Energy integration is a very important sectoral process within the overall IIRSA framework. IIRSA energy projects aim to create the necessary conditions for developing efficient regional energy interconnectivity, within a regulatory framework that promotes competition and free trade. Consequently, the underlying objective of such projects is to create a unified agenda among participating governments with respect to market-driven strategies for optimizing energy generation and transmission in South America.
Energy sector projects in the IIRSA portfolio are divided into two broad categories: “Interconnection” and “Generation.” Projects in the former category largely involve the extending or upgrading of electricity transmission lines, although there are also a handful of gas and oil pipeline construction projects. Projects in the latter category are overwhelmingly focused on hydroelectric energy generation.
At the time of IIRSA’s creation, Interconnection projects constituted some 62% of all projects in the sector, but represented only about 1/4 of the total projected cost of projects in the sector. This is due to relatively high cost of the hydroelectric works to be built under IIRSA. For example, the Madeira River Hydroelectric Complex, which calls for the construction of two large dams in Brazil, a dam in Bolivia and a bi-national dam (Brazil-Bolivia), is the Initiative’s single largest project, with an official budget of $10.5 billion.