World Bank approves $3.2 billion fund for Latin America's energy transition

The World Bank's executive board approved the creation of the “Green Infrastructure and Electricity Interconnection Fund for Latin America,” allocating an initial $3.2 billion in concessional loans to finance high-voltage transmission lines and large-scale battery storage systems.

The initiative seeks to resolve the logistical bottlenecks that cause curtailment, or forced disconnection due to excess generation, of 18% of the renewable energy produced at solar and wind farms in Chile, Colombia, Brazil and Mexico.

Priority projects include cross-border electricity interconnection in the Andean region and the modernization of urban substations.

However, environmental organizations and electricity sector unions warned that the loans require, as a condition, the mandatory tendering of grid segments to international private consortiums, restricting the participation of state-owned electricity companies in managing the service.

What does SurEconomics think?:

Financing power grids is necessary, but conditioning the funds on the privatization of energy transport hands a strategic public good to private capital without giving states and local players alternatives to take part in determining the fate of the countries' energy surpluses.

Sources:

·       World Bank: Approval of the Latin America Green Energy Transition Facility

·       OLADE: Priorities for investment in regional electricity transmission infrastructure