Paraguay must invest $5 billion by 2030 to avoid energy crisis

UPI

4 days ago

Experts warned Paraguay must make a $5 billion investment to double its power generation capacity by 2030 or face a production crisis. File Photo by Nathalia Aguliar/EPA
July 23 (UPI) -- Paraguay must double its power generation capacity by 2030 to avoid a supply crisis, as domestic demand rises, infrastructure ages and pressure grows to diversify its energy sources.
Experts warn that without at least $5 billion in urgent investment, the country could go from being one of the world's top exporters of clean energy to facing blackouts at home.
The country depends almost entirely on three major hydroelectric dams -- including Itaipú, jointly operated with Brazil, and Yacyretá, with Argentina -- which for decades have allowed it to sell surplus electricity to its neighbors. But domestic consumption is rising so fast that those sources can no longer meet internal demand.
In emerging economies like Paraguay, each percentage point of GDP growth typically leads to a proportional -- or even greater -- increase in energy consumption, driven by expanding industrial and agricultural activity, a growing number of vehicles and household appliances and the continued rise of commerce, services and urban infrastructure.
Paraguay's economy has grown at an average annual rate of 3% over the past decade, with a rebound to 4.7% in 2023 and a projected 4.2% in 2024. In the first quarter of this year, growth reached 5.9%.
ANDE, the state-run utility that oversees the country's entire power system, estimates that electricity demand will increase by 6% to 8% annually through 2030.
"If we keep growing at the current pace, the system won't be able to handle it," Guillermo Krauch of the Paraguayan Institute of Electrical Sector Professionals warned at a recent meeting of the National Energy Forum.
Krauch also said ANDE currently invests about $300 million a year, when it should be double that just to keep the grid operating. Expanding generation would require an additional $1.2 billion annually.
Víctor Giménez, a special projects adviser at the Yacyretá dam, said Paraguay spent decades under a false sense of energy security.
"That time is over. Today, companies come looking to invest in the country but leave once they realize there's no guaranteed power supply for the next five years," he said.
Both experts agreed that one of the main obstacles is regulation. A law allows private companies to generate and sell electricity, but the necessary regulatory framework has yet to be enacted -- a gap that continues to deter investment.
As an alternative, panelists proposed diversifying Paraguay's energy sources.
Paraguay has already identified 22 locations suitable for small hydroelectric plants, which would require an estimated $1.2 billion to build. These plants could be installed closer to consumption centers, reducing strain on the transmission grid.
Nicolás Foissac, a renewable energy consultant, highlighted the potential of solar power -- particularly in the Chaco region, a vast, flat area with low population density. He also pointed to biomass and biogas, which convert agricultural waste into electricity.
"True energy sovereignty means using what we already have, with modern technology and clear rules," he said.
According to estimates from the National Energy Forum, Paraguay will need a total investment of about $12 billion between 2025 and 2030, and up to $12.7 billion through 2043.
Macarena Hermosilla contributed to this report.