Innovation, Strategic Investment in Renewable Energies, and Inclusion as Key Elements for the Development of Peru’s Electricity Sector: IFC

The International Finance Corporation (IFC), a member of the World Bank Group, in collaboration with the consulting firms PSR and UL Energía e Infraestructura, and with the support of The Facility for Investment Climate Advisory Services (FIAS), has prepared a report on the Peruvian electricity sector. This study includes a detailed analysis of the physical, regulatory, and commercial characteristics of the electricity market in Peru, as well as long-term projections for its evolution.

The document, titled "Development of the Peruvian Electricity Sector: from SEIN to the Amazon" highlights that electricity demand in Peru has grown at an accelerated pace in recent years, driven mainly by the industrial and mining sectors. An average annual growth of 2.6% is projected until 2050, which will require significant investments in generation infrastructure.

The Peruvian electrical system, currently dominated by hydroelectric and natural gas thermal plants, is expected to experience a significant increase in the participation of non-conventional renewable energies, such as solar and wind, in the coming years. The study projects that these technologies will represent 45% of the installed capacity by 2050. To incorporate these intermittent renewable energies, the report also identified the need to make the system more resilient by incorporating battery storage systems.

The study also anticipates that electricity spot prices in Peru will stabilize in the long term, thanks to the diversification of the energy matrix and the greater participation of renewable energies. Among the actions recommended by IFC for the development of the sector are implementing financing mechanisms that facilitate the entry of solar and wind projects, improving transmission infrastructure, and promoting rural electrification (such as the development of sustainable mini-grid solutions to bring electricity to Amazonian communities).

Matilde Bordón, IFC Country Manager for Peru and Ecuador, pointed out: "This study provides a roadmap for the sustainable development of the Peruvian electricity sector, highlighting the importance of renewable energies and the need for strategic investments to meet the growing demand for electricity. Both recommendations are fundamental to ensuring a reliable and affordable energy supply in the future"

The research emphasizes the importance of establishing "inclusive electrification" in the country, as about 30% of the rural population in the Peruvian Amazon lacks access to electricity, and fossil fuel-based solutions are economically and environmentally unsustainable. In this regard, hybrid mini-grids (solar energy + battery storage) have proven to be a viable and scalable solution.

In IFC’s opinion, successful cases in Brazil and Colombia reinforce the applicability of the model for similar conditions in Peru. The study recommends that public policies facilitate the attraction of private capital through incentives, adaptive regulatory frameworks, and access to financing.

IFC will present the findings of this study in a workshop that will bring together key public and private sector actors to foster dialogue on the country’s energy future.

About IFC

IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2024, IFC committed a record $56 billion to private companies and financial institutions in developing countries, leveraging private sector solutions and mobilizing private capital to create a world free of poverty on a livable planet. For more information, visit www.ifc.org.

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