(2012-2014) Latin America Energy Brief (Argentina Brazil Chile Mexico) I.

Argentina
1816 Buenos Aires 2.78 mil sq km 42.6 million Spanish, Italian, English, German, French, indigenous Agriculture 9.1%, Industry 30.5%, Services 60.4% $484.6 billion 3.46% $11,679
Source: Argentina CIA World Fact Book

Independence Capital Area Population Language Sectors (by GDP) GDP (US$) GDP Growth (annual %) GDP per capita (US$)

Economic Overview
Rich in natural resources with a highly literate population and an export oriented agricultural sector with a diversified industrial base. Suffered from serious economic and political crisis in 20th century. Economy in 2010 rebounded from 2009 economic crisis, but growth is slow due to expansionary fiscal and monetary policies and results in double digit inflation. State intervention in the economy expanded in 2012, imports are restricted and currency control is in force to boost foreign reserves.

Energy Overview
One of the largest power markets in Latin America. Relies mostly on thermal (54%) and hydro (41%), with large untapped hydroelectric potential. With rising electricity demand of over 6% annually, large projects in power generation and transmission are commissioned. 75% of power capacity generation is owned by private utilities, transmission sector is highly regulated.

Renewable energy policies in force

Promotion of Renewable Sources of Energy for Electricity Production (2007) National Strategic Plan for Wind Energy (2005) Renewable Energy & Energy Efficiency Partnership (2002)

Renewable energy highlights

In 2012, total project costs in renewable energy with private participation reached USD 583 million. Most active sponsor was Generadora Argentina del Sur with 1350MW in development. Total potential installed capacity for projects in development reached 1450 MW. Wind was most active with 1450 MW in development and 225MW financed. Total projects in 2012: Wind: 1450MW in development, 225MW financed

2012 Argentina Energy Projects (MW)

13%

Wind-financed Wind-in development

87%

Source: Argentina Private Participation in Energy Projects, World Bank

II. Brazil
Independence Capital Area Population Language Sectors (by GDP) GDP (US$) GDP Growth (annual %) GDP per capita (US$) 1822 Brasilia 8.5 mil sq km 201 million Portuguese, Spanish Agriculture 5.2%, Industry 26.3%, Services 68.5% $2190.2 billion 2.54% $10,957
Source: Brazil CIA World Fact Book

Economic Overview
Brazils economy is gradually recognized in world markets. Has well-developed agricultural, mining, manufacturing and service sectors. Has steadily improved macroeconomic stability since 2003 High interest rates is attractive for foreign investors, large capital inflow causes to appreciation of currency, leading government to intervene in foreign exchange markets and raise taxes on foreign capital inflow. Implements floating exchange rate and fiscal restraint.

Energy Overview
Brazil is the largest energy consumer in South America and 10th largest in the world. Important oil and gas producer and worlds 2nd largest ethanol fuel producer. Petrobras and Electrobras are state owned energy companies that are major players in Brazil and Latin Americas energy sector. State does not monopolize oil and gas exploration but keeps monopoly control of key energy complexes and dictate price of certain energy products. 3rd largest hydroelectricity producer in the world, hydro accounts for majority of electricity production. Brazil has one of the highest solar incidence in the world, but currently PV capacity make up less than 0.01% of energy.

Renewable energy policies in force

Interministerial Commission on Climate Change (1999) 2010-2019 Plan for Energy Expansion (2010) Brazil National Climate Change Plan (2008)

Renewable energy highlights

In 2012, total project costs in renewable energy with private participation reached USD 22,907 million. Most active sponsor was Construtora Queiroz Galvao with 11,200MW financed. Total potential installed capacity for projects in development reached 1671 MW. Large Hydro was most active with 14046 MW financed. Total projects in 2012: Bioenergy: 324MW financed, 96MW in development Large hydro: 14046MW financed Small hydro: 553MW financed, 75MW in development Wind: 1370MW financed, 1500MW in development

2012 Brazil Energy Projects (MW)

2% 16% 4% Bioenergy Large Hydro Small Hydro Wind 78%

Source: Brazil Private Participation in Energy Projects, World Bank

III. Chile
Independence Capital Area Population Language Sectors (by GDP) GDP (US$) GDP Growth (annual %) GDP per capita (US$) 1810 Santiago 0.76 mil sq km 17.2 million Spanish, Mapudungun, German, English Agriculture 3.6%, Industry 36%, Services 60.4% $281.67 billion 4.4% $16,043
Source: Chile CIA World Fact Book

Economic Overview
Market oriented economy with high level of foreign trade and strong financial institutions. Chile has 22 trade agreements with 60 countries and a deepened commitment to trade liberalization. Government follows a countercyclical fiscal policy. It is the first South American country to join the OECD.

Energy Overview
Electricity in Chile relies mainly on hydro-electricity generation, gas, coal and oil. Natural gas shortages led to building of Chiles first LNG terminal to secure supply for gas-fired thermal plants. Chile is engaged in construction of new hydropower and coal-fired thermal plants. Vertical and horizontal unbundling of power generation and distribution led to large scale privatization after electricity sector reform in 1980s. Worlds largest unsubsidized solar farm would be in Atacama desert by SunPower Corp. General Law of Electric Services enables private investment in power generation and distribution. Generation is competitive market, while transmission and distribution are regulated.

Renewable energy policies in force

New Strategy for the National Electricity Sector (2012) Invest Chile Project (2005) Non-conventional renewable energy law (2008)

Rural Electrification with Renewable Energy Programme (2001)

Renewable energy highlights

In 2012, total project costs in renewable energy with private participation reached USD 783 million. Most active sponsor was Grupo Ibereolica of Spain with 530MW in development. Total potential installed capacity for projects in development reached 2181MW. Solar was most active with 1739 MW in development and 95MW financed. Total projects in 2012: Wind: 418MW in development, 241MW financed Solar: 1739MW in development, 95MW financed

2012 Chile Energy Projects (MW)

26% Solar Wind 74%

Source: Chile Private Participation in Energy Projects, World Bank

IV. Mexico
Independence Capital Area Population Language Sectors (by GDP) GDP (US$) GDP Growth (annual %) GDP per capita (US$) 1810 Mexico City 1.96 mil sq km 116.2 million Spanish, indigenous languages Agriculture 4.1%, Industry 34.2%, Services 61.8% $1327 billion 4.4% $11,224
Source: Mexico CIA World Fact Book

Economic Overview
Free market economy with mixture of modern and outdated industry, increasingly dominated by private sector. Income distribution is highly unequal. Mexico has free trade agreements with over 50 countries, with over 90% of trade under FTA. GDP after 2009 economic crisis rebounded with increased exports to the US, with growth around 4% annually. Legislature passed comprehensive labor reform law in November 2012, prioritizing structural economic reforms and competitiveness.

Energy Overview
Mexico is a major non-OPEC oil producer and the largest source of US oil imports. Net importer of natural gas mostly from US. Natural gas demand is rising due to greater use of fuel for power generation. Most electricity generation comes from conventional natural gas thermal plants. Foreign involvement in exploration, production and ownership of Mexico s hydrocarbon resources is restricted. Oil production decline is due to PEMEX, the state-owned oil company. Hydroelectricity supplies around 14% of total electricity generation.

Renewable energy policies in force

Promotion of Renewable Sources of Energy for Electricity Production (2007)

National Strategic Plan for Wind Energy (2005) Renewable Energy & Energy Efficiency Partnership (2002)

Renewable energy highlights

In 2012, total project costs in renewable energy with private participation reached USD 1326 million. Most active sponsor was Macquarie Infrastructure Group of Australia with 396MW in financed projects. Total potential installed capacity for projects in development reached 821 MW. Wind was most active with 522 MW in development and 540MW financed. Total projects in 2012: Wind: 522MW in development, 540MW financed Solar: 239MW in development Bioenergy: 60MW in development

2012 Mexico Energy Projects (MW)

4% 18% Bioenergy Solar Wind 78%

Source: Mexico Private Participation in Energy Projects, World Bank

LATAM GDP
3000.00 2500.00 2000.00 1500.00 1000.00 500.00 0.00 Billion

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Argentina 153.13 183.19 214.07 260.77 326.58 307.16 368.74 446.04 470.53 484.60 Brazil Chile Mexico 663.76 882.19 1088.9 1366.8 1653.5 1620.1 2143.0 2476.6 2252.6 2190.2 100.63 124.40 154.67 173.08 179.63 171.73 217.31 250.99 268.19 281.67 759.78 848.95 952.15 1035.8 1092.2 883.74 1034.9 1157.6 1177.9 1327.0 Source: World Bank Database, IMF

LATAM GDP per Capita

18,000.0 16,000.0 14,000.0 12,000.0 10,000.0 8,000.0 6,000.0 4,000.0 2,000.0 0.0 USD

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Argentina 3,997. 4,740. 5,490. 6,630. 8,231. 7,674. 9,133. 10,951 11,452 11,679 Brazil Chile Mexico 3,607. 4,739. 5,788. 7,194. 8,622. 8,373. 10,978 12,576 11,339 10,957 6,224. 7,614. 9,371. 10,383 10,672 10,106 12,670 14,501 15,355 16,043 6,946. 7,666. 8,492. 9,124. 9,500. 7,590. 8,779. 9,698. 9,747. 11,224 Source: World Bank Database, IMF

LATAM Annual GDP Growth

10.00 5.00 0.00 -5.00 -10.00 Percent

2004 5.71 6.04 4.05

2005 9.18 3.16 5.56 3.21

2006 8.47 3.96 4.40 5.15

2007 8.70 6.10 5.16 3.26

2008 6.80 5.17 3.29 1.19

2009 0.90 -0.33 -1.04 -5.95

2010 9.20 7.53 5.70 5.28

2011 8.90 2.73 5.77 3.89

2012 1.90 0.87 5.62 3.92

2013 3.46 2.54 4.40 1.22

Argentina 9.03 Brazil Chile Mexico

Source: World Bank Database, IMF