Modernization of hydropower in Latin America and the Caribbean: Investment needs and challenges

Hydropower supplies almost 50 per cent of electricity demand in Latin America and the Caribbean (LAC), and current projections estimate that the installed hydro capacity will continue to increase to meet future demand. However, an important part of LAC’s hydroelectric park was developed more than two decades ago, and the region needs to consider a modernization plan to promote sustainable development. A recent IDB study shows that the region needs to invest approximately US$ 33 billion to do so, only considering electrical and electromechanical installations. Modernization projects have several advantages, such as low environmental and social impacts, and high economic profitability. Nevertheless, to promote such investment, immediate and coordinated action by all actors, both public and private, is necessary. Especially, it requires an active role of both planning entities and regulators.