Study estimates $64.712 billion investment needed to decarbonize Venezuela's power grid

A team of researchers has estimated that Venezuela would need to invest $64.712 billion in generation infrastructure, battery storage, and electrical connections to achieve a fossil-fuel-free generation system by 2060. This figure exceeds by 87% the investment required to maintain the current composition of the electricity mix and by 8% the amount corresponding to a scenario of replacing thermal power plants with natural gas combined-cycle facilities.

The study, titled “A subnational approach to energy transition costs in Venezuela,” was developed by Fabiola González Pérez, Esteban Ricardo García Clavel, and Thomas Stringer, and published in the scientific journal Utilities Policy. The researchers developed a state-level power planning model in response to the lack of updated official statistics since 2012. To achieve this, they reconstructed generation and demand data using historical national and international sources and projected electricity consumption through 2060. The reference scenario assumes a population of 31.2 million, an annual demand of 89.47 TWh, and electrical losses of 25.4%.

The authors evaluated three alternatives. The first, referred to as Business as Usual (BAU), maintains the generation mix recorded in 2021 and requires estimated investments of $34.634 billion. The second progressively replaces power plants using fossil fuels with natural gas combined-cycle facilities, with an investment of $59.994 billion. The third, referred to as Net Zero (NZ), eliminates fossil fuel generation and replaces it with a combination of hydropower, solar photovoltaics, and wind power, supported by battery energy storage systems, with a total investment of $64.712 billion.

One of the main findings is that renewable generation infrastructure requires an investment of $48.279 billion, compared to $57.828 billion for the natural gas generation plants in the gas scenario. However, the renewable scenario includes $13.189 billion for battery energy storage systems (BESS) and another $3.244 billion for electrical interconnections. The model assumes a storage capacity equivalent to 50% of the installed renewable capacity. According to the researchers, these complementary investments explain the cost difference between the two scenarios.

The territorial analysis identifies significant differences in the distribution of technologies. Solar photovoltaic energy becomes the predominant source in states such as Amazonas, Apure, Carabobo, Guárico, Monagas, Portuguesa, and Yaracuy, due to their solar resources and land availability. In contrast, Falcón, Nueva Esparta, Sucre, and La Guaira present favorable conditions for wind energy development. Hydroelectric generation maintains a predominant position in Bolívar and in several states of the Andean region. To establish this distribution, the authors used information from SolarGIS and the Global Wind Atlas, as well as criteria related to existing infrastructure and territorial constraints.

The distribution of investments also varies across scenarios. Under the renewable energy alternative, Bolívar accounts for $25.21 billion, approximately 39% of the national total, followed by Zulia with $7.7 billion, Carabobo with $7.39 billion, and Aragua with $5.05 billion. The researchers conclude that the expansion of solar and wind power would allow generation infrastructure to be distributed across a greater number of states, whereas conventional scenarios keep investments concentrated in regions that already have power plants. The need to diversify the energy mix and the challenges arising from the lack of information on the sector had previously been highlighted by representatives of the Venezuelan Association of Renewable Energies (AVER) in an interview published by pv magazine Latinoamérica in 2024.

The authors warn that the estimates should be interpreted as comparative planning scenarios and not as precise forecasts of the investments Venezuela will make. The model uses constant 2025 technology costs, does not incorporate distribution network rehabilitation costs, and simplifies transmission and storage requirements. It also does not consider construction timelines, financial constraints, or a detailed simulation of power system operations. Furthermore, the study does not determine the lowest-cost technology combination between the extreme scenarios of natural gas and fully renewable generation. The researchers believe the results support the need for state-specific energy planning, in accordance with natural resources and available infrastructure.