Regional Energy Integration: A Key Strategy for Lower Costs and Sustainability in South America

A new report by the Latin American Energy Organization (Olade) highlights the economic and environmental benefits of regional energy integration in South America. By enhancing interconnections between countries, the region can lower electricity costs, improve efficiency, and adapt to climate-related changes in hydropower availability.

Despite the advantages, South American countries have traditionally developed their energy systems independently. However, major interconnection projects are now underway, including SINEA (linking Bolivia, Chile, Colombia, Ecuador, and Peru) and SIESUR (connecting Argentina, Brazil, Chile, Paraguay, and Uruguay).

For Paraguay, energy exchanges with Argentina and Brazil play a crucial role. The Yacyretá hydropower plant, shared with Argentina, provides electricity based on a treaty agreement. While Argentina has historically consumed most of the output, Paraguay has increased its share since 2019 due to growing demand. Similarly, Paraguay’s use of power from the Itaipu Dam, shared with Brazil, has risen alongside its economic expansion.

With energy demand expected to grow, further integration could strengthen Paraguay’s energy security while fostering economic development across the region. (Source: MarketData)