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Paraguay is the most vulnerable country to climate change in South America and one of the world’s largest electricity exporters. However, it only consumes 16% of the energy it produces: the rest is sold as a commodity to countries like Argentina and Brazil. Wood from forest plantations and native forests supplies 51% of households, as far as cooking is concerned, for instance.


By Norma Flores Allende

Osvaldo lives with his wife and a small baby in a Lambaré neighborhood. Lambaré is a city that is part of Greater Asunción, the metropolitan area of ​​the capital of Paraguay. Due to the frequent power outages, caused whether to intense heat, a storm or any another reason, it is usual for him to be forced to go to a relative’s house. However, the constant interruptions have caused losses in his business venture. And all this has led him to buy a generator.

Osvaldo’s reality is that of many Paraguayans who have found it necessary to purchase generators in order to have electricity in their homes or offices. Something that would not be unusual were it not for the fact that Paraguay is one of the world’s largest exporters of electricity.  

The South American country only consumes 16% of the energy it produces, the rest is exported as another commodity to countries like Argentina and Brazil, with which Paraguay shares the Yacyretá (Argentina-Paraguay) and Itaipú (Brazil-Paraguay) hydroelectric plants. It is also worth mentioning that the sale of such energy is carried out at a price lower than the market price due to international treaties, as indicated by the Base IS.

Hydroelectricity exporter supplied with firewood

In spite of exporting electricity, Paraguay actually depends on biomass for its internal consumption. Guillermo Achucarro, an environmental engineer specializing in climate change, explains: “Wood from forest plantations and native forests supplies 51% of households in connection with cooking, for example. What remains is used by agricultural industries, for whom it is cheaper using firewood than paying for electricity.”

The latest report of the Deputy Ministry of Mines and Energy, referring to the production and consumption of forest biomass for energy purposes, supports the expert’s statement and highlights the importance of firewood for the energy internal demand in Paraguay. “The excessive demand for biomass against the scarce supply of sustainable biomass results in a high consumption of wood from native forests, which indirectly induces a process of degradation of the remaining forests,” admits the most recent government document.

Miguel Lovera, an agronomist with a PhD in Biodiversity and International Forest Policy from the University of Georgia, points out that depending on firewood has a triple impact on the environment: first in the destruction of virgin mountains; second, as regards the felling of forests that are regenerating; and finally, in the expansion of forest monocultures, which affect biodiversity and climate cycles.

Dry rivers that threaten hydroelectric potential

Even though the internal demand in Paraguay is supplied through biomass, the historic drought of the Paraná River, for two consecutive years, has had a considerable impact on the generation capacity of the three hydroelectric plants that this country has, all settled on the same river.

The Paraná river downspout beat its maximum downspout for the second consecutive year. That had not happened since 1970,” says Achucarro. “And for that to happen two years in a row, is definitely not something normal,” he adds. 

The expert points out that this phenomenon is regional and that it covers the Plata basin, as a consequence of intensive deforestation, especially in the Amazon, one of the great sources of water in the Southern Cone.

And, due to the low inflow, little water reaches the reservoirs of the three plants: Acaray, Yacyretá (binational, Argentina-Paraguay) and Itaipú (binational, Brazil-Paraguay), which has considerably reduced the production of hydroelectric plants. This water crisis also turns into a lower reception of royalties by the Paraguayan State.

Engineer Mercedes Canese, former Deputy Minister of Mines and Energy, warns that water production becomes less stable in a context of climate crisis. “Hydroelectric plants are not eternal; they have a lifetime. The reservoirs gradually fill with sediment until there comes a time when the hydroelectric plant stops working.”

The engineer adds that this process is accelerated if the basin is not taken care of, which is what happens due to soybean monocultures on the banks of the Paraná River, according to this professional.

A climate crisis that is also a power crisis

“The climate crisis is really closely related to energy sovereignty, in all its dimensions. Less water, less energy, as simple as that,” Achucarro points out. 

It is worth remembering that Paraguay is the most vulnerable country to climate change in South America, ranking among the 10 extreme risk nations on the continent, due to its low development indicators and its economy dependent on the agricultural sector, according to the CAF Index of Vulnerability and Adaptation to Climate Change in the Caribbean and Latin American Region.  

While Paraguay is torn between droughts, floods, increasingly extreme events, lack of water security and displacement of people, the energy future does not look optimistic either. The Deputy Ministry of Mines and Energy has underlined that, as from 2030, energy production will not be enough to cover local demand.

To make matters worse, the intense deforestation in Paraguayan territory impacts on the amount of water available to feed these hydroelectric plants. Therefore, it is not just the climate crisis that stands in the way of this calculation and speeds up the inevitable, other practices are aggravating the problem.

“A lot is deforested to meet the energy demand for firewood, which is used in homes and industries. Biomass is extracted from forest cultivated fields to a lesser extent. The less water, the less plant growth to meet energy needs,” explains engineer Achucarro.

In this context, a cheap and fast alternative for energy supply is forest cultivated fields, but these have a hidden cost that ends up being more burdensome. “Forest cultivated fields, used as biomass, destroy native forests in order to meet energy demand,” says this expert.

Lovera, for his part, illustrates the effect of clearing on the availability of water: “Since there are fewer forests, there is less recharge of aquifers. And since there is less aquifer recharge, there is less flow in the rivers, which is the drainage system of these full aquifers”.

Nonetheless, studies are still needed to accurately estimate the impact of climate vulnerability on the production of the three hydroelectric plants that Paraguay has.

Towards a possible future of energy scarcity in Paraguay

Engineer Canese recalls that the local demand for energy increases every year, and in an increasingly adverse climate context, a future scenario of scarcity is possible. Former heads of the National Electricity Administration (ANDE for its initials in Spanish), the Paraguayan state company that provides energy, such as Héctor Richer and Miguel Fulgencio Rodríguez -who stated that “ANDE is likely to have to resort to scheduled outages”-, have agreed with that forecast.

Osvaldo believes that, faced with constant power outages, Paraguayans have no choice but to buy a generator. The drawback is noise, pollution and fuel consumption; but the truth is that he has no choice. He cannot rely on the quality of service -his income depends on it. Likewise, he is aware that the solution cannot be solely individual, and that is why he considers that the Paraguayan Government must adopt public policies to improve the distribution network, price and other aspects related to the efficiency of the service.

In addition to the lack of adequate infrastructure, there is an energy matrix that fails to take advantage of renewable energy sources and the progress of the climate crisis that promises to worsen problems.

In a not too distant future, the largest exporter of energy may not be able to turn on the light.