ious agenda, including a specific call to catalyze a stronger effort around energy efficiency.
Yet, despite these advances, demand-side resources – namely energy efficiency, demand response, and an engaged customer base – continue to be underutilized and can play a huge role for the region.
Here are three things that Latin America can do to fully unlock its demand-side resources and usher in a robust energy future.
3 Big Strategies
1) Incentivize Utilities to Champion Energy Efficiency
Energy efficiency is the cheapest kilowatt of power generation never built. It is capable of providing resources that can displace electricity generation from coal, oil and other highly polluting fuels. And according to a new comprehensive report, energy efficiency costs utilities 2 to 3 times less than traditional power sources. Regarding its application in Latin America, the Natural Resources Defense Council recently highlighted energy efficiency as a crucial tool to enable sustainable growth in the region.
Electric utilities have an important role to play. But in the absence of a modernized regulatory environment, utilities have a natural incentive to increase their sales and have limited incentives to pursue energy efficiency. Numerous regulatory models developed in California, Massachusetts, and dozens of other states and countries have demonstrated the value of creating the right incentives to get utilities investing in efficiency.
Some Latin American countries — like Brazil — require distribution utilities to spend money on energy efficiency projects. But it’s critical that industry leaders and policymakers take these measures a step further and incentivize energy efficiency results, not just energy efficiency spending.
2) Enable Demand Response
In addition to building long-term resources through sustained energy efficiency policies, governments should consider the immense potential benefits and savings that can be unlocked by demand response, which centers on trimming electric demand during peak times.
In March, the Brazilian government said it will cost customers 12 billion reais (US$5.4 billion) to recover the cost of buying expensive thermal power on the spot market to replace depleted hydro reserves during the summer heatwave. Utilities incurred the biggest losses during the hottest and highest-demand periods of the day, when power was most expensive. While Brazil has already designed a “Tarifa Branca” to encourage consumers to buy electricity when it is cheapest, slashing demand during these critical peak times could ease stress on thermal resources- and help save people money.
3) Put the customer first
New electric sector strategies in the region should focus on the customer and ensure they receive the highest-quality energy services and tools they need to manage their bills. Mexico’s sweeping Reforma Energetica has opened an exciting conversation about how to improve energy services for its citizens. Chile’s new government has similarly announced plans to take up broad reforms. As other countries develop tools for sustainable growth, it’s important to ensure electricity consumers have the information and control they need to make smart decisions about their energy consumption.
New innovations, like the smart grid, have the potential to further empower consumers. As Latin America considers investing in these technologies, regional regulatory leaders and energy sector innovators should follow the lead of other countries, states, and municipalities that are shaping their electric-sector investments to ensure direct benefits for the consumer.
To learn more about how utilities and policymakers can unlock energy efficiency in meeting Latin America’s energy challenges, sign up for Opower’s upcoming webinar, “Transforme a sus clientes en activos para el sector eléctrico.“
Jake Levine is Opower’s Director of Regulatory Affairs for Latin America. Salvador Nunez leads Opower’s product strategy for Latin America.
This article was originally published on the Opower Blog. It is originally available here.