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Paraguay's Grid Development: Struggling to meet demand despite surplus capacity [free access]

May 10, 2016

Despite sufficient installed electricity generation capacity, the Paraguayan population experiences regular power outages.  This is mainly due to the transmission grid’s limited capacity to transfer power from remote hydropower plants to the country’s main load centre—the Asunción metropolitan area.  Investment in the development of the country’s high voltage grid has been limited mainly due to lack of financial support and coordination among stakeholders during the planning phase, inadequate funds from the central government, low tariffs, high power theft, low bill collection and absence of private participation.

 

This has significantly hampered the growth of Paraguay’s power sector. Therefore, the government is now concentrating on expanding its power network. Under its 10-year Power Sector Expansion Plan 2014–23, Paraguay plans to invest USD2,148 million on strengthening its power transmission network by adding 2,833 km of line length, 9,215 MVA of transformer capacity and 19 substations during the 2016–23 period. 

 

Power sector overview

Paraguay is one of the few countries that generate almost 100 per cent of their electricity from renewable energy resources. The country has been a net exporter of power with more than 8,798 MW of installed power generation capacity. Of this, only 38 MW is thermal power-based and the rest is hydropower-based.

 

Paraguay’s electricity generation segment is dominated by the large bi-national hydropower projects of Itaipu (1,400 MW Brazil–Paraguay project) and Yacyreta (3,200 MW Argentina–Paraguay project), which cover 99 per cent of the country’s electricity demand and generate a large surplus for export, mainly to South America. The involved countries own equal capacity in these bi-national hydropower projects. The Paraguayan parts of these hydropower plants are managed by the state-owned vertically integrated power utility Administración Nacional de Electricidad (ANDE), which also owns the 210 MW Acaray hydropower project.

 

During 2006–15, Paraguay’s power generation capacity increased at a compound annual growth rate (CAGR) of 0.5 per cent. Between 2013 and 2015, no generation capacity was added in the country. Electricity generation in the country during 2006–15 increased at a CAGR of 6 per cent, from about 8.4 TWh to 14.5 TWh while consumption, on the other hand, increased at a CAGR of 8 per cent during the same period. This reduced Paraguay’s power exports significantly from 880 GWh in 2006 to 101 GWh in 2015.

 

ANDE also develops, operates and maintains the country’s entire high voltage Sistema Interconectado Nacional (SIN) or the national interconnected system. As of 2015, Paraguay had a transmission network of 4,594 km of lines and 9,170 MVA of transformer capacity. The transmission network consists of 220 kV and 500 kV lines. During 2006–15, the transmission line network and substation capacity increased at a CAGR of 3 per cent and 9.5 per cent, respectively.

 

Paraguay’s grid is connected with those of Brazil and Argentina through several interconnectors. It has two interconnections with Brazil—the ±600 kV direct current (DC) Brazil—Paraguay Itaipú interconnector and the 220 kV Foz de Iguazú (Brazil)—Acaray (Paraguay) line. With Argentina, it shares three interconnections—the 132 kV El Dorado (Argentina)—Carlos A. López (Paraguay) alternating current (AC) line; the 132/220 kV Clorinda (Argentina)—Guarambaré (Paraguay) AC line; and the 500/220 kV AC Yacyretá interconnector.

 

To promote the participation of domestic players in the power transmission segment, the government of Paraguay, in August 2015, passed a new decree which mandates that all the metal structures (pylons or towers) to be used in electricity transmission lines and substations must be sourced from local manufacturers. The manufacturers must produce the entire product within the country itself. This measure is also part of a project to strengthen the country’s electricity grid.

 

Upcoming capacity

Between 2016 and 2020, ANDE is expected to invest over USD2,660 million in the expansion of Paraguay’s power sector. Of this, USD2,140 million will be invested in strengthening the power transmission network.

 

As per the 10-year Power Sector Expansion Plan 2014–23, Paraguay’s demand for electricity is expected to increase at a CAGR of 5 per cent to reach at 4,369 MW by 2023. The current installed capacity base of 8,793 MW is more than sufficient to meet the future demand. Hence, the country has very limited plans to invest in power generation projects. Only 200 MW of capacity is expected to be added to the country’s generation base by 2020.

 

The future focus is on the expansion of the country’s power grid. During 2016–20, there are plans to add about 2,833 km of line length, 9,215 MVA of transformer capacity and 19 substations. About 54 per cent of the upcoming line length capacity is likely to be at 220 kV while 63 per cent of the transformer capacity will come up at the 500 kV level.

 

Paraguay is also part of the Comisión de Integración Eléctrica Regional (CIER) 15 project, which aims to enable electric power transactions among the Andean, Central and Southern American regions. The member countries are Argentina, Bolivia, Chile, Brazil, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela. The project, which is at a very early stage of development, entails the construction of 7,351 km of lines (365 km of 230 kV lines and 6,986 km of 500 kV lines).

 

The first phase of the project has been completed, under which a critical analysis of existing interconnections, and an analysis of the regulatory and institutional evolution of electricity markets and gas from each region, were undertaken. Based on the results of the first phase, in the second phase strategic feasibility studies will be carried out in various areas to identify the project’s structural benefits, reduce operating costs, increase reliability of power supply, and cut down CO2 emissions. The second phase will be financed by CIER, Corporación Andina de Fomento (CAF) or the Latin American Development Bank, and Banco Mundial. Presently, the second phase is at different stages of development in the various countries involved in the project.

 

The majority of the grid strengthening and expansion projects will cover the Hernandarias, Villa Hayes, Villeta, Itapúa, Pedro Juan Caballero, and Concepción regions, where the majority of the load demand is expected or key power projects are being set up. Some of the key upcoming domestic projects in the country are:

 

Yacyretá–Ayolas–Villa Hayes project: The project was awarded to Consorcio CIEGEC—set by Compagnie Ivoirienne d’Electricité (CIE) and Somagec Guinea Ecuatorial—in December 2015 for a bid of USD95.6 million. The project entails the construction of the 16-km-long, 500 kV Yacyretá–Ayolas line and the 347-km-long, 500 kV Ayolas–Villa Hayes transmission line. It also includes expansion of the Villa Hayes substation with the installation of a 500/220 kV transformer bank that will add an additional capacity of 600 MVA.

 

The line will connect the Yacyreta hydroelectric dam on the Argentine–Paraguayan border with the Villa Hayes substation (a key load centre) in Presidente Hayes Department in Paraguay. The project is being funded by the European Investment Bank (EIB), CAF and Inter-American Development Bank (IDB). Construction works for the 500 kV Yacyretá–Ayolas line were initiated in April 2016.

 

Margen Derecha–Carayaó line and Carayaó substation project: This includes the construction of a 500 kV transmission line of about 210 km and the expansion of the 500/220 kV Carayaó substation by adding two banks of autotransformers of 600 MVA capacity each. The transmission line will help meet the power demand of the central, northern and metropolitan areas by transmitting more power from the Itaipu hydro plant, via the Subestación Margen Derecha de Itaipu (SMDI) or the Right Bank of the Itaipu substation. The project is slated for completion by 2023.

 

Margen Derecha–Villa Hayes second line: The project aims to strengthen the existing 500 kV circuit connecting the Itaipú hydropower project located on Paraná River on the border between Brazil and Paraguay, to Villa Hayes in Paraguay. It will also constitute the main link between the Itaipú and Yacyretá power plants. The second circuit, which will be 348 km long and have a capacity of 2,000 MVA, will help meet the demands of the system with greater reliability. The line is expected to be built by 2019.

 

Concepción II–Pozo Colorado–Loma Plata line: This project will be the second line to serve the power system of the western region, and will increase transmission capacity and reliability in the service area. It includes the construction of a 220 kV, 280-km line, which is expected to come online by 2021.

 

Vallemí II–Toro Pampa line: This project will expand and improve energy supply in the Toro Pampa area, especially considering the vast power distribution network of the region. It includes a 130-km, 220 kV line, which is scheduled to be operational by 2021.

 

Ayolas–Trinidad II line: The project entails the construction of the 500 kV, 600 MVA Trinidad II substation along with a 129-km 500 kV transmission line from Ayolas to Trinidad II, in order to substantially increase the reliability of transmission. ANDE plans to complete the project by 2017.

 

In addition, ANDE is considering constructing a new transmission line to connect the two national hydropower plants, Itaipu and Yacyreta.

 

Outlook

With sufficient power generation capacity, the country is now focusing on the expansion of its power transmission network. Strengthening its domestic network will help reduce power outages while international connectors will facilitate greater power exports. However, as per some of the industry experts, high dependence on hydropower makes the country’s power sector vulnerable to natural calamities. Thus, Paraguay needs to also promote the development of other sources of energy to have a balanced energy mix.

 

Table: List of key upcoming transmission line projects

Name of line

Voltage (kV)

Line length (km)

Scheduled completion

Kilómetro 30–Santa Rita

220

                    45

2016

Limpio–Luque–San Lorenzo

220

                    25

2016

Villa Hayes–Puerto Botánico

220

                    18

2016

Horqueta–Concepción II

220

                    45

2016

Cruce Bella Vista–Bella Vista Norte

220

                    80

2016

Santa Rita–María Auxiliadora

220

                  110

2017

Margen Derecha–Itakyry

220

                    71

2017

Los Cedrales–Pte. Franco

220

                    10

2017

Pte. Franco–Paranambú

220

                    39

2017

Guarambaré–Villeta II

220

                    12

2017

San Lorenzo–Villa Aurelia

220

                      9

2017

Ayolas–San Patricio

220

                    43

2017

Villa Hayes–Concepción II

220

                  200

2019

Carayaó–San Estanislao

220

                    47

2020

Villalbín–Villeta II

220

                  200

2020

Ayolas–Villalbín

220

                  121

2020

Concepción II–Pozo Colorado–Loma Plata

220

                  280

2021

Vallemí II–Toro Pampa

220

                  130

2021

Cnel. Oviedo–Cnel. Oviedo II

220

                    48

2022

Yacyretá–Ayolas

500

                    16

2016

Ayolas–Villa Hayes

500

                  347

2016

Margen Derecha–Los Cedrales

500

                    25

2017

Ayolas–Trinidad II

500

                  129

2017

Margen Derecha–Villa Hayes

500

                  348

2019

Ayolas–Eusebio Ayala

500

                  225

2022

Margen Derecha –Carayao

500

                  210

2023

Source: ANDE’s 10-year Power Sector Expansion Plan 2014–2023

 

Figure 1: Paraguay’s planned investment in power transmission (USD million)

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Source: ANDE’s 10-year Power Sector Expansion Plan 2014–2023