Power policy

With 99.9% of its electricity demand met by three large hydro plants totaling 8.8 gigawatts of capacity, Paraguay has had little incentive to develop a policy framework for other energy sources. In fact, the country exports more electricity than it consumes. In 2014, Paraguay set a target for renewables to reach 60% of total energy consumption by 2030 while also lowering fossil-fuel consumption by 20%. The only clean energy policy incentive in Paraguay is a biofuel blending mandate for gasoline and diesel. Paraguayan authorities are planning to have its biofuel plan fully implemented in 2024.

Power prices and costs

In 2021, Paraguay’s average commercial and industrial electricity prices rose 13% and 37%, respectively, reaching $60.90 and $60.75 a megawatt-hour. Residential prices kept nearly flat, with a small decline of 6% at $57.16 a megawatt-hour. Paraguay’s electricity prices are some of the lowest in Latin America. Paraguay subsidizes electricity tariffs for lower-income families.

Power market

Paraguay’s electricity market is overseen by the Department of Mines and Energy, which is under the Ministry of Public Works and Communications and controlled by the state-owned vertically integrated utility National Electricity Administration (ANDE), which is the operator of the national electricity grid. In theory there is no rule that prohibits corporate power purchase agreements, but the power market structure makes it difficult for commercial and industrial (C&I) customers to sign bilateral contracts.

Because large hydro more than meets its needs, the country has not received significant clean energy investment in recent years. In 2011 Paraguay received $28 million in investments for biofuels. It is anticipated that investments will pick up again in 2024, when the Omega Green biofuels plant will receive $800 million in investment.

Doing business and barriers

Paraguay’s electrification rate in 2019 was 99%, and it claimed to reach 100% the following year. The country’s peak demand jumped 49% over the past 10 years, from 1,892 megawatts in 2010 to 3,709 megawatts in 2021.

From Paraguay’s total generated energy, the surplus (more than half) is exported to Brazil and Argentina. The Paraguayan power market does not have private players. The average level of import duties for components to build a solar or wind project is 14%. The average level of value added tax (VAT) for components needed to build a solar or wind project is 10%.

EV market

Paraguay has a nascent electric vehicle market, with total fleet of just over 1,000 EVs in 2021. A legislation that allows reduced VAT rates for EV purchases was enacted in 2016. Cleaner fossil fuels are being introduced in the country, with a rule limiting low-sulfur diesel to less than 50ppm.

EV policy

Itaipu Technological Park, through the Center for Innovation in Energy Technologies, undertook an initiative that oversees the installation of charging systems for EVs whose electricity will be generated with solar energy from photovoltaic installations built on site.

Paraguay's national energy policy includes a goal to electrify new vehicles in the public transport fleet. The plan states a short-term target of 10%, a 20% in the medium term and 50% in the long term, without detailed timelines. There are also specific targets for the Asunción area, of 10% in the short term, 50% in the medium term and 100% in the long term.

Buildings market

Paraguay in 2015 proposed the National Energy Efficiency Plan including indicative measures such as to improve building energy efficiency management, but has not issued any detailed policies for buildings.

Buildings policy

The government has yet to implement any substantive policy support in this sector and the building energy efficiency market remains at an early stage.