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Power systems integration Around the world, regional connections have evolved from bilateral relationships based on trading surplus power and providing mutual support in case of system emergencies to formal legal entities that span multiple states and countries and have formal regulatory power and centralized control over electricity dispatch. In LAC, a regional electricity system has been pursued as a key element for economic integration. Interconnection projects have been proposed and implemented in some cases for South America, Central America, and the Caribbean. Today, the objective of scaling up NRETs provides a further powerful reason to implement these projects. As compared to large countries such as Brazil, which clearly have the land area and the renewable resources to take advantage of geographic diversity, smaller countries such as those in Central America and the Caribbean will benefit more from greater regional transmission interconnection.99 Regional integration would permit variable generation to be balanced across international borders. Generally, regional power pools can: • improve system reliability and unlock investments by creating opportunities to capture greater economies of scale; • enable the integration of variable renewable energy by complementing greater geographic and resource diversity; • allow operating reserves to be shared and coordinated (in the Nordic power pool, for example, it has been estimated that reserve requirements would need to be twice as high if each country operated in isolation given the high regional penetrations of wind);100 and, • higher penetration of variable renewable generation, providing additional incentives to harness resource-rich areas such as the Patagonia (tidal and wave resource) or the Atacama and Sonora deserts (solar radiation). Wind and solar output may be variable at a single site, but the overall variability to the system can be smoothed out by geographically dispersed resources. In other words, while wind speeds may be low at one wind farm, they may be high at another at the same time. Similarly, clouds may temporarily reduce output at one solar plant, but the skies may be sunny over another on the system many kilometers away. Larger power systems can more readily incorporate variable renewables because the output from geographically dispersed renewable energy systems is less correlated. Wind forecast errors, for example, can be reduced by as much as 30% - 50% when wind is aggregated over a broad geographic area.101 Since generation is less variable in aggregate, it reduces the need for operating reserves and lowers integration costs. Progress in regional integration is limited, however. The Central American Electrical Interconnection System (SIEPAC for its Spanish acronym) has created new opportunities for power trade – and variable generation integration – among nations. It has been estimated that the interconnection on its own will result in a 3% reduction in energy cost and 4% fuel savings for the connected countries.102 Nonetheless, differences in electricity market structures and regulations have constrained efforts to integrate the markets. These same challenges are mirrored across the continent. For example, the Andean region countries are currently intending to ease electricity exchange through the Andean Electrical Rethinking our energy future p. 22PDF Image | White Paper on Renewable Energy for the 3GFLAC
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