Western Hemisphere 2021 Energy Landscape and Outlook

intermittent and volatile pattern of renewable power to secure a stable supply, reap the benefits of curtailed capacity and support sound consumer choices. Uruguay is frontrunner in managing a power system running at close to 100% renewable (just passing the first test of a heavy drought in a La Niña year). Lessons should be shared and further experimentation welcomed. Subsidies remain an obstacle for energy transition and distort markets. No doubt, the current economic hardship calls for support to vulnerable populations but subsidies which are not targeted miss the point and are very expensive. It takes technology solutions to keep track of subsidies reaching the intended targets. The sector remains subject to political capture across the region. This affects present performance but also investment, as prices stem from political decisions instead of market signals. As substitution replaces the traditional fossil commodities, as a society we have a choice: it can be a traumatic transition or one that is better planned and resourced, as funding will be required for remediation, re-skilling of the workforce and new infrastructure.

Infrastructure: The future energy matrix - electrical - is changing the paradigm of energy infrastructure towards a very distributed system. The dreams of cross-border integration that dominated the rhetoric for decades have not materialized. One only needs to see a map of cross- border natural gas infrastructure dated 2000 to concede that little was added. It is difficult to see how Vaca Muerta is ever going to anchor gas pipelines for export projects (perhaps, instead, its monetization will happen as a resource for blue hydrogen production with CCS). But integration of power transmission systems remains relevant and market design coupled with new technologies should help develop what is a very shallow market and pave the way for transparent transactions. At regional and local levels, grid investments are necessary to integrate the

In sum, 2021 is a year where the energy sector has a leading role to play in transitioning to a sustainable path.

INSTITUTE OF THE AMERICAS

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