Power sector in 2030
Renewable energy sources already make up 60% of Peru’s power generation. Roughly 55% comes from hydropower and the remaining 4% from solar and wind (2019).8 The government aims to increase the share of solar and wind in the power generation to 15% by 2030. 1.5°C compatible pathways would require the renewable energy share to be around 95-98% by 2030. There is room for improvement in Peru’s power sector targets. However, it is very likely that the country would require significant international support to achieve this outcome.
1.5°C compatible pathways would require gas to be phased out from the power sector between 2033 and 2035. However, Peru continues to expand the use of fossil gas in the power and other sectors through, for example, the relaunch in January 2023 of the construction of the gas pipeline in the south of Peru.
Towards a fully decarbonised power sector
On a 1.5°C compatible pathway, Peru’s power sector reaches full decarbonisation by the mid-2030s. Decarbonisation is made possible by a gas phase-out in the early 2030s.
Renewable energy made up 60% of Peru’s power generation in 2019. Ramping up renewable energy such as solar and wind will be the key driver of the power sector decarbonisation. It will also reduce the reliance on carbon dioxide removal approaches. For 1.5°C pathways, Peru would need to reach 100% renewable power production by 2035. Such a rapid scaling up of renewables and phasing out of fossil fuels will require considerable international support.
1 Climate Action Tracker. Climate Target Update Tracker: Peru. (2020).
2 Climate Action Tracker. Peru: Country Summary. (2020).
3 Ministerio de Energía y Minas Peru. Minem: al cierre del último año se ejecutaron 49 proyectos de energías renovables en el Perú. (2021).
4 COES Perú. Actualización Plan de Transmision 2021 – 2030. (2020).
5 Andina Staff. 15% of Peru’s energy matrix in 2030 to be generated from renewable sources. Andina: Agencia Peruana de Noticias (2018).
6 International Energy Agency. Peru: Electricity generation by source. (2020).
7 BN Americas. What’s next for Peru’s failed 7-region gas concession call? BN Americas (2021).
8 Ministerio de Ambiente de Peru. Estiman que reducir emisiones de gases de efecto invernadero beneficiará al país en 98 mil millones de dólares al 2050. Press Release, Ministerio de Ambiente (2020).
9 Gobierno del Peru. Contribuciones Determinadas a Nivel Nacional del Perú. Reporte de actualización periodo 2021-2030. 29 (2020).
10 Reuters Staff. Peru says deforestation on the rise, up 80 percent from 2001. Reuters (2014).
11 International Energy Agency (IEA). Peru: Total energy supply (TES) by source. (2020).
12 Banco del Desarrollo de Perú (COFIDE). Prácticas e instrumentos financieros para promover la descarbonización de la movilidad urbana. (2019).
13 COFIDE. KfW y COFIDE firman acuerdo de préstamo por 250 millones de euros para Programa “Covid 19: Programa de Reactivación Verde”. (2020).
14 Organismo Supervisor de Inversión en Energía y Minería (OSINERGMIN)- Perú. La industria del gas natural en el Perú a diez años del Proyecto Camisea. 51, (2017).
15 El Congreso de la República de Perú. LEY No 29969: Ley que dicta disposiciones a fin de promover la masificación del gas natural. El Peruano 23, 32 (El Congreso de la Repúblic de Perú, 2012).
16 Government of Peru. Peruvian submission to the UNFCCC under the Copenhagen accord. (2010).
17 Ministerio del Ambiente- Perú. Segundo Informe Bienal de Actualización ante la Convención Marco de las Naciones Unidas sobre el Cambio Climático. (2019).
18 Ministry of Environment of Peru. Programa Bosques del Minam proyecta conservar 10 millones de hectáreas de bosques comunales hacia el 2030. (2020).
19 BN Americas. Increasing natural gas use in 7 Peruvian regions: a mature and profitable project. (2020).
20 While global cost-effective pathways assessed by the IPCC Special Report 1.5°C provide useful guidance for an upper-limit of emissions trajectories for developed countries, they underestimate the feasible space for such countries to reach net zero earlier. The current generation of models tend to depend strongly on land-use sinks outside of currently developed countries and include fossil fuel use well beyond the time at which these could be phased out, compared to what is understood from bottom-up approaches. The scientific teams which provide these global pathways constantly improve the technologies represented in their models – and novel CDR technologies are now being included in new studies focused on deep mitigation scenarios meeting the Paris Agreement. A wide assessment database of these new scenarios is not yet available; thus, we rely on available scenarios which focus particularly on BECCS as a net-negative emission technology. Accordingly, we do not yet consider land-sector emissions (LULUCF) and other CDR approaches.
21 In some of the analysed pathways, the energy sector assumes already a certain amount of carbon dioxide removal technologies, in this case bioenergy carbon capture and storage (BECCS).
Peruʼs power mix
terawatt-hour per year
- Negative emissions technologies via BECCS
- Unabated fossil
- Nuclear and/or fossil with CCS
- Renewables incl. biomass
Peruʼs power sector emissions and carbon intensity
MtCO₂/yr
- Historical emissions
- SSP1 High CDR reliance
- SSP1 Low CDR reliance
- High energy demand - Low CDR reliance
- Low energy demand
- 100%RE
1.5°C compatible power sector benchmarks
Carbon intensity, renewable generation share, and fossil fuel generation share from illustrative 1.5°C pathways for Peru
Indicator | 2019 | 2030 | 2040 | 2050 | Decarbonised power sector by |
|---|---|---|---|---|---|
Carbon intensity of power gCO₂/kWh | 200 | 10 to 20 | 0 | 0 | 2031 to 2035 |
Relative to reference year in % | −97 to −89% | −100% | −102 to −100% |
Indicator | 2019 | 2030 | 2040 | 2050 | Year of phase-out |
|---|---|---|---|---|---|
Share of unabated coal Percent | 0 | 0 | 0 | 0 | 2018 |
Share of unabated gas Percent | 38 | 2 to 5 | 0 | 0 | 2033 to 2035 |
Share of renewable energy Percent | 60 | 95 to 98 | 100 | 100 | |
Share of unabated fossil fuel Percent | 40 | 2 to 5 | 0 | 0 |
Investments
Demand shifting towards the power sector
The 1.5°C compatible pathways analysed here tend to show a strong increase in power generation and installed capacities across time. This is because end-use sectors (such as transport, buildings or industry) are increasingly electrified under 1.5°C compatible pathways, shifting energy demand to the power sector. Globally, the “high energy demand” pathway entails a particularly high degree of renewable energy-based electrification across the various sectors, and sees a considerable increase in renewable energy capacities over time. See the power section for capacities deployment under the various models.
Peruʼs renewable electricity investments
Billion USD / yr
Yearly investment requirements in renewable energy
Across the set of 1.5°C pathways that we have analysed, annual investments in renewable energy excluding BECCS increase in Peru to be on the order of USD 2 to 5 billion by 2030 and 4 to 12 billion by 2040 depending on the scenario considered. The ‘high energy demand, low CDR reliance’ pathway shows a particularly high increase in renewable capacity investments, which could be driven by an increase of electrification of end-use sectors, growing energy demand, and expansion of electricity access. Other modelled pathways have relatively lower investments in renewables and rely to varying degrees on other technologies and measures such as energy efficiency and negative emissions technologies, of which the latter can require high up-front investments.