Latin America has made significant steps towards its energy transition. The region already generates 60% of its electricity from renewable sources, a figure that the International Energy Agency expects to continue to rise. However, there is one factor in this journey that receives limited attention – and is affecting the potential to reduce greenhouse gas emissions from energy.
Energy losses – the difference between the amount of electricity generated and the amount that is ultimately accounted for via consumer bills – averaged 17% per year in Latin America over the past three decades, according to a report by the Inter-American Development Bank (IDB). It says this is three times higher than in developed countries. That represents between five and six million tonnes of carbon dioxide emissions per year, equivalent to the emissions of 1.3 million cars.
Specialists have termed these as “compensatory emissions”, as more electricity generation is required to compensate for the losses. Countries with a higher share of fossil fuel generation, such as Argentina, Mexico and Colombia, are mainly responsible for these additional emissions.
Energy losses affect all countries in the region and occur for both technical and non-technical reasons. The former refers to problems in transmission and distribution lines, mostly due to a lack of investment and infrastructure maintenance; the latter corresponds to energy delivered and not paid for by users, such as theft and energy fraud.
“Energy losses have the potential to affect the fulfilment of the climate targets,” Ana Lía Rojas, executive director of the Chilean Association of Renewable Energy and Storage (Acera), tells Dialogue Earth. “Every unit of energy that is lost means more generation is needed to meet demand.”
Energy losses
Most electricity is produced in power plants and sent over long distances through high-voltage transmission lines. It then reaches consumers through the distribution network – the poles and wires that connect homes and businesses. This infrastructure can suffer from various problems that result in technical energy losses.
For example, losses due to the resistance of the conductive material through which the energy flows, ageing infrastructure and malfunctioning transformers. While these are inherent problems in electricity transmission, experts agree that there is a general lack of investment in transmission and distribution networks across Latin America.
“Decision-makers prioritise having energy, and the grid is left as a second priority. You have to invest in parallel in the grid and in generation – it’s about seeing the system as a whole,” Ramón Méndez, Uruguay’s former energy director, tells Dialogue Earth. “A deficient infrastructure can become a major economic and technical problem.”
Between 2015 and 2021, investment in distribution and transmission infrastructure in the region fell by about 40%. Not only can this lead to energy losses, but it also leaves grids more exposed to extreme weather events and can lead to service problems, which particularly affect vulnerable populations.
In Latin America, most electricity losses occur in the distribution system. This is mostly due to non-technical factors, such as energy theft, says Santiago López Cariboni. A professor of economics at the University of the Republic of Uruguay, he co-authored the IDB’s energy losses report.
“It is energy that is produced and transported, but not consumed legally. People break or tamper with meters or run a cable straight from the grid to their homes or businesses,” López Cariboni tells Dialogue Earth. “Even if governments could cut off the power to all those homes, they wouldn’t do it – it would create a huge social and economic problem.”
A user that steals energy consumes up to three times more than one that does not, estimates López Cariboni. By not paying a tariff, people have no incentive to consume less or to have low-consumption technology. According to the IDB report, irregular connections are related to the disorderly growth of Latin American cities in recent decades.
The dumping of energy
Although it does not generate emissions, renewable energy can also generate a problem of energy losses. This has happened recently in Chile. The share of solar and wind energy reached a record 40% of the country’s energy generation in 2024. However, as their weight in the mix increases, so do energy losses.
This phenomenon, also known as curtailment, occurs because the development of renewable projects is progressing much faster than available transmission and storage capacity. In 2024, 5,900 gigawatt hours (GWh) of power were wasted in Chile, 148% more than in 2023. The figure represents 20% of the solar and wind energy generated by the country, estimates Lía Rojas.
Jorge Leal Saldivia, a partner at the Chilean renewable energy company LAS Energy, says this wasting corresponds mainly to solar energy generated in the north of the country. “The transmission infrastructure is not in place to be able to bring that energy to central and southern Chile. The lines become congested, and the energy has to be dumped,” he tells Dialogue Earth.
Rodrigo Palma, a researcher at the Energy Centre of the University of Chile, tells Dialogue Earth there have been delays in energy planning: “The entry into operation of solar and wind has not stopped, and the rate of entry is greater than the rate of capacity-building by the state. This may slow down the penetration of renewables into our energy system.”
By 2040, all coal-fired power plants will have to cease operating in Chile. This is expected to be mostly compensated for by renewable energy. In April, the government announced a tender for eight new projects to upgrade the grid, adding to 12 projects launched last year. One of the biggest initiatives, the Kimal-Lo Aguirre transmission line, is now under review after complaints from social and environmental groups.
Possible solutions
Half of the 26 countries analysed in the IDB report have experienced greater energy losses in recent years, highlighting the urgent need for solutions. Honduras, Venezuela and the Dominican Republic lose more than 30% of their energy, followed by more than 20% in Jamaica, Paraguay and Guyana. The IDB also highlights how grids face increasing vulnerability and impacts due to climate change.
Societies justify energy theft by necessity. For those who can’t pay, the state should formalise those losses and take it as part of their budgetSantiago López Cariboni, University of the Republic of Uruguay economics professor
Specialists consulted by Dialogue Earth highlight the need for comprehensive planning by governments to address losses. For technical losses, the incorporation of technology can help, such as smart meters and storage. For the non-technical ones, a social policy perspective needs to be added, says López Cariboni.
“Societies justify energy theft by necessity; they see energy as a right,” he explains. “For those who can pay, you can work with sanctions and regulations. But for those who can’t, the state should formalise those losses and take it as part of their budget. It’s more public expenditure, but it’s an expenditure that is already being made.”
Martin Dapelo, a member of the board of directors for the Argentine Chamber of Renewable Energies (Cader), questions the lack of progress in the region on smart metering. “It is the first big step. We are missing out on the possibility of measuring in real time,” he tells Dialogue Earth. In storage, Chile has so far been the only country in the region to take the first steps.
Distributed generation – energy generated by consumers themselves in small-scale, localised systems – is also on the region’s solutions list. These arrangements place solar or wind farms at the site of consumption, for example among housing or industry. This removes the need for energy transportation, avoiding grid overload.
“We have gotten used to the idea that planning has to be indicative, and that it is the market that decides which direction to take with the energy sector. The case of Chile, with an oversupply of solar, but without transmission grids, shows that this is not the case,” say Méndez. “The optimal system is one that looks at the whole and determines the best combination.”
