Peru Power Report Q2 2016
BMI View: Strong growth in electricity consumption, government tenders for power generation andtransmissions projects, and robust investor interest in the market continue to support our positive outlookfor the Peruvian power sector. We upgraded our forecasts for Peru's renewables as a result of a successfulenergy tender in February 2016, but future opportunities in the market will be limited by strong growth inhydropower and gas-fired power plants. Delays in project tendering and implementation are themain risks to our upbeat growth forecasts for the Peruvian power sector.
Latest Updates And Structural Trends
In February 2016, Osinergmin (the Peruvian public agency responsible for supervising investment inenergy and mining) awarded 20-year power purchase agreements (PPAs) for a total of 1,792.2 gigawatthours (GWh) per year, distributed among 13 renewables projects. Italy's Enel Green Power (EGP)secured contracts for the majority of the energy on offer; EGP obtained PPAs for three renewable energyschemes, involving 126MW of wind power, 180MW of solar photovoltaic power and 20MW ofhydropower.
We have revised up our renewables power capacity and generation forecasts accordingly, but wemaintain that non-hydropower renewable energy will play only a minor role in the Peruvian electricitymix over the coming decade - due to greater growth in hydropower and natural gas-fired powergeneration. Peru's National Energy Plan does not include provisions for growth in non-hydro renewablesbeyond its target of having 5% of total electricity produced by non-hydro resources by 2018, which willbe reached via the auction. As such - barring the launch of a new renewable energy tender in the future -we expect only limited demand for utility-level renewables in Peru, driven mainly by PPAs with themining sector.
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