The bill would boost the share of renewables and reduce the country's dependence on gas and hydro, writes John Quigley
Draft legislation that aims to quintuple the share of renewable energy in Peru's electricity mix was defeated by a narrow margin in an initial vote in congress. But the sector hopes to reverse the result in a second vote as early as next week.
Lawmakers on 8 May on the congressional energy and mines committee voted 9-8 against the legislation, with one abstention.
President Dina Boluarte submitted the draft legislation to congress on 24 March to modify the 2006 energy efficiency law. But recent political turmoil has prevented the bill from gathering sufficient support. Boluarte took office in December following the impeachment of Pedro Castillo and severed ties with his Peru Libre party. Boluarte was left without a party in congress and the fate of the renewables bill may depend on the government's ability to negotiate with the opposition over giving the measure its support.
Crucially, the bill lacked the backing of legislators from the party led by three-time presidential candidate Keiko Fujimori.
Should the energy and mines committee approve the bill, it will be put to a vote on the floor of Peru's unicameral congress.
Billions of dollars of investment, and thousands of megawatts of new projects, are riding on the legislative changes, the president of domestic renewable energy association SPR, Brendan Oviedo, says. "The vote against was in large part due to disinformation, so we think this vote will be reversed next week," he says.
The legislation includes a plan to introduce time block contracts and simplify supply auctions. It is designed to reduce the country's reliance on natural gas and hydro, which account for 96pc of its power supply.
It will help with Peru's energy transition and reduce energy bills for the country's homes, which pay some of the highest electricity prices in Latin America.
Solar and wind generation costs have fallen significantly since Peru last held a renewable power auction in 2015. The changes would allow distributors to sign supply contracts without the need for auctions and would also make supply contracts more flexible and predictable.
The legislation is particularly important for solar producers. It would allow time blocks tailored to production sources and new daytime contracts would allow solar generators to compete for contracts to supply distributors.
Mine your own business
Renewable producers will also vie for business from industries such as Peru's vast, energy-intensive mining sector.
Multinational mining companies in Peru such as Anglo American plan to make the transition to renewable energy in the coming years. The firm has pledged to switch to renewables for 100pc of its energy needs at its new Quellaveco copper mine in southern Peru over eight years starting in 2029.
Expanding renewables capacity will allow the country to diversify its energy supply geographically. A clutch of thermoelectric plants located about 60km from Lima account for 40pc of the country's energy supply.
Peru has a goal of increasing its non-conventional renewables share of the power mix to 20pc by 2030, from 4pc currently.
