Power policy

Bolivia introduced a clean energy policy and plan to increase renewable energy generation and achieve a successful energy transition. The policy targets to increase hydro power and renewable energy generation and gradually move away from fossil fuel. In its National Development Plan 2021-2030, it introduced 10 goals for the energy sector, pledging to raise the share of renewables (including hydro) in the energy mix to 79% by 2030, up from 37% in 2020.

It also aims to increase the share of wind, biomass, geothermal, and solar to 19% by 2030 from 5% in 2020. The capacity is expected to come mostly from hydro plants, combined cycle and gas plants, and wind, biomass, geothermal, and solar. The NDC does not give a detailed target, but the government expects to leverage its vast amount of lithium and biofuel reserves to reduce its reliance to fossil fuels and a successful energy transition. Additionally, the updated NDC focuses more on mitigation and adaptation, reaffirming Bolivia’s initial goals.

State-owned Empresa Nacional de Electricidad SA (ENDE) leads the development of clean energy projects in Bolivia, with investment coming from international development banks and the Central Bank of Bolivia. The role of solar in power generation was solidified in 2018 and Bolivia was able to install 235.2 megawatts in 2021. One of the country’s largest PV plants, a 50-megawatt project financed by European development agencies, was commissioned in Oruro in 2019 and it is now in the second phase of construction. Bolivia in November 2021 inaugurated the country’s largest wind farm, a 54-megawatt facility in El Dorado.

The Bolivian government in March 2021 enacted Supreme Decree 4477 to decentralize and democratize energy generation system. This regulation is also expected to reduce renewable energy electricity costs to encourage alternative energy mix ratio.

Fiscal incentives: Law 3279 and Law 3525 of 2005 gives five years of VAT and import duty exemptions for renewable energy equipment. Under Supreme Decree 280 of 2009, solar and small-scale wind power equipment is exempt from import duties.

Power prices and costs

The government sets electricity prices. Given that Bolivia is a natural gas producer, tariffs are dependent on heavily subsidized gas-powered generation. However, energy generation from gas plants has decreased gradually since 2017 from 63.7% to 53.8% in 2021. Meanwhile, hydro, solar and wind have increased their share in the country’s energy mix. The share of hydro has increased from 34% in 2017 to 40% in 2021, while solar’s share of power generation rose from 0.1% in 2017 to 3.01% in 2021, and wind from 5.9% in 2017 to 10.7% in 2021. Electricity prices continue to rise, although rates remain low compared with most countries in Latin America. Prices in 2021 dropped slightly from 2020 levels. The average commercial electricity price was $140 a megawatt-hour, while industrial and residential electricity prices were $80.30 and $101.70 a megawatt-hour, respectively.

Power market

Despite Bolivia being heavily reliant on gas for power generation, the share of natural gas generation in Bolivia’s power matrix has been declining. Government subsidies for gas power limit the competitiveness of renewables. However, Bolivia is seeking to expand its hydroelectric capability to 74% of total capacity by 2025 (up from 30% in 2018) and allow the country to export electricity to neighboring countries. Despite competition from subsidized fossil fuels, renewable generation, such as from the Uyuni and Oruro solar plants and small hydro, accounts for 28.4% of total capacity as of end of 2021. ENDE is responsible for most power generation, transmission and distribution.

Doing business and barriers

Bolivia’s demand for electricity is gradually growing, rising from 1,458.5 megawatts in 2017, 1512.3 megawatts in 2019 and 1,611 megawatts in 2021. At the same time, energy reforms prioritize the electrification of rural areas, with the country aiming for universal access by 2025.

Most rural electrification takes the form of off-grid projects, mainly relying on thermoelectric generators and solar photovoltaics. Business opportunities for renewables are on the rise, but at a slow pace due to such projects receiving less financial support than fossil fuel plants. The largest planned projects are hydroelectric dams, as the country views them as the fastest way to achieve clean energy targets and increase power exports to neighbors.

The growth of renewable energy is hindered by Bolivia's reliance on heavily subsidized natural gas, which lowers power prices and impedes competition. The nationalized energy sector and foreign companies also lack clear incentives to boost renewables capacity, and projects must be financed without the option of power purchase agreements. There is no in-country manufacturing capacity for solar or wind components, so equipment must be imported.

EV market

The government has yet to implement any substantive policies in this sector and the electric vehicle market remains nascent. In Bolivia’s updated NDC, the government stated a target of an annual growth of 10% in the share of EVs in the country’s public transportation fleet by 2030, from a baseline of less than 1% in 2020.

EV policy

Bolivia has tax and financial incentives for the manufacture, assembly, purchase and import of electric, hybrid motor vehicles, electric and hybrid agricultural machinery. To create a conducive operating environment for importing and selling goods, such as electric vehicles and components, and to increase efficiency and economic savings for industrial and agricultural sectors, the Tariff Levy and Specific Consumption Tax (Impuesto al Consumo Específico, ICE) for electric and hybrid motor vehicles have been modified. This change in the tax and financial incentives for the payment toward specific consumption products will be in place for five years from the publication of Supreme Decree 4539 in 2021. After this period, corresponding rates will be reinstated.

Buildings market

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the low-carbon heat market remains at an early stage.