IEEE Power & Energy Magazine - July/August 2016 - 54

This article investigates the challenges faced by three South American countries that
employ the previously described framework for transmission expansion: Brazil, Chile and
Colombia. Other countries in the region employ a similar approach to transmission expansion and are also currently experiencing problems with delays. One of them is Peru, whose
transmission system grew at an average rate of 5.1% per year between 2004 and 2014, with private investments of almost US$2 billion in the period. Peru also faces implementation issues;
according to reports from its regulator, transmitters responsible for five out of 12 concessions,
to be implemented by December 2015, had requested postponements of target commercial
operations dates (CODs). Yet, the focus on Brazil, Chile, and Colombia is justified by the scale
of these systems and the volume of recent transmission investments.
This article focuses on transmission implementation challenges and how planning and
implementation solutions are being designed to cope with them. We will identify common
elements of the strategies devised by the countries and analyze their adequacy in light of the
underlying regulatory framework.

Brazil, Chile, and Colombia: Physical Characteristics
and Drivers to Transmission Expansion
Table 1 summarizes some of the most relevant physical characteristics of Brazil, Chile, and
Colombia. The figures suggest that transmission system growth rates have even exceeded
those of electricity demand in the last decade. This is explained by important drivers to transmission expansion in these countries, besides demand growth.
✔ Integrating generation far from load centers: Although hydropower already accounts for
a significant share of the electricity generation mix in these countries, there is still some
untapped potential, and most of it is far from the main load centers. Accessing it requires
long transmission systems that often span through forest areas, as is the case of the Belo
Monte hydro power plant (11 GW) and those of the Madeira river (jointly circa 7 GW) in
Brazil. The development of wind and, more recently, solar power in resource-rich areas
far from the load centers is also an important factor.
✔ Internal connectivity: The interconnection of previously isolated areas was also a significant driver for expansion in recent times. Take, for example, Manaus, a Brazilian
state capital with more than 2 million inhabitants: a 500-kV axis with about 1,800 km
connected the city to the national interconnected system in 2013. In the past decade,
Colombia concluded assets that integrated several of its islanded subsystems to the bulk
transmission grid. Chile began the construction of the 500-kV interconnection between
its two large subsystems (the Central Interconnected System and the Norte Grande Interconnected system) in 2015.
✔ Improving transmission system performance: This is still an important expansion driver in the region. Colombia and Brazil employ single or zonal pricing systems (nodal energy spot prices are used in Chile), and the costs of generation
redispatch due to congestion are treated off-market via uplifts
and are not always allocated efficiently to consumers. Redispatch costs due to the congestion of a northwest-southwest
230-kV system in Brazil amounted to more than BRL390 million (US$200 million) in 2012, before transmission capacity
was increased. Improvements in reliability and/or loss levels
were also verified in the three countries in the past decade,.
Yet there is still work to be done.
Although some of the systems listed in Table 1 are surpassed in size by other South American countries (such as Argentina, with 31-GW installed
capacity in 2014), these jurisdictions have jointly attracted a significant amount of private
investments in the electricity sector in the last decade, not only in transmission but also in
generation. This can be traced back to an industry organization and regulatory framework that
not only allows private participation in electricity infrastructure development but establishes
clear mechanisms for entry and risk management by private players. The existence of capacity remuneration mechanisms for the generation segment in the three countries (auctions of

The Challenges Faced
in South America

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