Carlos Temboury, Director and Chairman, Enel Generación: Interview

Interview: Carlos Temboury

To what extent is Peru’s energy surplus hindering electricity generation capacity?

CARLOS TEMBOURY: All actors in the chain are partially responsible for the surplus of energy. Prices have dropped, creating a scenario where energy is being sold at $48-50 per MWh to industrial clients, while users that are not subject to regulated prices buy it at $21-22 per MWh. Naturally, this has a negative impact on generation companies that are in the process of making significant investments to increase their capacity, meaning the near-term outlook for these firms is negative.

How can the private sector help equalise electricity distribution between urban and rural areas?

TEMBOURY: The main issue that the government must focus on is ending the current disparities in service delivery. The current framework benefits the wealthy over the least privileged. The significant gap in the quality of service delivery between Lima and the rest of the country is unacceptable. Greater participation from private distribution companies would contribute towards creating a fair and efficient system, and would minimise the impact that poorly managed public institutions have on the quality of service. There is certainly a desire from private investors to increase their engagement with the sector. The current government also has a different approach from the previous administration, hinting at a willingness to discuss changes to allow for greater private sector participation. However, no specific steps have been taken as of yet.

What impact would connecting Peru’s energy grid with Chile’s have on energy prices?

TEMBOURY: The main purpose of connecting Peru´s energy grid with other countries should be to enhance its security. It would be a mistake to connect grids and finance the project through long-term export contracts. Instead, developing cross-border infrastructure should be the responsibility of the states involved and financed through tariffs related to levels of usage. Interconnection would enable trading in both directions, depending on market circumstances. Furthermore, the gap in energy prices across the region will gradually decrease in the coming years as the input of power from renewable sources increases, particularly with the cost of renewable energy generation being the same as with traditional sources. The north of Chile offers a glimpse of the future for renewable energy in the region, as well as the impact it will have on prices.

What sort of infrastructure will be needed to meet the rising demand for energy?

TEMBOURY: Peru is a unique case in that it has large gas reserves, competitive prices, energy self-sufficiency and high hydropower generation capacity. Therefore, there is not an imperative short-term need to change its energy matrix. The country will continue to grow, thus resulting in an increase in demand, which will require greater generation capacity. The key to meeting this demand is developing small-scale renewable energy generation projects of between 100 MW and 200 MW in capacity that are closer to urban and industrial centres. Such projects are less capital intensive – due to their size and proximity to consumption points – more environmentally friendly and can be completed in short periods of time, as opposed to larger projects that can take up to eight years before operations begin.

How could on-site generation play a role in providing more people with electricity access?

TEMBOURY: There are 3m Peruvians that lack access to electricity, and the grid cannot cover all parts of the country due to its complex geography and population distribution. As a result, on-site generation will become increasingly important in supplying electricity, as it has in other Latin American countries. Ideally, capacity would increase until these sites reach a level of consumption that justifies their connection to the grid.