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rules, network design and enabling policies. As the current generation of policies enacted in the LAC region continues to mature and policy makers continue to strive toward national targets, a set of best practices for addressing the upfront costs of renewable resources and scaling up regional markets is likely to emerge. LAC has the opportunity of leapfrogging towards innovative frameworks to anticipate and then manage high penetrations of renewable generation, and in particular of variable generation. Variable generation In order to incorporate variable generation in the region there is a need to understand both the electricity markets structure and the types of technologies available in each electricity grid. Electricity market structures vary widely across the LAC region, and include vertically integrated monopolies in many Caribbean countries, single-buyer markets in several Central American countries, and wholesale electricity markets in many other countries in the region (see Figure 10). The commonality among these structures is that these were designed around large, centralized power plants that provide steady “base load” power and peaking plants that supplement the base load generators when demand rises. An electricity grid with a high penetration of renewable energy, however, would require a different mix of generator types. Given the technical difficulties to store power, electricity systems can accommodate some share of inflexible technologies (“must-take” technologies that cannot be dispatched, i.e. turned on and off at will), but require as well flexible technologies that can ensure that the generation matches the load at any instant. In conventional power systems base load technologies such as nuclear or coal occupy the inflexible (i.e. non-dispatchable) niche, whereas peak technologies such as hydropower (with seasonal or hourly storage reservoirs) or gas turbines occupy the flexible niche, with other technologies with limited flexibility occupying intermediate positions. In contrast, in renewable energy systems, non-controllable (non-dispatchable) technologies such as wind, solar, marine, and also geothermal power occupy the inflexible niche. NRETs such as hydropower and some biomass technologies are available to occupy the flexible niche. Other options are available as well to achieve the flexibility that renewable electricity systems include (for instance) regional integration, energy storage, and demand control.98 The LAC region is well-positioned in terms of flexible generation technologies: With the highest penetration of hydropower in the world, it has the ability to absorb significant penetrations of variable renewable energy. However, current policies and regulations hamper, rather than foster, synergies between hydropower and NRETs. New mechanisms are required to enhance the value of hydropower as a technology that compensates the short-term variability of NRETs. Rethinking our energy future p. 20PDF Image | White Paper on Renewable Energy for the 3GFLAC
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