Raquel Carrero: “Taking advantage of renewable energy will lower electricity rates for millions”

In Peru, the costs to generate electricity increase critically each year because the hydroelectric matrix is ​​pressured by climate change. Raquel Carrero, general manager of the Peruvian Renewable Energy Association, asks to rescue a project stuck in Congress that allows more investments in wind and solar.

—Why is the law not approved that allows the entry of more wind and solar projects?

—The project that the Executive Branch urgently sent to the Congress of the Republic more than a year ago was approved by a majority, in May, by the Energy and Mines Commission, but it got stuck in the Economy Commission after accumulating it with two other projects that actually had nothing to do with the proposal.

—What is the situation today?

—The opinion was approved, but it could not be raised so that it could be placed on the agenda. When the Economy Commission disqualifies itself, it approves its disqualification opinions because it does not have jurisdiction over the matter. The opinion has been released and it can now be placed on the Plenary agenda.

—How exactly does this bill work?

—This new law will allow the rules for purchasing energy in Peru to be adapted so that the electricity matrix can buy renewable energy available in the market under competitive conditions. As the rules stood, it was not possible to incorporate solar energy. It is a bit of a leveling of Peruvian regulation to the standards of other countries to purchase separate power energy, as two products.

—Of course, because, as the law stands, it makes investing in hydroelectric plants more attractive.

—It is with this new rule that the electrical matrix will be able to purchase energy for the system, in order to meet its needs in the best way. And in this case, the possibility of being able to buy solar energy at the moment it is present opens up, taking advantage of its low prices. Taking advantage of the low prices of renewable energy will help to have lower generation prices and this will translate into better rates for millions of users.

—How does it benefit Peruvian families?

—The regulated one that serves millions of homes through purchase tenders has a generation cost 38% higher than the free market [grandes industrias]. If we incorporate electricity generation from cheaper sources, that will impact the final result, because generation forms an important part of the composition of the rate. If we have lower cost generation, we will definitely have lower rates as well.

—Especially, when generation costs skyrocket during the dry season.

-And it’s not that we say so. Osinergmin has said that, without these changes, the regulated market rate will rise. What do we need? That in these new tenders that are going to be opened in the regulated market, competition is already open so that consumers can have a better alternative and renewable generators can enter. That is the only way to control the increase in the rate and have the possibility of reducing it.

—And at some point natural gas generation could also leave the system.

—Another important point to keep in mind is that we only have 16 years of proven natural gas reserves left according to the latest Minem reserve book with information up to 2022. And although many say that emissions from the electricity sector are only 7% of national emissions, they forget that that 7% is millions of tons of C02 that are released into the atmosphere each year. It is not an ethical argument to say that others pollute more and that is why I should not reduce my emissions.

—When could this rate reduction be noticed?

—Not tomorrow, obviously, because the electricity tenders buy today so that this generation enters within 3 years. But if we do not make changes now, the possibility of lowering prices would be ruled out. And on the contrary, we would increase the electricity rate.

—Is there any estimate of the potential for solar or wind energy in the country?

—Yes, there is a recent study carried out by the Ministry of Energy and Mines with the support of German cooperation. The most modest estimate is 399,287 megawatts of solar energy in a scenario that considers only arid and mostly near-coastal areas. In open wildlands, more in the mountains and less close to the transmission system, the potential is 937,185 MW. And in the case of wind energy, it is approximately 20,493 MW. But it’s not just about potential, it’s about quality. Both solar and wind energy are among the best in the world. And that would somehow help us avoid price spikes that later translate into higher tenders every time there are low droughts and changes in the climate that put pressure on the electricity market.

—When should the Plenary Session schedule this initiative?

—We hope, and I think it is the same as what the Government expects due to the circumstances, that it will be scheduled as a priority. Congress is organizing an environmental thematic plenary session for June 5 of this year, and we think that this is the space where it should be debated.