw material at low cost, since the raw material used today – cattle fat - has had very large fluctuations in prices and depends largely on what happens to the beef market (Bohn, 2009) The lack of abundant raw material at low cost has led the industry to search for alternatives, mentioning in particular bovine fat (already in use), turnip forage and especially the mbokayá palm (Acrocomia totai) as promising alternatives (Friedmann, USAID, 2009). However, the low current availability of these raw materials- the result of a long cycle of perennial crops - makes it unfeasible to use them on a scale necessary to fulfill the goals of substitution. Besides, the high fluctuation of prices of the bovine fat, which is affected by the beef market, causes the producers to be unable to count with this raw material all throughout the year (Bohn, 2009).
Companies producing biodiesel Capacity (Liters/year)
Frigorífico Guaraní S.A. 12,000,000
Frigorífico Concepción S.A. 9,000,000
Bio Paraguay S.A. 1,200,000
Cooperativa Cosecha Feliz 3,600,000
Agro GF S.A. 1,800,000
36
d) Diagnosis of the sector and its perspectives
Although there is the possibility for both competitive development of biodiesel and ethanol, the latter has substantial technical and economic advantages that result from the use of the chain of sugar cane cultivation. However, this crop, which has already been developed for several decades - mixtures of 24% in all gasoline under 95 octane - seems to have peaked, leaving only as an alternative to export in order to see this sector grow. The consumption of fossil fuels tax policy also collaborates with the economic viability of ethanol, and is greater in the case of gasoline (Bohn, 2008). The development of biodiesel in a competitive manner depends on the implementation of new alternative crops which are more efficient from the energy and economic point of view. This in turn depends on the development of successful public-private policies to reach these goals. The most viable crops are perennial crops that take several years to yield results (mainly palm and possibly mbokayá forage turnips). However, these crops need a comprehensive and continuous research and development to ensure its viability on the long- term, considering that in this area the undertaken initiatives seem to be dispersed, some systematized, isolated or just beginning (Bohn, 2008). Although the road to sustainable competitiveness of biodiesel is longer, the strategic importance of it to sustain the agricultural activities (the basis of the Paraguayan economy) in the future (diesel fuel) fully justifies a venture on this path; even more, considering that the domestic demand alone would generate a large socio-economic impact on the more humble rural population (Bohn, 2008).
2.3.3.3.Electric Energy
a) Situational description (Pulfer, 2005)
The "National Electricity Administration” (ANDE) is in charge of administering the electric sector. This entity was created in 1949 by the Decree No. 3161 of the Executive Branch, was organized by Decree Law No. 2340 of 1950, was approved by Law No. 274, 1955 and currently it is regulated by the Law No. 966 of 1964. This Act was amended and supplemented by Law No. 976 of 1982 and No. 2199 of 2003, respectively. ANDE is an autonomous and decentralized public administration body with legal persona and its own equity capital, charged with the responsibility of meeting the electricity needs of the entire country. This body is controlled directly by the Executive Branch through the MOPC. As noted above, Paraguay is a net exporter of electricity. This energy source is generated by the Acaray hydro power plant (210MW) and the bi-national projects of Itaipú with
37
Brazil (7,000 MW) and Yacyretá with Argentina (1,200 MW). Electricity is transported and distributed by the National Interconnected System (NIS). On the other hand, within the NIS, it is estimated that the country has more than 18,000 km of lines that were built in the 90s (under the self-help program), and whose general condition is poor and therefore has a high level of risk and losses (technical and non technical) (Pulfer, 2005).
38
Illustration 10: Electricity map of Paraguay. (ANDE 2008)
39
b) Tariffs and electricity prices in Paraguay
In relation to electricity tariffs, it is the President of ANDE that has the power of approval (Article 16 of Law 2199/03). According to Article 85 of the Act: "The rates will be determined so that the revenue from their application permits ANDE to cover all costs and obtain a reasonable return on the investments affected by the activities related to the supply of electricity. This has the objective of ensuring the availability of the company resources to the attention of their debts and the normal expansion of its services." According to Article 91 of Law 966/64,"different rates will be set for different consumer groups, such as residential or domestic, commercial, industrial and rural."
The statement of ANDE tariffs consists of a large number of different rates that distinguish between tension types (low, medium, high and very high voltage), consumer type (social, residential, commercial, industrial, general, government, public lighting) and the declared power and the amount of energy consumed, respectively.
Some reference rates can be observed in the following table7:
Category name
Consumption strips (kWh/month) Gs/kWh
In peak hours (Gs/kWh)
Off-peak hours (Gs/kWh) Observations
1 USD $ = 350 Gs.
more than 500 389,57
51-500 252,87
more than 50 358,7
7 Extracted partially from the Tariff Statement No. 20, April 2009.
40
Medium voltage
(2300 V)*
General 237,3 -Online delivery, the pricing formula also contemplates de contracted capacity and excess demand.
Table 6: Reference tariffs of ANDE (Source: partially extracted from Tariff Sheet from Ande)
By analyzing Table 14, it can be deducted that the public service tariffs of electricity from Paraguay vary from USD $ 1.8 up to 8.9 cents per kWh.
c) Coverage of electricity in the country.
Despite the fact that Paraguay is an underdeveloped country, it has a high coverage of electricity supply, which is distributed by the National Interconnection System (NIS). NIS is managed by the "National Electricity Administration (ANDE). According to data of ANDE, 96.8% of the population has electric energy which is distributed by SIN (ANDE, 2008). This data is consistent with the Permanent Household Survey (PHS 2008) which mentions that there is coverage of 96.7%. The coverage in urban areas is of 99% and in rural areas is of 93.3%, according to the same source (PHS 2008). The NIS provides electricity to the majority of the country (urban areas and several rural areas), with the exception of most of the Western region (Chaco) and some peripheral areas of the eastern region, which in both cases is mainly due to the low population density. According to a study of the Inter-American Development Bank (IBD) (Pol Arranz-Piera et al, 2008), it is on a regional scale that the greatest differences are presented. The eastern region of Paraguay is the most densely populated area and has the best rates of electricity supply. In the Western region (Chaco, home to 10% of the population), it is estimated that only half of the population are still without access to this service. Therefore, there are considerable differences between different regions of the country in the levels of coverage of rural electrification. First, one may notice a huge difference between the East and the Chaco region. The first has a rate of non-electrified rural households of 21.6% with a total quantity of 94,548 households and the latter a rate of 54.2% with a total of 9,260 houses. In the eastern region, the Departments that have a lower level of electricity have coverage below 75% of the rural households; these are in descending order according to the level of electrification: Amambay, Canindeyú, Ñeembucú, Concepcion and Caazapá. These departments have a population density of less than 15 inhabitants per km2 and are in geographically peripheral regions. The 5 above-
41
mentioned departments account for 40% of the non-electrified households in the entire eastern region, but represent only 19% of the rural population. (Pulfer 2005). In the Chaco region, there are also important differences between the different departments with regards to the levels of rural electrification coverage. In the Presidente Hayes Department, which is the closest to the capital Asunción and has the highest population density, a total of 48.6% of rural households do not have electricity, whereas in the 2 Departments of the northern Chaco, Boqueron and Alto Paraguay, the values are 62.9% and 71.4% respectively. The average population density of the entire western region is only 0,55 inhabitants/km2, varying between 0.16 and 1.1 inhabitants per km2 depending on the Department, which explains the low levels of rural electrification coverage. (Pulfer, 2005) In conclusion, it is estimated that roughly 48,300 homes are still without power in the country (IDB 2008), of which the vast majority are located in rural areas outside the scope of the NIS.
d) Future prospects of the sector
Electrical sector strategies are currently focused on:
1. The expansion of the power delivered to the national market by ANDE has been through the launch of a new 500KVA transmission line from Itaipú. This expansion has been done due to the fact that the capacity of the NIS has reached its limit during of high consumption periods, especially during the summer. Currently, (July 2010) the country is negotiating the financing of the technical project.
2. Have full national coverage: for this, the inclusion of other energy technologies has been considered, which are currently operating outside of the NIS and are generation projects in rural areas that some are associated and other not to small networks (autonomous rural electrification). Plans are being considered to implement, if possible, generation from renewable sources in such cases. (Interview with Deputy Minister of Mines and Energy)
Antecedents of autonomous rural electrification in Paraguay:
In Paraguay there are very few initiatives of autonomous rural electrification with renewable energy. So far, ANDE has undertaken virtually all the country's electrification, including rural areas through the expansion of the NIS. The main exceptions are the electrification by ANDE of two isolated communities in the Chaco, Bahia Negra and Nueva Mestre, which have autonomous electrification systems, with distribution by micro-network and generation by groups with gasoil engines (diesel) (Pulfer, 2005).
42
Decentralized rural electrification in areas without ANDE service (especially in the Chaco region, where coverage is relatively low) has been driven mainly by private initiatives. In most cases these are ranches that have diesel generators, which have been installed by their owners, without any government support. Some of them install photovoltaic generators as a complementary energy source (Pulfer, 2005). The few renewable energy rural electrification initiatives in peasant and indigenous communities were mostly undertaken in the Chaco. These projects have mostly been funded by donations from international institutions. (Pulfer, 2005).
The role of renewable energy in this sector:
It can be mentioned that nowadays, the generation of electricity in Paraguay uses 100% renewable (hydroelectric) sources and is done at a comparatively lower cost. It is for this reason that the possibility of implementing other alternatives of electricity generation is very low, especially in areas where there is no access to the NIS. (Pulfer, 2005). The IDB study (Pol Arranz-Piera at al, 2008) analyzed the possibilities of generating renewable technologies and concluded that the most viable potential resources in the country are photovoltaic and biomass gasification, which can be conceived as combinations among themselves or with diesel generators. The comparison of costs of generating electricity with renewable energy sources and non-conventional energy sources can be seen in the following table:
8 Fuel and LPG: APESA 2010, electricity tariff: ANDE sheets, wood, bulk, number of sources, coal, bulk, several sources
Exchange rate: 4750 Gs / US $ 9 Only in the case of electricity, this price represents the actual cost of electricity; in all other cases it only represents the
equivalent price of fuel precursor.
Fuel or vector Unit of
measurement
Table 7: Equivalence of energy prices in kWh of various fuels in Paraguay (E. Bohn)
Option 1 Option 2 Option 3 Option 4
Unit Gasifier +
FV + Diesel
Fraction of
% 100 100 76 0
Table 8: Estimated costs of energy generation with renewable energy sources in Paraguay (Source:
excerpted and adapted from the IBD study (Pol Arranz-Piera at al. 2008).
From the comparison of prices and generation cost, it can be deduced that the estimated costs of generation alone (with the technologies mentioned) are about 8 to 12 times higher than the market prices charged by ANDE currently.
Premium
Electricity tariff
Charcoal Kg 0.13 8.02 1.6
For this reason, these technologies can only be viable access to the NIS and therefore manner, photovoltaic power generation, wind, biomass gasification, biogas, etc., fulfill a marginal role in the se in quantity but in quality, in the sense that these facilitate the isolated communities that today are marginalized from development.
2.4.Legal and institutional framework for
In this section, it is listed and indirectly related to renewable energy in the country. energy in Paraguay are shown
Diagram 3: Institutions linked to the Paraguayan energy sector (Own authorship)
Case of Paraguay
logies can only be viable in remote areas where and therefore autonomous rural electrification is the only option.
photovoltaic power generation, wind, biomass gasification, biogas, etc., fulfill a marginal role in the sector. However, the importance of these energy sources is not
but in quality, in the sense that these facilitate the provision of electricity to t today are marginalized from the modern elements of
Legal and institutional framework for renewable energy in the country
In this section, it is listed and briefly cited the laws and institutions that are indirectly related to renewable energy in the country. The institutions linked to the field of energy in Paraguay are shown below.
: Institutions linked to the Paraguayan energy sector (Own authorship)
44
in remote areas where there is no is the only option. In this
photovoltaic power generation, wind, biomass gasification, biogas, etc., can only energy sources is not
ovision of electricity to the modern elements of
renewable energy in the country
that are directly or nstitutions linked to the field of
45
2.4.1. Electric Sector
2.4.1.1.Institutional Framework
The Executive Branch of Government is responsible of the management and regulation of the energy sector through the Ministry of Public Works (MOPC) and through the Vice Ministry of Mines and Energy (VMME).
Ministry of Public Works and Communications (MOPC):
This entity is the central administrative organization, considering that it has the authority to elaborate the national energy policy through the Cabinet of the Vice Ministry of Mines and Energy, according to the Law 167/93. 10 As specified by this Law, this Cabinet has the responsibility to, according to Art. 25:
a) Establish policy and guidance regarding the use and management of mineral resources and energy;
b) Study the technical, economic, financial and legal steps needed to promote the industrial exploitation of the resources available in the country; and
c) Oversee the proper use of the resources corresponding to their functions."
Vice Ministry of Energy and Mines (VMME):
Within the Vice Ministry, the entity that is in charge of the energy is the Department of Energy. Its specific functions are the following, according to Art. 28:
a) Study, identify and propose alternative energy technologies, according to current and prospective needs of consumption in the country;
b) Consider all aspects of national and international energy development, whether conventional or unconventional, and;
c) Propose policies, regulations and applications that are of interest to the national development, and which guarantee the best use of all resources available. "
10 Denomination: “THAT APPROVES WITH MODIFICATIONS, THE DECREE-LAW No. 5 DATED 27 MARCH
1991 "THAT ESTABLISH THE ORGANIC STRUCTURE AND FUNCTIONS OF THE MINISTRY OF PUBLIC WORKS AND COMMUNICATIONS."
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National Electricity Administration (ANDE): The responsibility of the National Electricity Administration (ANDE) is to distribute electricity and also to produce it through the "Acaray" hydroelectric power plant. The most important laws that structure and regulate this institution are:
• Law No. 966/64, which created the National Electricity Administration (ANDE) as an autonomous body and sets its Charter.
• Law No. 976/82 through which Law No. 966/64 is extended, which establishes the National Electricity Administration (ANDE).
• Law No. 167/93 which outlines the structure and the functions of the Vice-Ministry of Mines and Energy.
Law No. 966/64 is the charter of the National Electricity Administration (ANDE), an autonomous body in Paraguay. In its Article 64, it is mentioned that the "ANDE will exclusively supply electricity and public lighting throughout the territory of the Republic." Article 66 refers to the mentioned exclusivity in the following terms: "With an affirmative vote of at least four members of the Governing Council, ANDE may delegate its exclusive rights to supply electricity and street lightening service to other companies, only to those towns and/or communities where ANDE does not provide its services. This delegation arrangements needs to be done by agreement, ad referendum of Congress." Article 96 establishes the obligation of the service: "ANDE is required to provide electricity to whomever requests it; however this is subjected to the capacity and characteristics of ANDE´s facilities to satisfy the demand, and to the fulfillment of the conditions outlined in the following Articles of this Chapter."
In Law No. 167/93, in Chapter VII, it is defined the structure and functions of the Vice Ministry of Mines and Energy (VMME) as Sub-secretary of the Ministry of Public Works and Communications (MOPC), and it also regulates the relationship of ANDE with the VMME.
2.4.1.2.Regulatory Framework
Among the regulatory provisions that may be relevant for decentralized power generation, it is worth mentioning the following:
• Law No. 422/73 states that the use and management of forests and woodlands of the country be of public interest. As a state agency in charge of the forestry sector it is created the National Forest Service (SNF), under the Ministry of Agriculture and Livestock. The law establishes the types of forests and the legal mechanisms for their use.
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• Law No. 976/82 establishes safety zones and service for the transmission lines and distribution of electricity.
• Law No. 2501/04 establishes new limits for the social tariff of electric energy for low-income users. It provides a discount of 75% for monthly consumptions up to 75 kWh and a 50% discount for consumptions up to 150 kWh / month.11
• The ANDE statement of tariffs No. 20 of 2005 establishes the rates for electricity, which is sold by ANDE, for different categories of users and energy.
• Law N ° 3009/06 of the Independent Production and Transportation of Power. This law is a supplement to Law N º 966/64. It has the objective to administrate the "activities of independent electricity power production, including cogeneration or self-generated electricity." (Art. 2). In Article 5, it is declared that "The independent electricity power production from the use of natural gas, wind, solar, biomass utilization, fuel cell, bio diesel or any other form of non-conventional energy, including mini hydroelectric power plants smaller than 2 MW, will require a license granted by the implementing authority. "
2.4.2. Biofuels Sector12
2.4.2.1. Institutional Framework.
The case of biofuels also covers the subject of agriculture; in this manner this energy sector is different from other energy fuels and vectors. Within this sector, the following institutions can be mentioned: Ministry of Industry and Commerce, the Ministry of Agriculture and Livestock and the Ministry of Public Works and Communications. Ministry of Agriculture and Livestock (MAG)
The participation of MAG is evident in regards to all matters relating to raw materials for bio-fuels. Its mission is to ensure the sustainable development of agriculture and forestry, in this manner contributing to improve the social and economic conditions of the population.
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Act No. 2501/2004 is currently being revised. It has the sanction of both houses of Congress, but has not yet been promulgated by the Executive. The new law will aim to further expand the limits of electricity consumption to benefit from social tariffs. Establish a 75% discount on the rate established by the ANDE for consumption of 100 kWh / month, 50% from 101 to 200 kWh / month and 25% from 201 to 300 kWh / month. 12
Partially extracted from Bohn E., 2009
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The institutional performance is based on the Agriculture and Rural Development Plan 2003 – 2008, presented by the Government of Dr. Nicanor Duarte Frutos, whose core programs are:
1. Sustainable economic growth. 2. Combating poverty and social exclusion. 3. Environmental protection. 4. Modernization of public administration.
Ministry of Industry and Commerce (MIC):
This entity seeks to adopt, in coordination with other agencies, the best economic policy for the nation in relation to the sources for the supply of goods and services, such as energy. In this manner, this institution seeks to formulate plans and programs of industrial and commercial development to incorporate new technologies and preserve the environment. Therefore, its objectives are: promote industrial production through the development of new installations and the improvements of the existing ones; in this manner to facilitate the distribution and consumption of these energy services.
Other public and private institutions.
PETROPAR
During the year 1985, with the approval of the Law No. 1182, it was created the state company Petróleos Paraguayos (PETROPAR), which has the following objectives and functions: industrialization of petroleum and its derivatives, storage &transportation, refining, distribution of hydrocarbons and its derivatives, among the most important stages of downstream. This institution was inaugurated in the democratic era, and one of the first measure undertaken was when the Ministry of Industry and Commerce, by the Resolution No. 69 of 1989, assigned to Petropar the responsibility of the technical and administrative operations of the ethanol production plant, which was owned by Paraguay Administration of Alcohol APAL and was located in the city of Mauricio Jose Troche, about 168 km east of Asuncion.
Bureau of Biofuels:
At the end of year 2004, the Decree No. 4328 approved the National Plan for Exports and created the Investment and Export REDIEX, as a body in the MIC, which seeks to encourage investment and promote competitive exports, in conjunction with the private sector and universities. The Bureau of Biofuels was created to focalize the efforts of
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stakeholders - public and private sectors involved in biofuels - and to improve the competitiveness of exported materials. It is worth mentioning that in the Bureau of Biofuels there is the participation of representatives of the business associations FECOPROD13, CAPECO14, ECCLA15, Association of Vegetable Oil Producers, Paraguayan Chamber of Alcohol and Paraguayan Chamber of Biodiesel. Also, representatives of the Ministry of Public Works (Department of Mines and Energy), Ministry of Agriculture and Livestock and Ministry of Industry and Commerce, and the Faculty of Agricultural Sciences of the UNA. They also include delegates from PETROPAR, INTN16, SEAM17, AFD18 and others. The Bureau of Biofuels seeks to be a unifying actor/platform of the strategies and actions that need to be taken by consensus among the participants. Also, it seeks to be a link between the biofuels sector of Paraguay and a platform to facilitate foreign investment, in this manner to develop and promote new projects in the country.
2.4.2.2. Regulatory Framework.
In the year 2005, the Law No. 2748 "Development of Biofuels" was approved, which declares of national interest the production of biofuels, the raw materials needed for its manufacture and its use throughout the country. This law grants to the MIC the responsibility of being the regulatory authority of biofuels and to the Ministry of Agriculture it grants the task of promoting the production of raw materials, both vegetable and animal, for biofuels, as well as issuing certificates of origin. In the year 2006, the Decree No. 7412 regulated the law of biofuels and established the technical specifications, which the biodiesel must comply with mandatorily. It also mentions that the Vice Minister of Commerce, a body of the MIC, will be the one who will authorize and approve physical or legal entities that are dedicated to the production and sale of biofuels. The Law No. 2748/05 also establishes that biofuels producers can enjoy from benefits regulated by Law Nº 60/90 and 2421/04. It further states the obligation to mix biofuels with conventional liquid fuels in percentages will be established by the Ministry of Industry and Trade (MIC), taking into account the actual production in the country.
13 Federation of Production Co-operatives. 14 Paraguayan Chamber of Cereals and Oilseeds Exporters. 15 Industrial Centre of Cane and Alcohol. 16 National Institute of Technology and Normalization. 17 Environment Secretary. 18 Financial Development Agency.
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It should be noted that the mixtures of ethanol and biodiesel in petroleum fuels are set by Decree of the Executive Branch of Government, through the Ministry of Industry and Commerce. The sector is also regulated by other legislations from the environmental field (SEAM), those regulatory in nature (INTN), among others.
2.4.3. Biomass Sector
2.4.3.1. Institutional Framework:
• Law 1561/00 creates the National Environment System, National Environmental Council and the Secretary of Environment (SEAM).
SEAM has the following objectives: formulation, coordination, implementation and enforcement of national environmental policy. Among its powers and functions are: to promote the control and focalization of activities aimed at the exploitation of forests, flora, wildlife and water resources, authorizing their sustainable use and improvement of environmental quality; develop economic and social national regional development plans, in order to ensure the sustainability of the processes of exploitation of natural resources and improve quality of life.
National Forestry Industry (INFONA):
• Law No. 3464/08 creates the National Forestry Instit

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