Exploring Sustainable Electricity System Development Pathways in South America's Mercosur Sub-Region

We explore sustainable electricity system development pathways in South America’s MERCOSUR sub-region, considering a range of techno-economic, infrastructural, and policy forces. The MERCOSUR sub-region includes Argentina, Brazil, Chile, Uruguay, and Paraguay, which represent key electricity generation, consumption, and trade dynamics in the continent. We use a power system planning model to co-optimize investment and operations of generation, storage, and transmission facilities out to 2050. Our results in a Reference scenario indicate that the electricity system can maintain a relatively clean energy portfolio by leveraging existing hydropower capacity and integrating increasingly cost-competitive wind and solar power. However, dependence on natural gas in the sub-region is likely to remain high due to substantial natural resource endowments in Argentina, Brazil, and Chile. A low-carbon electricity system can cost-effectively be achieved through policy interventions and by diversifying investments in hydro, wind, and solar power, as well as battery storage. We also find that existing hydropower is critical for maintaining reliable future grid operations. Enhanced regional electricity trade, mostly based on existing interconnection capacities, can also substantially promote a low-carbon electricity system