Bolivia Energy Situation
Situation analysis and framework conditions
Energy situation especially in rural areas
Energy demand and supply in the household sector
Bolivia, with a population of approximately 10 million inhabitants, is considered one of the poorest countries in Latin America. While urban areas such as La Paz and Santa Cruz are modern cities with a relatively good supply of modern energy services, the majority of Bolivia’s rural areas are still experiencing a lack of most basic services, including reliable and affordable access to electricity and improved biomass cooking stoves. Thus, in 2005, total access to electricity in Bolivia was 68%, one of the lowest in Latin America. Urban access was 87%, while rural access remained as low as 30%.
Bolivia produces oil and natural gas. Thus, it is a net exporter of gas and oil. Due to the absence of refineries is has to import refined petroleum products. Electricity is nearly exclusively generated by private companies from hydropower (40%) and thermal power plants mainly based on gas (60%). The total installed capacity in 2007 was 1,5 GW and the contribution of other renewable sources than hydropower is almost negligible. 85% of the electricity were produced in the Sistema Interconectado Nacional (SIN - National Grid System), while 15% were produced in isolated systems (mainly diesel-driven generators). The demand for electricity rose in the last 20 years dramatically and led into a series of outages and unsatisfied demand. There was a significant rise in the household sector.
Rural electricity supply
Bolivia has one of the lowest rural electrification ratios of Latin America. While urban access was 87%, rural access is as low as 30%. This situation gets even worse considering that the electrification programmes had no significant effect on the rural electrification ratio in the last 10 years.
Traditional biomass (wood, dung, charcoal and green residue) still accounts for 15% of primary energy consumption and is the third most important source of energy after gas and petroleum. This is mainly due to the important role of biomass for the energy supply in the country’s rural areas. Traditional biomass represents nearly 90% of total energy consumption by rural households and is mainly used for cooking, the remaining 10% are mainly used for Lighting and ICT.
Although the electricity consumption rose in the resident sector the consumption in rural households remains very low (less than 40kWh/month/HH).
Institutional set up and actors in the energy sector
Public institutions
The Viceministry of Electricity and Alternative Energy (VMEEA)", within the Ministry of Petroleum and Energy (MHE), is in charge of establishing policies and designing the regulation for the electricity sector. The VMEEA and the Viceministerio de Desarrollo Energético (VMDE) are in charge to develop policies to promote energy efficiency and renewable energy. A Working group of VMDE and VMEEA, the "Unidad de Desarrollo Energético", develops the National Plan for Rural Electrification.
The Superintendencia de Electricidad (SE) is responsible for applying the regulation set by the VMEEA and it grants and supervises concessions. It controls the Comité Nacional de Despacho de Carga (CNDC), which coordinates the activities of the actors in the three markets (generation, transmission and distribution). The CNDC consists of delegates of the relevant companies.
Electricity companies
Like in other countries, Bolivia’s electricity sector consists of National Interconnected System (SIN) and off-grid systems (known as the Aislado). The Bolivian electricity market is strictly divided into the three fields: generation, transmission, distribution. One company is not allowed to work in more than one of this fields. However there is an exception for off-grid systems.
Power Generation:
In 2007 nearly 5,000 GWh were generated in the national grid. Currently, there are eight generation companies in the interconnected system, all of them privately owned. The three largest companies alone represent 70% of the total generation. The largest company serving the SIN is the Compañia Boliviana de Energía Eléctrica (COBEE), which serves the region surrounding La Paz. Furthermore COBEE is the only company, which has both thermoelectric power plants and hydroelectric ones. The other two bigger companies are Empresa Eléctrica Guarachi (EGSA; thermal) and Empresa Eléctrica Corani (CORANI; hydropower).
Transmission:
All mayor cities -except Tarija and Trinidad- are connected to the national grid. A line to connect Tarija is projected.
Currently, there are two transmission companies in the SIN, Transportadora de Electricidad (TDE), owned by Spain’s Red Electrica de Espana (REE), and ISA Bolivia, which was created in 2005. ISA Bolivia, which runs 53% of the transmission network in Bolivia, is a subsidiary of Interconexión Eléctrica S.A. (ISA), a corporation controlled by the government of Colombia. The number of companies is limited due to the existence of institutional entry barriers in this sector.
Distribution:
In Bolivia, the six existing distribution companies enjoy a geographic monopoly in their concession areas. The largest company (in terms of sold kWh) is the Rural Electrification Cooperative (CRE), which operates in the Department of Santa Cruz; followed by Electropaz, majority-owned by Spain’s Iberdrola. The third place is occupied by the Empresa de Luz y Fuerza Eléctrica Cochabamba (ELFEC), which was owned by the American PPL Global until 2007
Off-grid and self-supplying systems:
The departments of Beni, Pando and Tarija and the eastern region of Santa Cruz are not integrated in the SIN. As a result, there are vertically integrated operators that provide the service. The most important operators are:
- SETAR (Servicios Eléctricos Tarija, S.A.): 44 MW, serves 56,885 clients
- ENDE (Empresa Nacional de Electricidad): 16.65 MW, serves 28,554 clients
- CRE (Cooperativa Regional de Electricidad): 14.53 MW, serves 4,940 clients.
In some cases, especially in the high plateau, cooperatives and community organizations access the distribution companies’ network and sell electricity to small rural communities. Sometimes, those are organized enterprises that provide the service to middle-size towns, but in most cases, they are small organisations that serve family communities. This situation faces a legal vacuum since the consumers benefiting from these scheme, who do not consume the minimum power established legally established, cannot be considered as regulated ones. In addition, these consumers are localized outside the distribution companies’ concession areas, so they cannot receive the companies’ service. In practice, the distribution companies are reselling electricity to the mentioned organizations outside the legal framework. Accurate information on the number of organizations that operate in rural areas does not exist. However, there are approximately three in La Paz, twenty in Oruro and three in Potosi.
Non governmental service providers for rural areas in the field of energy
Projects implementing NGOs:
Micro-Finance Institutions:
Policy framework
Poverty reduction strategy
Energy policy
Key problems hampering access to modern energy services in rural areas
Obstacles for grid based rural electrification
Obstacles for off grid energy technologies and services
Energy Situation
Bolivia, with a population of approximately 10 million inhabitants, is considered one of the poorest countries in Latin America. While urban areas such as La Paz and Santa Cruz are modern cities with a relatively good supply of modern energy services, the majority of Bolivia’s rural areas are still experiencing a lack of most basic services, including reliable and affordable access to electricity and improved biomass cooking stoves. Thus, in 2005, total access to electricity in Bolivia was 67%, one of the lowest in Latin America. Urban access was 87%, while rural access remained as low as 30%.
Bolivia produces oil and natural gas. Thus, it is a net exporter of gas and oil. Electricity is mainly generated by private companies from hydropower (53%), gas (27%) and oil (18%). According to other sources total installed capacity in 2006 was 1,43 GW, of which 60% was thermal production, which primarily burns natural gas, and 40% hydroelectric. The contribution of other renewables is almost negligible.
Traditional biomass (wood, dung, charcoal and green residue) still accounts for 15% of primary energy consumption and is the third most important source of energy after gas and petroleum. This is mainly due to the important role of biomass for the energy supply in the country’s rural areas. Traditional biomass represents nearly 90% of total energy consumption by rural households and is mainly used for cooking.
Electric power consumption per capita in 2006 was 588 kWh (a 19% increase since 1996). By sector, residential consumption represents 40% of the total, followed by industrial consumption with 28%.
Institutional set up and actors in the energy sector
The Viceministry of Electricity and Alternative Energy, within the Ministry of Petroleum and Energy, is in charge of establishing policies and designing the regulation for the electricity sector. The Superintendencia de Electricidad (SE) is responsible for applying the regulation.
The electricity sector in Bolivia was privatized in the early 1990s and was unbundled into generation, transmission and distribution. The electricity coverage in rural areas is among the lowest in Latin America and improving it represents a major challenge in the future and requires the joint efforts from both the public and private sectors. Like in other countries, Bolivia’s electricity sector consists of National Interconnected System (SIN) and off-grid systems (known as the Aislado).
Generation
Currently, there are eight generation companies in the interconnected system, all of them privately owned. The three largest companies alone represent 70% of the total generation. The largest company serving the SIN is the Compañia Boliviana de Energía Eléctrica (COBEE), which serves the region surrounding La Paz. The other two are Empresa Eléctrica Guarachi (EGSA) and Empresa Eléctrica Corani (CORANI).
Transmission
Currently, there are two transmission companies in the SIN, Transportadora de Electricidad (TDE), owned by Spain’s Red Electrica de Espana (REE), and ISA Bolivia, which was created in 2005. ISA Bolivia, which runs 53% of the transmission network in Bolivia, is a subsidiary of Interconexión Eléctrica S.A. (ISA), a corporation controlled by the government of Colombia. The number of companies is limited due to the existence of institutional entry barriers in this sector.
Distribution
In Bolivia, the six existing distribution companies enjoy a geographic monopoly in their concession areas. The largest company is Electropaz, majority-owned by Spain’s Iberdrola; followed by Empresa de Luz y Fuerza Eléctrica Cochabamba (ELFEC), which was owned by the American PPL Global until 2007. The third place is occupied by the Rural Electrification Cooperative (CRE), which operates in the Department of Santa Cruz.
In some cases, especially in the high plateau, cooperatives and community organizations access the distribution companies’ network and sell electricity to small rural communities. Sometimes, those are organized enterprises that provide the service to middle-size towns, but in most cases, they are small organizations that serve family communities. This situation faces a legal vacuum since the consumers benefiting from these scheme, who do not consume the minimum power established legally established, cannot be considered as regulated ones. In addition, these consumers are localized outside the distribution companies’ concession areas, so they cannot receive the companies’ service. In practice, the distribution companies are reselling electricity to the mentioned organizations outside the legal framework. Accurate information on the number of organizations that operate in rural areas does not exist. However, there are approximately three in La Paz, twenty in Oruro and three in Potosi.
Operators in the off-grid system
The departments of Beni, Pando and Tarija and the eastern region of Santa Cruz are not integrated in the SIN. As a result, there are vertically integrated operators that provide the service. The most important operators are:
- SETAR (Servicios Eléctricos Tarija, S.A.): 44 MW, serves 56,885 clients
- ENDE (Empresa Nacional de Electricidad): 16.65 MW, serves 28,554 clients
- CRE (Cooperativa Regional de Electricidad): 14.53 MW, serves 4,940 clients.
Other donors
The World Bank is financing a rural infrastructure project in Bolivia which, among others, plans to install 17,000 solar home systems by 2009. Another project funded by the Global Partnership on Out-based Aid which is administered by the World Bank intends to scale up the installations by an additional 7000 in the next three years.
Policy framework
Energy policy
The Bolivian government’s efforts to improve delivery of energy services to the poor have been quite intensive in recent years. First, the broad energy sector reform programme that comprised among others the privatisation of state utilities, was implemented in the mid-1990s. The reform improved the overall performance of the electricity sector and achieved important coverage gains in urban areas, connecting and providing access to the grid for about 90% of the urban population. The access rate in rural areas, however, has only grown from 13.7% in 1997 to 30% in 2005.
In 2002, the government of Bolivia developed an ambitious rural electrification plan (PLABER – Plan Bolivia de Electrificación Rural) to increase access to electricity in rural areas from 25% to 45% within five years. However, implementation of the plan has been slow due to the ongoing political and economic crisis. A new Rural Electrification Decree was approved in 2005 (Supreme Decree No. 28567). This new decree aims at increasing rural access through the extension and densification of electric networks, development of renewable energy and a change in the energy mix (substitution of diesel by natural gas, biomass and other renewable energies) and an increase in distribution capacity. The Rural Electrification Decree and its associated regulatory framework encourages stakeholders in the energy sector to establish partnerships with other government agencies to implement the rural electrification plan. An agreement between the Ministry of Public Works, Services and Housing and the Ministry of Education will allow for the installation of solar PV systems in rural areas in conjunction with the literacy program, “I can” (Yo sí Puedo).
In 2006 a new Law for Universal Access to Electricity (Ley de Acceso Universal) was proposed. Under the framework of this Law, the program called ‘Electricity for a Decent Living” has been designed to improve both rural and urban electrification. The short term goal (2006-2010) of the program is to increase rural electrification to 53% (connection of 210,000 new households) and urban electrification to 97% (connection of 460,000 new households). The medium term goal (2010-2015) is to achieve universal access in urban areas and a 70% access in rural ones. In the final stages, rural access would have increased to 87% by 2020 and universal coverage would be reached by 2025. The Law also mandates de creation of a Common Fund for Universal Access to Public Electricity Sevice (FOCO) and creates a co-financing mechanism of the National Government with Prefectures, municipalities and the private sector. However, the Law has not been approved yet, although it is expected that the Law and the mechanisms it creates will be approved soon.
Key Problems hampering access to modern energy services
Despite great efforts of the government and foreign donors to improve access to electricity, the majority of the rural poor lacks access to modern energy for lighting, communication etc. . Close to 70% of the population have to rely on biomass for their energy needs. Especially wood and other traditional biomass is widely used for cooking in a very inefficient manner. This issue needs to be tackled urgently since biomass has become scarce in some arid areas. Furthermore, indoor air pollution, resulting from traditional combustion technologies and practices, is causing severe health problems, especially among women and children. Moreover, extensive use of wood for cooking is resulting in deforestation and related environmental problems - since forests are often not managed in a sustainable manner. In addition, most schools and health facilities in rural areas are suffering from a lack of warm water, adequate cooking conditions and means to heat their premises. The responsible municipalities are able to cater to the regular budgets; but they have great deficiencies in thunneling their increased financial resources into energy related investments. Their human and institucional capacity to improve access to modern energy for households and community-run social infrastructure institutions is very low.
In nearly all national and municipal support programmes for the productive sector, energy related issues such as technology or reliable energy supply, are missing. This hampers in many cases the development of better processing facilities and value added products in rural areas.
