REFERENCE CODE GDPE0683ICR PUBLICATION DATE AUGUST 2013 PERU POWER MARKET OUTLOOK TO MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

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1 REFERENCE CODE GDPE0683ICR PUBLICATION DATE AUGUST 2013 PERU POWER MARKET OUTLOOK TO

2 Executive Summary Thermal Capacity Dominates Power Mix Power generation capacity in Peru is currently dominated by thermal power, which accounted for a XX% share of the country s cumulative installed capacity in Gas-fired power plants dominated the country s thermal installed capacity that year, with an XX% share. Thermal capacity increased from XX Gigawatts (GW) in 2000 to XX GW in 2012, at a Compound Annual Growth Rate (CAGR) of XX%. To meet increasing demand for electricity and ensure the reliable supply of power, the government will continue to augment its thermal installed capacity. However the share of thermal capacity in Peru is expected to decrease in the future, and be replaced by renewable capacity. Power Market, Peru, Thermal Installed Capacity (GW), Continued Growth in Power Generation Power generation in Peru increased from XX Terawatt hours (TWh) in 2000, to XX TWh in 2012, at a CAGR of XX%. During the period from 2013 to 2030, power generation is expected to increase in order to satisfy the steadily increasing demand for electricity. This increased power demand can be attributed to economic growth, increasing industrialization, and increased population size. Power Market, Peru, Annual Power Generation (TWh), Annual power generation (TWh) Thermal installed capacity (GW) Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on: July 18, 2013] Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on: July 18, 2013] 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Peru, Power Market, Snapshot Macro Economic Factors Supply Security Generation Infrastructure Transmission Infrastructure Opportunities Challenges Peru, Power Market, Market Analysis Peru, Power Market, Supply Structure Peru, Power Market, Key Players Financial Performance Key Financial Ratios and Inference Peru, Power Market, Financial Deals Deals, Split by Type, Peru, Power Market, Demand Structure Power Market, Peru, Power Consumption by Sector,

4 Table of Contents 5 Peru, Power Market, Regulatory Scenario Peru Power Market, Electricity Structure Background Peru, Power Market, Electricity Sector Reform Peru, Power Market, Rural Electrification Master Plan for Rural Electrification by Renewable Energy in the Republic of Peru, Peru, Power Market, Renewable Energy Development Peru, Power Market, Energy Efficiency Development Peru, Power Market, Capacity and Generation Overview Installed Capacity, Breakdown by Type of Power Plant, Cumulative Installed Capacity and Annual Generation, Thermal, Installed Capacity and Generation, Hydropower, Installed Capacity and Generation, Renewable Power, Installed Capacity and Generation, Peru, Power Market, Transmission and Distribution Overview Peru, Power Market, Transmission Network Overview Peru, Power Market, Transmission Network Development Peru, Power Market, Distribution Network Overview Peru, Power Market, Grid Interconnections Peru, Power Market, Electricity Trade Peru, Power Market, Competitive Landscape: Snapshot of Top Power Companies Key Companies in the Peru s Power Market, Edegel S.A Edegel S.A., Company Overview

5 Table of Contents Edegel S.A, Business Description Edegel S.A, SWOT Analysis Key Companies in the Peru s Power Market, Enersur Enersur, Company Overview Enersur, Business Description Enersur, SWOT Analysis Key Companies in the Peru s Power Market, Kallpa Generacion S.A Kallpa Generacion S.A., Company Overview Kallpa Generacion S.A., Business Description Kallpa Generacion S.A., SWOT Analysis Key Companies in the Peru s Power Market, Empresa Electricidad del Peru - Electroperu S.A Empresa Electricidad del Peru - Electroperu S.A, Company Overview Empresa Electricidad del Peru - Electroperu S.A, Business Description Empresa Electricidad del Peru - Electroperu S.A, SWOT Analysis Peru, Power Market, Key Company, Duke Energy Corporation Duke Energy Corporation, Company Overview Duke Energy Business Description Duke Energy Corporation SWOT Analysis Appendix Market Definitions Power Installed Capacity

6 Table of Contents Active Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary research and analysis Primary Research and Analysis Disclaimer

7 Table of Contents 1.1 List of Tables Table 1: Power Market, Peru, Trends in GDP at constant prices ($bn), Population (million) and Annual Power Consumption (TWh), Table 2: Power Market, Peru, Leading Power Generating Companies (%), Table 3: Power Market, Peru, Key Financial Ratios, Table 4: Power Market, Peru, Deal Value ($m) and Deal Volume, Table 5: Power Market, Peru, Annual Power Consumption (TWh), Table 6: Power Market, Peru, Estimated Consumption by Sector (%), Table 7: Power Market, Peru, Cumulative Installed Capacity by Type of Power Plant (%), Table 8: Power Market, Peru, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 9: Power Market, Peru, Leading Active Thermal Power Plants (MW), Table 10: Power Market, Peru, Leading Upcoming Thermal Power Plants (MW), Table 11: Power Market, Peru, Cumulative Thermal Installed Capacity (GW) and Annual Thermal Power Generation (TWh), Table 12: Power Market, Peru, Leading Active Hydro Power Plants (MW), Table 13: Power Market, Peru, Leading Upcoming Hydropower Plants (MW), Table 14: Power Market, Peru, Cumulative Hydropower Installed Capacity (GW) and Annual Hydropower Generation (GWh), Table 15: Power Market, Peru, Leading Active Renewable Power Plants (MW), Table 16: Power Market, Peru, Leading Upcoming Renewable Power Plants (MW), Table 17: Power Market, Peru, Cumulative Renewable Installed Capacity (GW) and Annual Renewable Power Generation (TWh), Table 18: Power Market, Peru, Transmission Line Length (Ckm), Table 19: Edegel S.A., SWOT Analysis Table 20: Enersur, SWOT Analysis

8 Table of Contents Table 21: Kallpa Generacion S.A., SWOT Analysis Table 22: Empresa Electricidad del Peru - Electroperu S.A., SWOT Analysis Table 23: Duke Energy Corporation, SWOT Analysis Table 24: Abbreviations

9 Table of Contents 1.2 List of Figures Figure 1: Power Market, Peru, Trends in GDP at constant prices($bn), Population (million) and Annual Power Consumption (TWh), Figure 2: Power Market, Peru, Leading Power Generating Companies (%), Figure 3: Power Market, Peru, Deal Value ($m) and Deal Volume, Figure 4: Power Market, Peru, Annual Power Consumption (TWh), Figure 5: Power Market, Peru, Estimated Consumption by Sector (%), Figure 6: Power Market, Peru, Cumulative Installed Capacity by Type of Power Plant (%), Figure 7: Figure 8: Figure 9: Power Market, Peru, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Peru, Cumulative Thermal Installed Capacity (GW) and Annual Thermal Power Generation (TWh), Power Market, Peru, Cumulative Hydropower Installed Capacity (GW) and Annual Hydropower Generation (TWh), Figure 10: Power Market, Peru, Cumulative Renewable Installed Capacity (GW) and Annual Renewable Power Generation (TWh),

10 Introduction 2 Introduction Peru is a developing country with a liberalized economy. The country has a republican form of government, with a multi-party system in place. It is a member of international organizations such as G-24, Union Latina, the United Nations (UN) and the United Nations Conference on Trade and Development. The country attracts a large amount of Foreign Direct Investment (FDI). In 2012 Peru s FDI inflow increased by XX% when compared with 2011 (Andina, 2013a). This growth is the highest in the Latin American region. The country also became the fifth-largest FDI recipient in Latin America during Furthermore, FDI inflow in Peru during the first quarter of 2013 amounted to $XX billion, which demonstrating an increase of XX% in comparison to the same period in the previous year (Andina, 2013b). This steady growth in FDI can be attributed to the favorable business environment in Peru. The Peruvian government s primary objective during the 1990s was to create a political environment that promoted private investment. In order to achieve this goal, various policy initiatives were launched. Peru also signed a number of trade agreements to improve its international trade. In April 2006, Peru signed the US Peru Trade Promotion Agreement with the US. The agreement has since been ratified several times by both governments, and was implemented in February 2009 after the Peruvian government incorporated changes related to environmental and intellectual property laws. Peru is also involved in trade agreements with Chile, Mexico, Canada, Singapore, China, the European Union, Japan, South Korea, and the European Free Trade Association. Furthermore, Peru is a leading member of the World Trade Organization, the Asia-Pacific Economic Co-operation forum, the UN, and the Andean Community. Peru s Gross Domestic Product (GDP) amounted to $XX billion at current prices in 2012, indicating a GDP growth rate of XX% compared with the previous year. The service sector was estimated XX% share towards GDP in 2012, followed by the industrial sector with XX% and the agricultural sector with XX%. Peru s economy was not seriously affected by the global recession, recording a positive growth rate of XX% even in the wake of the economic downturn. This was achieved as a result of the country s strong macro-economic scenario. 11

11 Introduction The Ministry of Energy and Mines (MEM) is the apex body responsible for regulating and supervising the energy and mining sectors. The Supervisor of Investment in Energy and Mining (Osinergmin) oversees and regulates the activities of the power and mining sectors. In response to increasing concerns regarding the adverse environmental impact of green house gas emissions, the government has shifted its focus from gas-fired power generation to the development of hydropower plants. Moreover, Peru is likely to emerge as an exporter of natural gas in the future, meaning that it is probable that gas will be used for export purposes rather than for power generation. In May 2008, the Peruvian government also passed Legislative Decree 1002, which promotes investment in renewable power generation. 2.1 GlobalData Report Guidance The report opens with an executive summary capturing key growth trends in Peru s power market. Chapter three provides a snapshot of Peru s power sector. Chapter four provides cumulative capacity and power generation information, as well as segmentation according to source of energy from 2000 to 2012, with forecasts provided up until This is followed by the consumption scenario for the market between 2000 and 2012, with forecasts provided up until Chapter five provides information about the power infrastructure in Peru, including details of leading active and upcoming power plants in the country, existing and planned developments in transmission and distribution infrastructure, and cross-country interconnections. Chapter six provides information on regulatory structure and provides a brief description of the power regulatory structure and prominent policies influencing the future of the power market. Chapter seven describes the competitive landscape of Peru s power generation market, with complete descriptions and SWOT analysis provided for leading companies. Note: from 2012 onwards the report provides actual or estimated data depending upon the information available at the time of writing the report. 12

12 Peru, Power Market, Market Analysis 4.4 Peru, Power Market, Demand Structure Peru s steady economic growth, improved standard of living, and increased industrial development has led to growth in the consumption of electricity. Electricity consumption in Peru was XX Terawatt Hours (TWh) in 2012, compared with XX TWh in During this period, consumption increased at an estimated CAGR of XX%. During the forecast period from 2013 to 2030, electricity consumption is expected to increase at a CAGR of XX%, from XX TWh to XX TWh. Figure 4: Power Market, Peru, Annual Power Consumption (TWh), Annual power consumption (TWh) Source: GlobalData, Power etrack, Consumption Database [Accessed on July 18, 2013] 26

13 Peru, Power Market, Market Analysis Table 5: Power Market, Peru, Annual Power Consumption (TWh), Year Source: GlobalData, Power etrack, Consumption Database [Accessed on July 18, 2013] Consumption (TWh) 27

14 Peru, Power Market, Market Analysis Power Market, Peru, Power Consumption by Sector, 2012 The industrial sector is estimated to have accounted for the highest share of total electricity consumption in 2012, with XX%. The residential sector accounted for the next highest share of total electricity consumption, at an estimated XX%, and the commercial sector had a share of XX%. Figure 5: Power Market, Peru, Estimated Consumption by Sector (%), 2012 Commercial Street lighting Residential Industrial Source: GlobalData Table 6: Power Market, Peru, Estimated Consumption by Sector (%), 2012 Sectors Percentage (%) Industrial Residential Commercial Street lighting Source: GlobalData 28

15 Appendix 9 Appendix 9.1 Market Definitions The geographical coverage of this report is Peru. The report covers market segments related to installed electricity capacity, generation, consumption, and power infrastructure and regulations. The report covers the whole of Peru for a quantitative and qualitative assessment of its power market Power The rate of production, transfer, or energy use, usually related to electricity. Measured in watts and often expressed in kilowatts (kw) or Megawatts (MW), it is also known as real or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer or the maximum rated output of a generator under given conditions. Installed capacity is given in Megawatts (MW) on a nameplate physically fixed on the generator Active Installed Capacity Active installed capacity refers to that component of electric power that actually performs work. It is given in kilowatts (kw), Megawatts (MW) or Gigawatt (GW) Electricity Generation The production of electric energy is achieved through the transformation of other forms of energy. The figure also refers to the amount of electric energy produced, expressed in Gigawatt hours (GWh) or Terawatt Hour (TWh) Electricity Consumption Consumption of electricity calculated as generation, plus imports, minus exports, minus transmission and distribution losses and measured in Gigawatt hours (GWh) Thermal Power Plant A plant in which turbine generators are driven by burning fossil fuels. 73

16 Appendix Hydropower Plant A plant in which turbine generators are driven by falling water Nuclear Power The electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources limited in the amount of energy available per unit of time. For example, biomass, geothermal, solar, and wind can all be termed renewable. 9.2 Abbreviations Table 24: Abbreviations Full Form Compound Annual Growth Rate Combined Cycle Gas Turbine Circuit kilometres Committee of Economic Operation System Empresa Electricidad del Peru Foreign Direct Investment Gross Domestic Product Gigawatt kilovolt Liquefied Natural Gas Ministry of Energy and Mines Megawatt Photovoltaic Sistema Eléctrico Interconectado Nacional trillion cubic feet Terawatt Hours United Nations Source: GlobalData Abbreviations CAGR CCGT Ckm COES Electroperu FDI GDP GW kv LNG MEM MW PV SEIN tcf TWh UN 74

17 Appendix 9.3 Bibliography Abengoa (2013). Abengoa will carry out a new electricity transmission project in Peru. Abengoa, February 22, Available from: bg_ _2.html [Accessed on: July 20, 2013] Anaya K (2010). Restructuring and Privatization of the Peruvian Electricity Distribution Market. University of Cambridge. Available from: Andina (2013a). Peru records highest LaTAm FDI-growth, ECLAC says. Andina, May 15, Available from: [Accessed on: July 20, 2013] Andina (2013b). Foreign direct investment in Peru totaled US$4.1bln in 1Q2013. Andina, June 9, Available from: [Accessed on: July 20, 2013] Andina (2013c). Peru January-September power sector investment brushes US$2bn. Andina, January, 1, Available from: [Accessed on: July 20, 2013] COES (2013). COES: Who are we? Committee of Economic Operation System. Available from: [Accessed on July 20, 2012] EIA (2012). Peru- Country Analysis. US Energy Information Administration. Available from: [Accessed on July 20, 2012] IMF (2013). World Economic Outlook Database October 2012 Poland [database]. International Monetary Fund. Available from: [Accessed on: July 20, 2013] 75

18 Appendix Maurer L et al (2011). Electricity Auctions: An Overview of Efficient Practices. Available from [Accessed on July 20, 2013]. Osinergmin (2013). Information Institutional. Osinergmin. Available from: [Accessed on July 20, 2013] Reuters (2013). UPDATE 1-Corsan-Corviam to build $600 mln hydroelectric plant in Peru. Reuters, March 21, Available from: [Accessed on: July 20, 2013] The Guardian (2013). Enabling access to electricity in rural Peru. The Guardian, June 21, Available from: [Accessed on: July 20, 2013] UPI (2013). Peru upbeat about boosting natural gas exports. United Press International, May 13, 2013.Available from: Resources/2013/05/13/Peru-upbeat-about-boosting-natural-gas-exports/UPI / [Accessed on: July 16, 2013] World Bank (2012). The Worldwide Governance Indicators, 2012 Update. The World Bank Group. Available from: [Accessed on: July 20, 2013] World Bank (2013). Doing Business Economy Rankings. The World Bank. Available from: [Accessed on: July 20, 2013] 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( 76

19 Appendix The following research methodology is followed for all country outlook reports Coverage This report gives detailed information on Peru s power market. It examines the country s power market structure and provides historical and forecast numbers for generation, capacity and consumption up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects. The report also provides snapshot of the country s power sector by analyzing its power sector on broad parameters of macroeconomics, supply security, generation infrastructure, transmission infrastructure, degree of competition, regulatory scenario and future potential Secondary research and analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases like the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database. Further to this, the following secondary information is collected and analyzed to project the country s power market scenario through to 2030, analyzing factors such as the following: The country s macro-economic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historic track record 77

20 Appendix Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople. 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. This report is a licensed product and should not to be reproduced without prior permission. 78