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Paraguay's Grid Development: Struggling to meet demand despite surplus capacity [free access]
May 10, 2016

Despite sufficient installed electricity generation capacity, the Paraguayan population experiences regular power outages.  This is
mainly due to the transmission grid’s limited capacity to transfer power from remote hydropower plants to the country’s main load
centre—the Asunción metropolitan area.  Investment in the development of the country’s high voltage grid has been limited mainly due
to lack of financial support and coordination among stakeholders during the planning phase, inadequate funds from the central
government, low tariffs, high power theft, low bill collection and absence of private participation.
 
This has significantly hampered the growth of Paraguay’s power sector. Therefore, the government is now concentrating on expanding
its power network. Under its 10-year Power Sector Expansion Plan 2014–23, Paraguay plans to invest USD2,148 million on
strengthening its power transmission network by adding 2,833 km of line length, 9,215 MVA of transformer capacity and 19 substations
during the 2016–23 period. 
 
Power sector overview
Paraguay is one of the few countries that generate almost 100 per cent of their electricity from renewable energy resources. The
country has been a net exporter of power with more than 8,798 MW of installed power generation capacity. Of this, only 38 MW is
thermal power-based and the rest is hydropower-based.
 
Paraguay’s electricity generation segment is dominated by the large bi-national hydropower projects of Itaipu (1,400 MW Brazil–
Paraguay project) and Yacyreta (3,200 MW Argentina–Paraguay project), which cover 99 per cent of the country’s electricity demand
and generate a large surplus for export, mainly to South America. The involved countries own equal capacity in these bi-national
hydropower projects. The Paraguayan parts of these hydropower plants are managed by the state-owned vertically integrated power
utility Administración Nacional de Electricidad (ANDE), which also owns the 210 MW Acaray hydropower project.
 
During 2006–15, Paraguay’s power generation capacity increased at a compound annual growth rate (CAGR) of 0.5 per cent. Between
2013 and 2015, no generation capacity was added in the country. Electricity generation in the country during 2006–15 increased at a
CAGR of 6 per cent, from about 8.4 TWh to 14.5 TWh while consumption, on the other hand, increased at a CAGR of 8 per cent during
the same period. This reduced Paraguay’s power exports significantly from 880 GWh in 2006 to 101 GWh in 2015.
 
ANDE also develops, operates and maintains the country’s entire high voltage Sistema Interconectado Nacional (SIN) or the national
interconnected system. As of 2015, Paraguay had a transmission network of 4,594 km of lines and 9,170 MVA of transformer capacity.
The transmission network consists of 220 kV and 500 kV lines. During 2006–15, the transmission line network and substation capacity
increased at a CAGR of 3 per cent and 9.5 per cent, respectively.
 
Paraguay’s grid is connected with those of Brazil and Argentina through several interconnectors. It has two interconnections with Brazil
—the ±600 kV direct current (DC) Brazil—Paraguay Itaipú interconnector and the 220 kV Foz de Iguazú (Brazil)—Acaray (Paraguay)
line. With Argentina, it shares three interconnections—the 132 kV El Dorado (Argentina)—Carlos A. López (Paraguay) alternating
current (AC) line; the 132/220 kV Clorinda (Argentina)—Guarambaré (Paraguay) AC line; and the 500/220 kV AC Yacyretá
interconnector.
 
To promote the participation of domestic players in the power transmission segment, the government of Paraguay, in August 2015,
passed a new decree which mandates that all the metal structures (pylons or towers) to be used in electricity transmission lines and
substations must be sourced from local manufacturers. The manufacturers must produce the entire product within the country itself.
This measure is also part of a project to strengthen the country’s electricity grid.
 
Upcoming capacity
Between 2016 and 2020, ANDE is expected to invest over USD2,660 million in the expansion of Paraguay’s power sector. Of this,
USD2,140 million will be invested in strengthening the power transmission network.
 
As per the 10-year Power Sector Expansion Plan 2014–23, Paraguay’s demand for electricity is expected to increase at a CAGR of 5
per cent to reach at 4,369 MW by 2023. The current installed capacity base of 8,793 MW is more than sufficient to meet the future
demand. Hence, the country has very limited plans to invest in power generation projects. Only 200 MW of capacity is expected to be
added to the country’s generation base by 2020.
 
The future focus is on the expansion of the country’s power grid. During 2016–20, there are plans to add about 2,833 km of line length,
9,215 MVA of transformer capacity and 19 substations. About 54 per cent of the upcoming line length capacity is likely to be at 220 kV
while 63 per cent of the transformer capacity will come up at the 500 kV level.
 
Paraguay is also part of the Comisión de Integración Eléctrica Regional (CIER) 15 project, which aims to enable electric power
transactions among the Andean, Central and Southern American regions. The member countries are Argentina, Bolivia, Chile, Brazil,
Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela. The project, which is at a very early stage of development, entails the
construction of 7,351 km of lines (365 km of 230 kV lines and 6,986 km of 500 kV lines).
 
The first phase of the project has been completed, under which a critical analysis of existing interconnections, and an analysis of the
regulatory and institutional evolution of electricity markets and gas from each region, were undertaken. Based on the results of the first
phase, in the second phase strategic feasibility studies will be carried out in various areas to identify the project’s structural benefits,
reduce operating costs, increase reliability of power supply, and cut down CO2 emissions. The second phase will be financed by CIER,
Corporación Andina de Fomento (CAF) or the Latin American Development Bank, and Banco Mundial. Presently, the second phase is
at different stages of development in the various countries involved in the project.
 
The majority of the grid strengthening and expansion projects will cover the Hernandarias, Villa Hayes, Villeta, Itapúa, Pedro Juan
Caballero, and Concepción regions, where the majority of the load demand is expected or key power projects are being set up. Some
of the key upcoming domestic projects in the country are:
 
Yacyretá–Ayolas–Villa Hayes project: The project was awarded to Consorcio CIEGEC—set by Compagnie Ivoirienne d’Electricité
(CIE) and Somagec Guinea Ecuatorial—in December 2015 for a bid of USD95.6 million. The project entails the construction of the 16-
km-long, 500 kV Yacyretá–Ayolas line and the 347-km-long, 500 kV Ayolas–Villa Hayes transmission line. It also includes expansion of
the Villa Hayes substation with the installation of a 500/220 kV transformer bank that will add an additional capacity of 600 MVA.
 
The line will connect the Yacyreta hydroelectric dam on the Argentine–Paraguayan border with the Villa Hayes substation (a key load
centre) in Presidente Hayes Department in Paraguay. The project is being funded by the European Investment Bank (EIB), CAF and
Inter-American Development Bank (IDB). Construction works for the 500 kV Yacyretá–Ayolas line were initiated in April 2016.
 
Margen Derecha–Carayaó line and Carayaó substation project: This includes the construction of a 500 kV transmission line of
about 210 km and the expansion of the 500/220 kV Carayaó substation by adding two banks of autotransformers of 600 MVA capacity
each. The transmission line will help meet the power demand of the central, northern and metropolitan areas by transmitting more
power from the Itaipu hydro plant, via the Subestación Margen Derecha de Itaipu (SMDI) or the Right Bank of the Itaipu substation.
The project is slated for completion by 2023.
 
Margen Derecha–Villa Hayes second line: The project aims to strengthen the existing 500 kV circuit connecting the Itaipú
hydropower project located on Paraná River on the border between Brazil and Paraguay, to Villa Hayes in Paraguay. It will also
constitute the main link between the Itaipú and Yacyretá power plants. The second circuit, which will be 348 km long and have a
capacity of 2,000 MVA, will help meet the demands of the system with greater reliability. The line is expected to be built by 2019.
 
Concepción II–Pozo Colorado–Loma Plata line: This project will be the second line to serve the power system of the western region,
and will increase transmission capacity and reliability in the service area. It includes the construction of a 220 kV, 280-km line, which is
expected to come online by 2021.
 
Vallemí II–Toro Pampa line: This project will expand and improve energy supply in the Toro Pampa area, especially considering the
vast power distribution network of the region. It includes a 130-km, 220 kV line, which is scheduled to be operational by 2021.
 
Ayolas–Trinidad II line: The project entails the construction of the 500 kV, 600 MVA Trinidad II substation along with a 129-km 500 kV
transmission line from Ayolas to Trinidad II, in order to substantially increase the reliability of transmission. ANDE plans to complete the
project by 2017.
 
In addition, ANDE is considering constructing a new transmission line to connect the two national hydropower plants, Itaipu and
Yacyreta.
 
Outlook
With sufficient power generation capacity, the country is now focusing on the expansion of its power transmission network.
Strengthening its domestic network will help reduce power outages while international connectors will facilitate greater power exports.
However, as per some of the industry experts, high dependence on hydropower makes the country’s power sector vulnerable to natural
calamities. Thus, Paraguay needs to also promote the development of other sources of energy to have a balanced energy mix.
 
Table: List of key upcoming transmission line projects
Name of line Voltage (kV) Line length (km) Scheduled completion
Kilómetro 30–Santa Rita 220                     45 2016
Limpio–Luque–San Lorenzo 220                     25 2016
Villa Hayes–Puerto Botánico 220                     18 2016
Horqueta–Concepción II 220                     45 2016
Cruce Bella Vista–Bella Vista Norte 220                     80 2016
Santa Rita–María Auxiliadora 220                   110 2017
Margen Derecha–Itakyry 220                     71 2017
Los Cedrales–Pte. Franco 220                     10 2017
Pte. Franco–Paranambú 220                     39 2017
Guarambaré–Villeta II 220                     12 2017
San Lorenzo–Villa Aurelia 220                       9 2017
Ayolas–San Patricio 220                     43 2017
Villa Hayes–Concepción II 220                   200 2019
Carayaó–San Estanislao 220                     47 2020
Villalbín–Villeta II 220                   200 2020
Ayolas–Villalbín 220                   121 2020
Concepción II–Pozo Colorado–Loma Plata 220                   280 2021
Vallemí II–Toro Pampa 220                   130 2021
Cnel. Oviedo–Cnel. Oviedo II 220                     48 2022
Yacyretá–Ayolas 500                     16 2016
Ayolas–Villa Hayes 500                   347 2016
Margen Derecha–Los Cedrales 500                     25 2017
Ayolas–Trinidad II 500                   129 2017
Margen Derecha–Villa Hayes 500                   348 2019
Ayolas–Eusebio Ayala 500                   225 2022
 Margen Derecha –Carayao 500                   210 2023
Source: ANDE’s 10-year Power Sector Expansion Plan 2014–2023
 
Figure 1: Paraguay’s planned investment in power transmission (USD million)

Source: ANDE’s 10-year Power Sector Expansion Plan 2014–2023