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Energy Essay Bolivia

Bolivia’s new revolution is in electricity

After a decade of increased natural gas exports that have raised living standards for its citizens, Bolivia is planning to increase exports of electricity, aided by Siemens. This essay, by the general manager of Bolivia’s main power utility, is one in a series by experts writing about energy.

It’s widely known that Bolivia has made enormous advances in developing its energy resources over the last decade. Aggressive investment on its own and with international partners has helped the country double its annual production of natural gas since 2005 and made us South America’s largest gas exporter. We ship approximately 45 million cubic meters of gas every day to Brazil and Argentina.

Prudent management of the revenue produced by natural gas sales has led to significant social and economic improvements. Per capita incomes have more than doubled since 2005, and the standard of living has risen in terms of better health, education, housing, and transportation. The poverty rate has been cut from 38 to 16 percent, and international reserves have grown to US$15 billion from about US$2 billion in 2006. To be sure, we have felt the effects of the global decline in hydrocarbon prices and other commodities, but Bolivia’s economy remains one of the most stable and fastest growing in the hemisphere, averaging a 5 percent annual expansion over the past decade.

Exporting electricity to neighbors
What isn’t so well known are the strides Bolivia has made in improving electrification, and its self-sufficiency in the capacity to generate power. To do this, we had to dig ourselves out of a deep hole left by the privatization of ENDE, Bolivia’s electric power monopoly until the mid-1990s. The sell-off was designed to maximize investor profit and position Bolivia as an electricity exporter. But at the end of the day, not a single energy export project materialized, long-term planning disappeared, and whole sections of the country were neglected. Because the new owners refused to make the necessary investments – they considered areas as too remote, too unprofitable, or serving too small a population. The national interconnection system (SIN) did not expand.

Since renationalizing strategic parts of the electric power industry in 2010, Bolivia has seen indisputably positive results. We have added 1.3 million homes and businesses to the SIN national grid. Electricity coverage of rural areas has increased to 66 from 37 percent and in urban areas to about 97 from 80 percent, and we have nearly doubled peak generation capacity. In 2008, the ENDE Andina generation subsidiary, the unit that I manage, was founded, and it currently injects about 460 megawatts into the SIN. The electricity sector’s main challenge of converting Bolivia into a net exporter of electric power over the next decade is being met.

All these advances didn’t happen from one day to the next. We first had to put our house in order with some painful measures including rationing, a result of the lack of investment in generation by the private entities that had a power monopoly until 2010. All told, since 2006 we have invested US$7 billion in additional generation capacity, transmission lines, substations, and distribution networks to better interconnect all of Bolivia.

Bolivia's energy system in numbers.



Energy for value-added products
Now Bolivia, and specifically the energy sector, is embarking on an entirely new evolutionary phase: the industrialization of the economy. We will be investing in several projects to convert us into an exporter of more value-added products, instead of just natural resources. Among those value-added products planned is the export of electric power to Brazil, Argentina, Paraguay, and probably Peru as a transit country. Our ambitious plans will require significant investment, and our congress recently passed laws to provide incentives to foreign companies who want to invest in Bolivia to participate with us in building a completely new energy landscape.

Why these new directions? The history of Bolivia since Spanish colonial times has in a sense always been tragic, in that we are blessed with natural resources but have never truly industrialized. Colonial powers, the governments that followed, and the elite private interests that dominated them were far more interested in shipping out tin, silver, and other raw materials than investing in factories and human capital. We have decided to leave this history behind and invent a new future as a value- added exporter.

Huge hydropower potential
The electric power sector will play a major role in this plan, because one of the key components of our future development strategy is to realize Bolivia’s huge potential for hydropower generation, estimated at as much as 40,000 megawatts. This development will enable us to export all the excess electric power that we generate to our neighbors who need energy. In fact, Bolivia aspires to become the electricity hub of South America by exporting electricity to all countries with which it shares borders.

Currently, hydro accounts for only 500 megawatts or roughly 35 percent of the electric power that Bolivia generates, but we expect our power matrix to grow to 65 percent hydro, or 4,000 megawatts by 2025.

Binational energy developments with Brazil
Our ambitions are evident in various megaprojects with Brazil that are in early planning stages: the El Bala hydroelectric complex of around 1,000 megawatts, the Cachuela Esperanza of approximately 800 megawatts, and the binational project of 3,000 megawatts in the Rio Madeira. These projects include canals, locks, dams, reservoirs, and electric generation plants.

Over the next decade, Bolivia won’t be neglecting thermoelectric sources of energy. In fact, ENDE Andina is expanding and building several new combined-cycle thermoelectric power plants (Entre Rios, Sur, and Warnes) with an investment of US$1.2 billion that will add 1,000 megawatts to the SIN.

To export electricity to Argentina, we are working with Siemens on a US$750 million project now in its advanced stages to send up to 1,000 megawatts of electric power from our Southern Thermoelectric Plant in Yaguacua to San Juancito in northern Argentina that should be operational by 2019–2020. The project is interesting in that we will construct a combined-cycle co-generation thermoelectric plant at the Yaguacua complex, as well as a 500-kilvolt transmission line to connect it with the Argentinean power grid at San Juancito located 240 miles to the south.

Industrialization at long last
Electricity isn’t the only component of the plan to develop more value-added exports and diversify Bolivia’s economy. We are in the final stages of construction of an US$800 million petrochemical complex near Cochabamba that will specialize in manufacturing fertilizers from urea and ammonia.

A new US$1 billion industrial complex to produce lithium is planned for our southwestern desert area in Potosí province to meet growing global demand for long-lasting, high-capacity batteries for autos and smartphones.

Of course, natural gas will remain an important export in coming years, and revenue from those sales will help us finance the industrialization process we envision over the next decade. New laws encourage foreign companies to continue investing in Bolivian energy by guaranteeing the legal security of their investments.

Bolivia finds itself at an interesting point in its economic history. In the South American context our policies emphasize state participation, and the electric power sector is no exception. If Bolivia’s economic results over the last decade can be described as positive, I think it’s pertinent to recognize the role that the state has played in that success.

Hugo Villarroel, General Manager of ENDE Andina
Picture credits: independent Medien-Design/ENDE Andina; Illustration: www.grafilu.ch