Analysis: Paraguay, the major energy exporter in South America, where the power goes out

RIO DE JANEIRO, BRAZIL – Osvaldo lives with his wife and a small baby in a neighborhood of Lambaré, a municipality that is part of Greater Asunción, the metropolitan area of Paraguay’s capital. During frequent power outages, whether due to the intense heat, a storm or other reasons, he is usually forced to move to a relative’s house.

Nevertheless, the constant interruptions caused losses in his business. This prompted him to buy a generator.

Read also: Check out our coverage on Paraguay

Osvaldo’s reality is the same as that of many Paraguayans who have had to buy generators to have electricity in their homes or offices. This would not be unusual if Paraguay were not one of the largest exporters of electricity in the world.

This South American country of 7.5 million people consumes only 16% of the energy it generates, and the rest is exported as a commodity to countries like Argentina and Brazil, with which Paraguay shares the Yacyretá (Argentina-Paraguay) and Itaipú (Brazil-Paraguay) hydroelectric plants.

A detail is that, due to international contracts, the sale of this energy is done at a lower price than the market price, as pointed out by the Base IS organization.

PARADOX

Although Paraguay exports electricity, the country relies on biomass for domestic consumption.

Guillermo Achucarro, an environmental engineer specializing in climate change, explains, “Wood from forest plantations and native forests supplies 51% of households, for cooking, for example. The rest is consumed by agribusiness, for which it is cheaper to use firewood than to pay for electricity.”

The recent report by the Vice-Ministry of Mines and Energy on the production and consumption of forest biomass for energy purposes supports the expert’s statement and highlights the importance of firewood for Paraguay’s energy needs.

“The excessive demand for biomass compared to the scarce supply of sustainable biomass leads to a high consumption of wood from native forests, which indirectly triggers a process of degradation of the remaining forests,” the latest government document on the issue states.

Miguel Lovera, an agronomist with a Ph.D. in biodiversity and international forest policy from the University of Georgia, points out that dependence on fuelwood has a threefold impact on the environment: first, by destroying primary forests; second, by cutting down forests that are regenerating; and third, by expanding forest monocultures that affect biodiversity and climate cycles.

DRY RIVERS THREATEN HYDROELECTRIC POTENTIAL

Although Paraguay’s domestic needs are met by biomass, the historic drought of the Paraná River for two consecutive years has had a significant impact on the generation capacity of the country’s three hydroelectric plants, all located on the same river.

“For the second year in a row, the Paraná River has exceeded its maximum gradient. This has not happened since 1970,” Achucarro says. “And for this to happen two years in a row is definitely not normal,” he continues.

The expert points out that this is a regional phenomenon that encompasses the La Plata Basin and is a consequence of intensive deforestation, especially in the Amazon, one of the great sources of water in the American Southern Cone.

And because of the low inflow, little water reaches the reservoirs of the three power plants: Acaray, Yacyretá (binational, Argentina-Paraguay) and Itaipú (binational, Brazil-Paraguay), which has significantly reduced the production of the hydroelectric plants.

This water crisis also means that the Paraguayan government receives fewer royalties.

Engineer Mercedes Canese, former vice minister of mines and energy, warns that water production is becoming less stable in light of the climate crisis. “Hydropower plants don’t last forever; they have a useful life. The reservoirs gradually fill up with sediment until the hydropower plant eventually ceases to operate,” she says.

The engineer adds that this process is accelerated if the watershed is not taken care of, which is happening due to soy monocultures on the banks of the Paraná River, according to the expert.

A CLIMATE CRISIS THAT IS ALSO AN ENERGY CRISIS

“The climate crisis, in fact, has a very high share in everything that has to do with energy sovereignty, in all its dimensions. Less water, less energy, it’s as simple as that,” Achucarro explains.

Paraguay is the most vulnerable country in South America to climate change and is among the ten most vulnerable countries on the continent. This is due to its low development indicators and its economy dependent on the agricultural sector, according to the Climate Change Vulnerability and Adaptation Index for the Latin America and Caribbean Region, produced by the CAF Development Bank for Latin America and the Caribbean.

While Paraguay struggles with droughts, floods, increasing extreme events, lack of water security and displacement of people, its energy future does not look bright either. The Vice-Ministry of Mines and Energy has indicated that energy production will be insufficient to meet local needs starting in 2030.

To make matters worse, intensive deforestation on Paraguayan territory is affecting the amount of water available to supply hydroelectric plants. So it’s not just the climate crisis that is throwing a wrench in this calculation and accelerating the inevitable, but other practices that are exacerbating the problem.

“Much of the world’s forests are being cut down to meet the energy demand for firewood used in homes and industries. To a lesser extent, biomass is also obtained from forest plantations. The less water there is, the fewer plants grow to meet energy needs,” Achucarro says.

In this context, forest plantations are a cheap and quick alternative for energy supply, but they have a hidden cost that ends up weighing even more heavily. “Forest plantations used as biomass destroy native forest to meet energy needs,” says the expert.

For his part, Lovera illustrates the impact of deforestation on the availability of water: “As there are fewer forests, the aquifers are less replenished. And as aquifers fill up less, less water flows into the rivers, which are the drainage system for these filled aquifers.”

However, studies are still needed to accurately assess the impact of climate vulnerability on the production of Paraguay’s three hydropower plants.

TOWARD A POSSIBLE FUTURE OF ENERGY SCARCITY IN PARAGUAY

Engineer Canese recalls that local energy demand is increasing year by year and that a future scenario of energy scarcity is possible in an increasingly unfavorable climatic context.

Héctor Richer and Miguel Fulgencio Rodríguez, former heads of the National Electricity Administration (Ande), Paraguay’s state-owned utility, agree with this forecast and explain that Ande will likely be forced to make programmed cuts.

Osvaldo believes that Paraguayans have no choice but to buy a generator, given the constant power outages. The downside is the noise, pollution and fuel consumption, but the truth is that he has no other choice.

He cannot rely on the quality of the service: his income depends on it. He also realizes that the solution cannot lie solely in the individual, and therefore believes that the Paraguayan government must take public action to improve the distribution network, the price, and other aspects related to the efficiency of the service.

In addition to the lack of adequate infrastructure, there is an energy matrix that does not take advantage of renewable energy sources and the progression of the climate crisis, which will exacerbate the problems.

In the not too distant future, it is possible that the largest energy exporter will not be able to turn on the lights.

With Information from ipsnoticias