National energy companies
National and regional development agencies
National energy planning institutions
Regional integrated energy development, with its focus on demand development, regional disaggregation and interconnections between factors of development, requires cooperation and expanded scopes of responsibility from every actor involved in energy and development activities.
Because of the integrated nature of the programs and the distinct institutional framework existing in each country, no single agency can be assigned to "do" integrated energy development. In some countries, energy planning agencies have the institutional capacity to identify and promote projects. In other countries, strong regional development organizations exist that can appropriately assume the lead role in planning and implementing integrated projects. In still others, national energy companies can lead an integrated effort. The goals of the program and the level of interest expressed by the various agencies are also important factors to consider. Regardless of the organization best suited to plan or implement projects, a concerted, cooperative effort between agencies is essential.
In Uruguay, cooperation between government development agencies, private cooperatives and national energy companies resulted in an extremely successful integrated project for energy and transportation. The OAS role in such groups is to facilitate coordinated activities between all of the national counterpart agencies.
The traditional energy institutions of Latin America and the Caribbean, the electricity, petroleum and gas companies, take a supply approach to energy development. The perceived and in many cases assigned responsibility is to provide energy as the needs arise. The demand for energy is generally treated as an externality, an important factor for accurate estimation and forecast which then drives the development of the energy supply infrastructure: generation plants, electric transmission systems, petroleum refineries and petroleum storage facilities, for example.
This supply approach, common throughout the world, does not provide adequate flexibility to take advantage of specific energy demand opportunities which offer not only development benefits but also significant improvements in the provision of energy at low costs. In the developed as well as the developing world, cogeneration is an outstanding example of the way that some industries can provide for their own process heat and electricity needs in a way that is much more efficient than combined direct purchase of grid electricity and self-generation of process heat. Moreover, cogeneration buy-back schemes can benefit electricity companies by balancing system load factors and improving system reliability.
In Latin America and the Caribbean, electricity companies need to expand their activities to include development and integration options in their planning and analysis. Although subdivisions of responsibilities begin to overlap, these energy companies need to coordinate with other development institutions, so overall development and energy development proceed hand in hand.
In a similar fashion, those agencies with responsibilities for economic and social development, at both regional and national levels, traditionally have not considered energy as an integral factor in their planning for development projects. These institutions need to consider the mechanisms for provision of energy for productive activities and not just leave the responsibilities in the hands of the energy companies to provide energy where needed.
The integrated energy and development opportunities provide mutual benefits to both energy and development institutions. Because of the overlap of responsibilities to achieve these benefits, the only mechanism available is for energy and development institutions to cooperate in areas of overlap. This means that energy institutions need to become involved in demand generation (development) and development institutions need to become involved in evaluations of energy supply. The amount of overlap clearly needs to be based on the extent of the benefits that will be obtained. It is hoped that the results described in this report will show the type and level of benefits that can be obtained and the conditions under which they are likely to occur, and convince decision makers in these institutions of the value in pursuing this type of cooperation.
National energy planning institutions, typically separate from the energy companies noted above, provide global information about the way energy is delivered and consumed in a country and global policy definitions in future national energy matters. Generally, alternative energy supply considerations are assigned to the staff in these offices. As in the case above, there is a supply orientation to these efforts with ample technical expertise in the technologies for conversion to new and renewable or alternative energy supplies. There is a general knowledge about the location and quality of the various energy sources, but other than technology demonstration projects, there has been little success in the integration of these concepts into actual development and development projects.
These national energy planning institutions also would do well to expand their scope to permit entry into integrated energy development projects. Again, these institutions would need to provide the cooperation or extension services necessary to assist development institutions, both regional and national, with the expertise to show how alternative energy sources in certain cases can enhance the development process through specific projects throughout the country. This service in turn can feed back to national policy planning to provide new directions for global as well as regional energy matters.
These energy planning institutions, by the nature of their centrality, have a unique opportunity for providing the cooperation setting to bring together other institutions to participate in integrated energy development.
Typically, energy planning offices, unlike the energy companies, are financed out of tax receipts. Because of their defined global planning and analysis role, little budget is assigned for travel. To be effective in integrated energy development, the staff involved must travel to the field, to project sites, to work with development institutions, to participate directly in cooperation. This travel requires funding and must be a prime consideration in the decision of any institution to pursue integrated energy development. The OAS experience has shown this country budgetary limitation on travel to be a factor in nearly every energy/development project in technical cooperation that it has undertaken.
Financing institutions, with traditions of providing sectoral loans, need to understand the process and benefits of integrated energy development and to become comfortable with the mechanisms available for financing integrated energy and development projects. This includes national as well as international financing agencies.
Because integrated projects do not directly fit into the standard structure used by international agencies, financing may require extra effort and ingenuity. Again, a familiarity with the process and benefits of integrated energy development can reduce these problems. The procedures for the financing of the more general regional development programs are well established and can be very useful as models for approaches to funding of integrated energy development projects.
Financing institutions, as service organizations, need to respond and adjust as good ideas and opportunities are identified. It is well known that those requesting financing will be reluctant to submit projects that will cause confusion within the financing institutions. The resolution to this predicament is that financing institutions need to be prepared. They need to preplan approaches to the development and financing of integrated energy development projects. In their own programming missions, financing institutions need to include professional staff with broad and interdisciplinary capabilities that will seek and encourage the presentation of integrated energy projects when they are evident and justified.