Hydropower is the largest source of electricity generation in Latin America

Hydropower is the largest source of low-emissions electricity worldwide today. According to the IEA Stated Policies Scenario (STEPS), it is expected to maintain this status until 2030, while providing flexibility and other power system services, integrating and balancing variable renewable energy sources.

In Latin America, hydropower is the main source for electricity generation in most countries, accounting for 45% of the total electricity supply from the region. The total hydropower installed capacity in Latin America was 196 GW in 2019, of which 176 GW was from South America and the rest from Central America and Mexico. Because of this significant contribution of hydropower, Latin America has been the region with the largest share of electricity generation renewables. In Latin American countries where over 70% total electricity generation is from renewables (Paraguay, Costa Rica, Uruguay, Brazil, Panama, Ecuador and Colombia), hydropower provides the biggest share, ranging from 50% in Uruguay to 100% in Paraguay.

The role of hydropower in Latin America is likely to remain significant or potentially increase. The IEA World Energy Outlook projects that under a continuation of stated policies, the share of hydropower in the power sector would stay at its current level (Stated Policies Scenario) or increase to achieve sustainable energy objectives in full (Sustainable Development Scenario) by 2040.

Climate change will have increasing impacts on hydropower generation in Latin America

Climate change impacts on temperature and precipitation patterns could pose a challenge to hydropower generation in Latin America by increasing the variability in streamflow, shifting seasonal flows and augmenting evaporation losses from reservoirs. Rising temperatures, fluctuating rainfall patterns and the increase in extreme weather events have major impacts on streamflow and water availability, consequently affecting hydropower generation.

Climate projections show an increasing variability and probability of extreme precipitation events, which can result in heavy rainfall, floods and droughts by the end of this century. An increase in heavy precipitation is projected for many areas of Latin America, although there are projected negative trends in some locations as well. Some studies project intense droughts during the 21st century in regions like Amazonia and northeast Brazil. El Niño-Southern Oscillations (ENSO) could exacerbate these extreme regional precipitation events. The increased probability of extreme precipitation events will consequently increase risks to hydropower generation by altering water availability, increasing sediments or causing physical damages to assets.

To minimise the adverse impacts of climate change on Latin American hydropower, governments and utilities need to scale up their efforts to address potential climate risks and impacts and identify effective measures to enhance resilience to climate change. A resilient hydropower system can accelerate clean energy transitions while providing adaptation benefits.

This report aims to help improve the resilience of hydropower in Latin America by providing qualitative and quantitative analyses of climate risks and impacts and by introducing potential resilience measures. First, it qualitatively assesses the climate risks to Latin American hydropower based on three dimensions: hazard, exposure and vulnerability (Chapter 2). Second, it examines the potential climate impacts on Latin American hydropower quantitatively, comparing three climate scenarios (Chapter 3). Finally, Chapter 4 presents examples of measures to enhance climate resilience and suggests policy recommendations.