Latin America and the Caribbean are facing a structural challenge: renewable energy is expanding faster than the region’s electrical grids can absorb. According to a new report from the Inter-American Development Bank (IDB), more than 53,000 GWh of clean electricity were curtailed in 2024 due to insufficient transmission capacity—equivalent to 3.2% of total regional generation.
Those curtailments represent approximately USD 7 billion in direct losses: clean, fully generated electricity that never reached consumers.
This issue is far from isolated. With growing electrification of transport and industry, the rapid addition of solar PV and wind power, and increasingly frequent extreme weather events, the grid has become the central backbone of the energy system. And that backbone—for now—is saturated.
The IDB report urges governments to treat transmission infrastructure as a national development priority, not merely as a technical component of the power sector.
According to the study, delayed project execution, outdated planning methods and rigid regulatory frameworks are slowing investment and jeopardizing climate and energy-security goals.
To break this bottleneck, the report calls for a fundamental shift in planning methods—moving away from linear, centralized models and toward resilient, multisectoral and territorially integrated planning. This includes anticipating medium- and long-term electricity demand, incorporating climate resilience, and coordinating with environmental, financial and social authorities from the earliest stages.
The IDB highlights that several technological solutions remain severely underused.
Grid Enhancing Technologies (GETs) — such as advanced sensors, automation systems and power-flow controllers — can boost the capacity of existing transmission lines without the need for major new infrastructure.
These technologies are faster to deploy and generally face fewer environmental and social conflicts. However, current regulatory frameworks do not formally integrate GETs into transmission-expansion plans, limiting incentives for adoption.
The scale of the challenge demands significant financial support. The IDB estimates that Latin America and the Caribbean must invest USD 6–8 billion per year in transmission by 2030 to keep up with renewable-energy growth. By 2050, that requirement could triple.
Yet investment levels remain far below target: in 2022, only USD 3.3 billion were mobilized for transmission projects.
The problem is not just fiscal. The transmission business model is failing to attract private capital due to unpredictable revenue streams, slow tendering processes, and remuneration schemes focused solely on physical infrastructure—rather than on efficiency, performance or system benefits.
The IDB recommends updating regulatory frameworks, incorporating risk-mitigation mechanisms, and tapping into climate finance instruments.
Environmental and social permitting remains one of the region’s most persistent obstacles.
According to the report, lack of digitalization, redundant procedures and limited technical capacity among permitting authorities create legal uncertainty, discourage investors and delay strategically important projects.
There is significant room for improvement through greater transparency, streamlined rules, and early engagement with local communities, the authors note.
The report also stresses the need to strengthen cross-border power interconnections. Regional integration is not only a matter of efficiency: it enhances energy security, climate resilience and cost optimization.
Greater interconnection could reduce regional generation costs by up to 15%, yet progress in recent years has been marginal due to a lack of coordinated planning, harmonized regulations and political alignment.
“Cross-border electricity exchanges are becoming essential not only for economic efficiency but also for system resilience and energy security,” the authors argue.
A Clear Message: No Energy Transition Without Transmission
Ultimately, the IDB’s conclusion is unequivocal: strengthening transmission grids is foundational for a resilient, equitable and climate-aligned energy transition.
Investing in grids should be viewed not as a sectoral expenditure, but as a strategic development priority for the 21st century.
The key question, the report suggests, is whether Latin American governments and regulators are prepared to recognize the grid for what it is: the backbone of the modern energy system.
