The Economic, Environmental and Developmental Benefits of High-Voltage Interconnections Between South and North America via Central America and the Caribbean

Michael Hesse Wolfe, International Energy Planning Consultant, USA

Peter Donalek, Hrza Engineering Company, USA

Peter Meisen, Global Energy Network Institute, USA

ENERLAC 93

Bogota, Colombia

June 15 - 18, 1993

1. SUMMARY

This paper addresses the potential for expanding current efforts to complete power system interconnections in Central America towards an Inter-American Transmission System (IATS), that would interconnect northern South America with North America via Central America and the Caribbean. The principal reason for expansion of the concepts for interconnection would be to emphasize the greater utilization of renewable resources by deliberately creating an export trade in energy derived mainly from major sources of renewable hydropower in South America. The energy would be delivered initially to the countries of Central America and Mexico from sources in Colombia and Venezuela, and eventually with Brazil, Ecuador and Peru. The initial transmission system envisaged is a hybrid, comprising a three-terminal high voltage direct current (HVDC) system between a converter terminal in Colombia and an inverter terminal in Mexico, connected mid-isthmus to an a.c. Central American Interconnected System via a HVDC tap-station. Eventually this hybrid system could be expanded to include terminals in Brazil, Ecuador and Venezuela connected to additional bipoles to Mexico and a marine cable system to Florida via the Antilles in the Caribbean. Emphasis is given to an initial program for firming of existing generation and transmission capability in Central America, to be followed by a planned expansion of generating capacity in source countries with transmission interconnection facilities extending from South to North America via Central America and the Caribbean.

Staged expansion of the interconnection would enable considerable regional economic and environmental benefits to be realized. The principal economic advantages of interconnection are rationalization of investment in new generation and transmission facilities, coupled with improvements to operating flexibility and efficiency, resulting in reductions to cost of supply. To these would be added new revenue resulting from export of surplus energy derived from renewable resources and consequent environmental benefits resulting from the displacement of fossil-fired thermal generation. A regional environmental development compact (EDC), which would place these benefits in a regional perspective, could provide the political framework for cooperation by regional participants. It is envisaged that there would be a positive role for OLADE and ECLAC in support of CEAC and other regional participants to the EDC. Also addressed is the financial support necessary from the World Bank and regional banks, IDB and BCEI, together with a suggestion for conversion of existing commercial debt to local currency components of investment in generation and transmission facilities. In this way an initial economic boost is given to national economies by debt conversion to be followed by progress towards economic growth and integration.

There is momentum towards hemispheric economic integration in the Americas, provided by several regional economic areas, or common markets, at different levels of development, from nascent political formation to legislative process [1]. These regional economic groupings are part of the present pattern of convergence towards evolved forms of integrated economic areas. The global economy tends to encourage this convergence, with participation at different levels by regional trading blocs. One feature of this convergence is the supportive role played by energy exchange made possible by regional power system interconnections.

In South, Central America and North America, four subregional economic groupings have been formed or are being actively pursued. These are natural groupings evolving in geographical contiguity and economic affinity. Andean countries along the Cordilleras Blancas began the process of economic market formation under the terms of the Andean Pact but, due to adverse economic circumstances, convergence to meaningful integration has been slow. Argentina, Brazil, Paraguay, and Uruguay formed MERCOSUR in the southern cone but progress towards integration is also slow. In the countries of Central America, some progress was made to form a Central American Common Market but efforts have languished due to conflict situations in the isthmus area over the past decade. At the present time, efforts are being made to revive hopes for Central American integration. Possibly the best example of positive progress in the hemisphere is the expansion of NAFTA to include Mexico together with Canada and the United States. This can be expected to provide an example of what can be achieved with regional economic integration in North America. The example will surely cause re-examination of the basis for further progress with economic common markets in Central and South America. A precedent is thus set for forward movement in other subregions of the Americas, one feature of which would be extension of power system interconnections to facilitate intra-regional energy exchange.

In the progress towards economic integration of common market areas, energy could be defined in terms of its role as a leading sector. As we near the year 2000, the impact of energy on the global environment is more certain of critical review than in past decades. The unique advantage of energy as a catalyst to economic integration in the Americas is that renewable energy resources such as hydropower exist in abundance in countries of South America, whilst they are already well developed in North America. The possibility of energy transfer based upon this renewable resource development imbalance is then a factor that could contribute to economic integration between South and North America, via Central America and the Caribbean.

2. Renewable Energy and Interconnection for Economic Growth

The potential of renewable energy development to spur economic growth and integration of common markets is two-fold. Firstly, it would provide energy for local industrial and commercial growth requirements, contributing to domestic and, through trade expansion, regional economic growth and market integration. Secondly, if energy export from renewable resources were to be introduced on a sufficiently large-scale, revenue from export sales would contribute to local and regional development as well as preservation of the regional environment. This could only be made possible by extended power system interconnections.

At first, renewable energy would contribute to reduced consumption of fossil fuels, which would reduce both foreign exchange requirements for those countries having to import petroleum or coal and the environmental impact of fossil fuel combustion on air quality in urban areas. As subregional interconnection is extended, these benefits are also provided to wider areas. An example of this would be the proposed interconnection between Machala in Ecuador to Tumbes in Peru to enable surplus hydropower from the Paute Project to replace thermal generation in Tumbes [2a]. The first stage is modest: A seasonal range of power between 5 and 8 MW to be exported over a 69 kV line, but nevertheless the savings are tangible in terms of both the cost of alternative generation and relative environmental impact.

As more ambitious interconnections are completed, economic andenvironmental effects are magnified. Once the second stageinterconnection between Machala and Tumbes is completed, 30 MW of transfer capacity will be available between Ecuador and Peru. Interconnection capacity will be further increased in this border area by the Puyango-Tumbes binational project. In the northern Andean zone, a ten-fold increase in transfer capacity is projected for the 300 MW capacity 230 kV interconnection between Venezuela and Colombia, to link San Mateo and El Corozo via a 50 km transmission line through the Andes [2a].

Also in the Andean zone, plans for interconnections between Ecuador and Colombia are under implementation which will eventually enable reliable, economic energy exchange between the central systems of both countries, taking full advantage of seasonal hydroelectric generation diversity between the Amazon and Pacific basins [2a]. This emphasizes the considerable benefits that are associated with major system interconnections, which certainly contribute to economic growth of subregional participants. Greater utilization of hydropower also enhances environmental benefits from development of renewable resources.

Along the Atlantic coast of northern South America, prefeasibility studies have been made by the governments of Venezuela and Guyana to determine the relative economic advantages of an interconnection between two hydropower projects on the Lower Caroni in Venezuela and the Guyana electric power system. Delivery of power would be made from the future Macagua II and Tumeremo stations, which would be interconnected by a 200 km section of 400 kV line in Venezuela, to a terminal at Linden in Guyana over a 400 km section of 200 kV line.

Benefit/cost analyses indicate that this export of power from Venezuela would enable Guyana to realize significant fuel cost savings and avoid possible energy rationing [2a]. In this case, development of dedicated hydropower generation for export would be possible, enabling Venezuela to earn revenue from renewable energy resources and Guyana to displace the need for costly fossil fuel generation. Mutuality of interest is then possible, which would lay the basis for future expansion of dedicated generation for export of electrical energy converted from renewable resources.

One such future market for hydropower in reasonable proximity to northern South America is the subregional grouping of countries in Central America. The intent to form a Central American Common Market has been aided by the extension of transmission interconnections between countries along the isthmus. Apart from Belize, the other six nations of Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama are sequential links in the chain of countries from Mexico in southern North America to Colombia in northern South America. In 1991, only a 230 kV transmission link between Honduras and El Salvador remained to be built to complete interconnection between all six electrical power systems of Central America [2b]. The natural extension to this formation would be a southern interconnection between Panama and Colombia to be followed by a northern link between Guatemala and the central interconnected system of Mexico. As capital formation for generation expansion in Central America is partially reliant on private sources, most new generating plants are relatively small and their output tends to be absorbed immediately by local demand after commissioning. Seasonal hydropower, such as from run-of-river plants in Costa Rica, enable whatever surplus energy is available periodically to be exported via existing interconnections. The present need is to firm supply capacity in the six countries taking into consideration the limited surplus available for export. Future reinforcement of transmission capacity should be planned in context of the need to optimize on shared generation capacity via interconnecting links. There are several medium size hydropower sites available for development: Boruca in Costa Rica and Copalar in Nicaragua [2b]. The output of these could be shared following a sequential building program that would enable investment capital to be allocated with an efficient disbursement schedule. These larger plants, in the order of 300 MW capacity, could be developed on a joint basis together with associated transmission interconnections. However, during the period of generation and transmission capacity firming, it would be appropriate to evaluate the feasibility of extending transmission from Panama to Colombia for interchange of surplus hydropower. Alternatively, dedicated hydropower could be developed in Colombia and Venezuela for export to Mexico via Central America. In this case, it would be essential to fully evaluate the relative technical and economic merits of EHV AC or HVDC as a preferred transmission mode. At some juncture, the purpose of the Inter-American transmission system would change from a normal mode of energy interchange between national systems to also include delivery of power over a long-distance interconnection from Colombia to the natural regional demand center, Mexico City. At this stage it is likely that a hybrid system would be required, comprising a three-terminal HVDC system from Columbia to Mexico City, with a tap-station in Central America to the underlying interconnected a.c. system on the isthmus.

In the 2lst century, it may be possible to further expand hydropower exports from South America to North America by building dedicated HVDC transmission systems from terminals in Colombia, northwestern Brazil, Ecuador and Venezuela to three energy centers on the border between Mexico and the southern United States [3]. The energy centers would be developed within the context of NAFTA, primarily for renewable energy export to the U.S. and termination of the Inter-American transmission system. These energy centers would serve to buffer flows of power northwards to the NERC regions of WSCC, ERCOT and SPP. This would complete the interconnection of South America with North America. Its transfer capacity could then be gradually increased, as required, according to demand growth in relation to economic sources of renewable energy supply. In addition, if feasible, a marine cable interconnection could be made from Venezuela to Florida via the Antilles in the Caribbean. The map in Figure I shows the general location of interconnection terminals and overland/undersea routes for the Inter-American Transmission System.

Figure I

Inter-American Interconnection Terminals and Corridors

3. Natural Convergence of Regional Needs and Potentials

Over the last decade, many countries in the region have undergone domestic political turmoil, civil strife and foreign intervention. United Nations population trends predict 50% more people in the region in the next 25 years, most preferring urban areas. [4] Both the people and the environment of the region are suffering as a result, with widespread poverty still being the norm for millions of Latin Americans.

The benefits of electrical energy: clean water, refrigeration of food and medicine, waste disposal, communications; are available to only the wealthier minorities in each country. Lack of electricity can be easily correlated with high rates of infant mortality, as well as high birth rates. [5] A priority of sufficient electric power for all should be a social commitment made by all leaders of the region.

3.1 Regional Environmental Needs and Renewable Energy

All developing countries are dedicated to improving the standard of living for its citizens. Yet protecting the environment in the process of development is often forgotten. Burning wood for cooking and heating supplies the immediate needs of survival, but clears forested lands more quickly than they are replanted. The "cleaner" power technologies that are now available are usually more costly than the budgets of the nations can afford, and proprietary interests often keep new technology out of reach.

The great opportunity of the Mexico to Colombia-Venezuela region is vast potential of renewable energy. Hydro, geothermal, wind and solar energy are abundant beyond the actual energy needs of the region. Along with high voltage power transmission, these sources can be tapped for domestic development, and the excess used for export. These energy sales will have two major benefits: first, to return income for national development programs and debt repayment, second, to displace the more polluting fuels with cheaper electricity from non-polluting renewable sources.

3.2 Potential of Renewable Energy as a Catalyst for Growth

By working in concert, the Latin American countries could interest both technical expertise and foreign investment into the region. This investment into primary infrastructure, will bring jobs in construction, operation and maintenance of power transmission and control centers. More importantly, this integration of electrical infrastructure will help bring the economies of Latin America into a more competitive world standing. New markets will naturally open as the region's economic situation recovers.

4. Role of Intra-Regional Power System Interconnections

Interconnection of power systems within the region serves as a tangible sign of the economic integration of national economies into logical sub-regional market areas. International power flows over transmission systems represent another form of trade, with electrical energy being the basic exchange commodity. However, intra-regional power transmission interconnections are made in response to definite technical, economic and financial criteria. These criteria are discussed below in relation to proposed regional interconnections.

4.1 Economic Operation of Interconnected Power Systems

The usual motive for interconnection is to improve the economic operation of generation and transmission systems, as they expand to form more viable territorial extensions. Improvements to operation include the ability to utilize generation on a more rational basis for energy generation. Thermal unit operating efficiencies and cost of fuel are taken into consideration by economic dispatch and variations in hydrologic cycles are compensated for in the case of hydropower. Reliability of supply is improved as the number of generating units are increased through interconnection of supply areas. Firm power and economic energy may be exchanged to suit the operating requirements of interconnected supply systems.

4.2 Optimization of Capacity and Transmission Expansion

Advantages that may be gained from interconnection are associated with overall system expansion, including the timing of capacity additions which are key to financial investment. When a system is entirely self-reliant, more capacity has to be built to satisfy demand and reserve margin requirements. Interconnection enables sharing of capacity additions over time, which results in postponement of system additions. The cost of generating plant and transmission interconnections may be shared by adjacent utilities, such that investment in generation and transmission facilities to individual participants is minimized or deferred. Optimization of supply networks enables power demand to be met with a minimum of new generating capacity additions and transmission extensions for interconnected system expansion.

4.3 Rationalization of International Investment Programs

In this time of budgetary restraint, system interconnections allows rationalization of international investment programs. Capital is used efficiently as minimal outlays are possible with least cost expansion programs. Optimization of supply facilities over the expansion period enables capital plant additions to be postponed, or sometimes canceled, which results in reductions to capital disbursements through time. In addition, power system interconnection is being given new emphasis with increasing international environmental awareness. Stack emissions are reduced whenever thermal plants are postponed or canceled, which would be a positive consideration by international and regional financial institutions such as the World Bank and Inter-American Development Bank.

4.4 Interconnection of Energy Sources to Distant Markets

In addition to advantages resulting from local system interconnection, it is now possible to contemplate regional interconnections between major sources of renewable energy to distant demand centers. Advances in transmission technology allow delivery of large capacity blocks of power and energy over very long distances, from remote sources to distant markets. Transmission corridors up to 7,000 kilometers are within the extended range of high voltage d.c. (HVDC) and it is therefore possible to think in terms of continental distances for HVDC transmission reach [6]. Thus, remote renewable energy sources that would not be developed near-term to satisfy local demand can be thought of as potential sources of supply for distant markets, particularly if alternative generation sources are mainly fossil. The imperatives of environmental development suggest that one of the principal ways to counter global warming and regional pollution from fossil combustion would be to include more renewable energy sources in the supply mix. Interconnection of remote renewable energy sources to distant markets for displacement of fossil generation would be one way in which a major impact could be made on sources of environmental pollution.

4.5 Potential for Export of Surplus or Dedicated Energy

In Central and South America there is great potential for export of renewable energy, either surplus to local requirements or as a dedicated supply for energy export. Abundant hydro resources exist in northern South America and both hydro and geothermal resources exist, along the Isthmus of Central America. It is entirely conceivable to deliver hydropower from Colombia to Mexico via the countries of Central America. It is also possible to think in terms of a more inclusive system of interconnection to link hydropower sources in Colombia, Brazil, Ecuador, and Venezuela with North America via overland transmission systems through Central America and by a combination of marine cables and island transmission systems across the Caribbean. However, it is necessary to carefully plan the staged interconnections through time, with close coordination by participating nations within the region.

4.6 Integration of Systems to Maximize Economic Growth

With long-term maximization of economic growth as an objective, it is necessary to think in terms of steadily approaching the goal, within a well coordinated master plan to integrate existing plans for system interconnection along the Isthmus of Central America with extensions to North and South America. Extension of the interconnection between Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama will be necessary to link major sources in Colombia, Brazil, Ecuador and Venezuela with Mexico and the United States. Basically, what could be accomplished through time would be intra-regional interconnection of power systems that would build on existing interconnected networks within the Andean, Central American, and NAFTA market areas embracing Mexico and certain US-NERC regions.

5. Regional Distribution of Power-Energy Demand Centers

The main power and energy demand centers under consideration for assessment of the potential for future interconnection of South and North America via Central America and the Caribbean are Mexico City and the capital cities of Central American countries, assuming that a limited number of taps would be made to transmission systems comprising the Inter-American Transmission System (IATS). It is further assumed that power delivered to demand centers would be available to supply a portion of country loads via interconnected national transmission systems. In order to approximate the relative distribution of power along the transmission system, total national demand projections are given in Table 1.

Table 1:

Diversified Demand for Mexico and Countries of Central America

(Megawatts)

Sources:

**1/ 1989 Forecast of Comision Federal de Electricidad (CFE)

**2/ Central America Power Interconnection: A Case Study in Integrated Planning, World Bank Energy Department Paper No. 15, April 1984

It may be observed that the Central American country loads are of a similar order of magnitude and that their total diversified demand is approximately 1/4 of the total diversified demand for Mexico in 1989, ranging up to 1/3 in 2000. The load growth of Mexico is increasing at a faster rate than that of the six Central American countries, indicative of the stagnation in Central America. However, in relation to the justification for interconnection, Mexican load growth offers a definite incentive to eventually supply the CFE system mix with electrical energy from hydropower sources of northern South America.

The primary factor which would govern the economic transfer of power to Central America and Mexico would be the amount of power relative to installed capacity and the delivered cost of energy in relation to prevailing energy tariffs. The 1988 values given in Table 2 are indicative of respective levels in the countries of Central America.

Table 2:

Countries of Central America (1988)

Source:

The Evolution, Situation and Prospects of the Electric Power Sector in the Latin American and Caribbean Countries, World Bank Infrastructure and Energy Division and the Latin American Energy Organization (OLADE), 1988

The spread between actual cost of energy and average tariff suggests that there is a reasonable margin for negotiation between energy suppliers and purchasers within the upper limit of average tariffs for retail sales of energy. However, it indicates how the economics of interconnection are dependent upon relative marginal cost levels for energy generated and delivered from remote sources compared with that of potential energy purchasers. Transmission energy losses over long interconnections will be a determining factor in negotiations.

6. Resource Centers of South and Central America

The principal resource centers of northern South America are located in the countries of Colombia, Brazil, Ecuador and Venezuela. Of these, only the northwestern area of Brazil is considered for hydropower development dedicated to export and Ecuador is regarded as being a suitable center for delivery of surplus hydropower from other Andean countries to the south, such as Peru.

6.1 Characterization of Resource Base for Interconnection

The principal resource that is considered suitable for energy export is large capacity hydropower. Other renewable resources, such as small to medium capacity hydro and geothermal in Central America are suitable mainly for local supply or, if surplus to local demand, could supply equivalent energy to partially compensate for transmission losses in the interconnection system. The environmental impact of large hydropower developments has caused serious questions to be raised whenever potential high-head sites are considered for development. However, hydro resources are still relatively benign when compared with combustion of coal and oil for energy generation. Stringent environmental assessment criteria have been introduced by the World Bank and other institutions. These criteria and rigorous assessment procedures will help screen candidate sites to remove potential problematical developments from further consideration. One other possibility is a turn towards large capacity low-head developments that rely more on dynamic flow rather than potential head for energy conversion. Innovative designs for prefabricated modules with caisson-mounted bulb units would be suitable for river transport logistics rather than ecologically disruptive roads and dam construction in areas such as Amazonia. This technique may well provide a valid alternative to high dams and large reservoirs, and is worthy of detailed investigation.

6.2 Regional Sites of Major Renewable Energy Resources

Hydropower sites being considered are concentrated in the northern part of South America. A low-head development at Ilha Grande on the Rio Negro in Brazil is a potential source of hydropower that could be developed for export, as sites along this tributary of the Amazon are far from major Brazilian load centers and the rainforest of Amazonia is unsuitable for construction of transmission systems. However, the relative proximity of Ilha Grande to the highlands of Colombia would provide a natural route for transmission dedicated to power export as the terrain would be more suitable for transmission corridors.

6.3 Major Renewable Energy Resource Center Locations

In addition to Ilha Grande in Brazil, other hydropower sites in northern South America are located in Colombia, Ecuador, Peru and Venezuela, the Magdalena basin in Columbia, the western slopes of the Andes in Ecuador and Peru, together with the Orinoco-Caroni basins in Venezuela are the location of major hydropower resources. These could be considered the renewable energy resource centers that would provide the bases for major hydropower developments. An indication of the relative magnitude of hydropower resources is given in Table 3.

Table 3

Hydropower Resources of Northern South American Countries

Source:

World Energy Conference survey data

Colombia has the largest hydropower resource base, approximately half of the combined total of 95,100 MW generating capacity for average annual flow conditions. The relative magnitude of hydropower resources in Central America may be compared by reference to Table 4. The total for the six countries of Central America is approximately 18 percent, or 17,200 MW.

Table 4

Hydropower Resources of Central American Countries

Source:

World Energy Conference survey data

There is the possibility of future supply to Central America and Mexico from surplus hydropower in northern South America. Staged development of an Inter-American Transmission System is required to gradually evolve an interconnection between renewable energy sources and demand centers. The map of Figure I indicates power flows from main resource centers to Mexico over four main interconnections, three overland routes and one undersea and island route:

• Ilha Grande, Brazil to Mexico via Central America

• Colombia to Mexico via Central America

• Ecuador to Mexico via Central America

• Venezuela to Florida via Caribbean islands

It is assumed that HVDC would be the preferred transmission mode, both for overland bipole routes through Central America and for the marine cables and cross-island bipole route across the Caribbean. Limited d.c. tap terminations would enable island power in-feeds to supplement local supply and diminish reliance on diesel-engine generating units.

6.4 Location of Transmission Interconnection Terminals

Ecuador could be the site of a HVDC converter terminal that would transmit surplus power from the Andean subregion, embracing hydropower sites in Ecuador and Peru. These sites would be interconnected by an extended EHV AC system superimposed on existing local high voltage systems. Colombian hydro sites would be served by a separate HVDC converter terminal, as would sites in Venezuela. Due to geographic disposition, the three terminals in Colombia, Brazil and Ecuador would be interconnected with Mexico via the Isthmus of Central America, while the terminal in Venezuela would be more suitable for interconnection to Florida by HVDC marine cable systems via the Caribbean island chain of the Antilles. This would probably be the last interconnection to be implemented due to the relative cost of marine cables compared to overland HVDC bipoles.

6.5 Potential Integration of Renewable Energy Centers

Integration of renewable energy centers will require a coordinated program to develop hydropower resources in the countries of northern South America. Initial steps to interconnect sources and systems within this subregion are proceeding. To build on the many possibilities for future interconnection will need cooperation between the several national power authorities to formulate a plan for staged development of subregional hydropower sources and transmission systems to establish priorities and schedule design and construction programs.

7. Firming of South and Central American Power Systems

The countries of Central America have basic electric transmission and distribution systems. These have been developed over the years as part of each country's needs. In many cases the development was based on the demand for electricity in the large metropolitan areas. In more recent times the electrification system was part of plans to electrify the country and may have been part of larger plans to industrialize and modernize.

The development of electric power systems from localized systems serving large cities and urban centers to the construction of nation wide bulk power systems began in the late 1940's. Following 1945 several countries embarked on plans to modernize. Among the accoutrements of a modern nation were a national airline, a hydro electric station and electric transmission lines. Computer based central dispatch and high speed communications systems followed.

The bulk power and generation facilities one finds throughout Central America today provide the basis for the next evolutionary step in the development of a regional electric power system. In the past decade, each country has installed some form of central load dispatch (Energy Management System). Such facilities are an essential facility to the control of system operation.

A compelling force driving the development of a regional electric power transmission system is the realization that a quantum step is required to assure a secure energy future for the region. This is coupled with the need for sufficient and reliable supply of electric energy is basic to any plan for modern development.

Although existing bulk power transmission systems are sufficient in most cases for national interests, the need for an interconnected regional system imposes a more rigorous set of criteria. Existing transmission systems must be developed in two ways. One in the direction of a common high voltage that allows power and energy interchange between systems and second is the need to firm existing capacity and transmission within each region.

Transmission within each country must be firmed up so that the effects of a unit outage or loss of a heavily loaded line do not result in a major disturbance that would jeopardize the flow of power and energy on the regional interconnection. The reliability of the overall regional interconnection will impose a new reality constraint on each system in the region. This restriction will be that each system must be as self sufficient as it possibly can. This can also be stated in terms of reliability by stating that any system disturbance within a system shall not have a negative impact on a neighboring system.

Long range benefits to participating countries will follow from interconnected system operation as a result of the creation of a new major electric utility market. The total electrical load accessible from the interconnected systems will be of sufficient magnitude to justify large generation projects. These can be geothermal and hydro electric projects in the 1,000 MW range. There will probably also be some natural gas and oil fueled plants required for operating and control requirements.

In 1992 several countries in the region suffered a drought. The direct impact to the electric energy sector is reduced output from hydro electric plants. Since there are inadequate transmission interconnections, it is not possible for the drought stricken countries to import electric energy from neighboring countries. This situation has focused attention of energy planners and policy makers in the region on the importance of interconnected utility operation.

7.2 Existing Transmission Systems and Interconnections

Since the 197O's several interconnections have been constructed between the countries of the region, These are:

Each of the six Central American countries have 230 kV as their highest established transmission voltage. At the terminal ends of a HVDC system, the highest established voltages are: Mexico - 400 kV, Colombia - 500 kV, and Venezuela - 745 kV.

The country of Belize is a special case in that it is separated from the existing transmission systems in the region by a large undeveloped area. In addition to the separation it has a relatively smaller load. Thus the combination of small load magnitude and distance makes Belize difficult to include in present plans for interconnection.

In addition to the systems on the main land bridge between the south and north continents there is the case of the island systems along the archipelago from Trinidad to Florida. These systems, although not connected with transmission lines, do have an organizational interconnection. The island systems belong to the Caribbean Electric Utility Services Corporation (CARILAC). Through their combined common interests they can act as an electric utility group, and would be able to participate in future plans for underwater cable connections.

7.3 Planned System Extensions and Proposed Linkages

The idea of interconnecting the power systems in the countries of the region is not new. The idea has been discussed and considered previously. In the early 1970's the Commission Economica Para America Latina (CEPAL) commissioned a study of the interconnection of the Central American utilities. The report developed a transmission interconnection plan based on a 400 kV alternating current backbone transmission system, and underlying 230 kV national systems.

The CEPAL plan was based on a principle that power and energy exchange between countries would allow the sequential development of large generating facilities on a country by country basis. It envisioned the need to accommodate the express transfer of power and energy through the region as a long term goal.

With the major electrical market created by the interconnection it will be possible to construct large hydro and geothermal projects that were not previously economically viable. There are several large hydro projects in Central America that were feasible as engineering projects but not economically feasible because available native load was too small relative to the plant capacity. A general rule of system planning is that total installed capacity in one plant site should not be more than 25% of system peak demand. When the Central American region has a transmission interconnection, then these projects will become viable because total interconnected load will be sufficiently greater than the plant capacity.

The CEPAL plan has value in the present discussion. It provides the basis for route selection, and identifies locations in each country where connections can be made to the existing bulk power transmission system. In some cases the connection point is selected in anticipation of the development of a large hydro generation plant. Many concepts of the CEPAL plan remain valuable today, and others require review. Most importantly the CEPAL study served to keep the concept of regional interconnection in view.

The CEPAL study also provides the basis for the need to construct national and regional energy management centers. These are necessary to control and account for the reliable and uniform interchange of power and energy between parties. From a technical perspective one needs to control system frequency, voltage and real and reactive power flow within each system and across the interconnection points between systems. From a commercial point of view a regional control center will be required to monitor and record power interchanges between systems, and for the purpose of allocating costs for power and energy transactions.

7.4 Priority Areas for Firm Capacity and Transmission

Each country has specific needs and problems to consider with regard to transmission requirements. With the advent of the proposed region wide transmission system concept, each country will be required to examine internal needs and plans for expansion with regard to electric power. This review will involve preparation of load forecasts, population trends, industrial and agricultural developments, transportation systems and other unique issues. As these data are developed they will be used by decision makers confronted with the task of deciding how their system will fit into the regional transmission system.

8. Staged Extension of Intra-Regional Interconnections

8.1 Regional Program for Staged Power System Expansion

Present interconnections require review and study to determine if in their present configuration they are adequate to meet the needs of intra regional interconnections. This can be done using load flow and transient stability planning software tools. The objective of such an effort could be to formulate a long range interconnected transmission system. The capacity and reliability of the interconnections would be analyzed and studied to determine how the system responds to various contingency and basic operating contingencies.

Based on the results of system performance studies a revised plan can be identified. The plan should conform to some predetermined system performance criteria. It is a suggestion that a minimum set of system performance criteria be established. The criteria would cover such items as: amount of spinning reserve, transmission outage criteria, frequency and voltage regulation requirements, as well as generation and transmission planning criteria.

8.2 Intra-Regional Program for Staged Interconnections

From an engineering perspective the accomplishment of a staged interconnection within Central America can be considered to be underway. There are no technical engineering barriers to interconnection. What is required however is a regional mind set be established in which there is the political will and desire to accomplish such a plan because it has a common sense basis.

This may be a difficult hurdle to overcome since it requires agreements between electric utility organizations as well as agreements between sovereign nations. There are however examples of how this can be achieved, and it is expected that under the relentless and persistent force of economic necessity and need for reliable energy supply that a program of staged interconnection will be established.

8.3 Defined Stages for Extension of System Integration

The stages for system integration are driven by several issues. These are: reserve sharing, desire to construct large hydro and geothermal projects, revenue from the sale of electric energy, and related water storage and irrigation issues.

When forecasts for future electricity demand and energy are prepared and matched with other needs of the region, it should become apparent that a fundamental key in the long range future of the region is a reliable and economical supply of electric energy. With the schedule of need and economic growth firmly established, the development sequence for the interconnected electric system will be known.

8.4 Definition of System Control and Energy Management

Electric Utility Organizations throughout Central America have recognized that there is an economic advantage if they can interchange electric energy. Technical personnel within the Electric Utility organizations know that there are two major technical components to interconnected operation, and they are actively seeking technical assistance. The two technical areas are: (1) design and construction of high voltage transmission lines and substations, and (2) energy management (control) centers and communications systems.

Design and construction of transmission lines and substations is well understood by the utility organizations. However, the advancing technology of control and communication systems is an area in which technical assistance may be needed.

The need for energy management systems will also force system operators to come to grips with problems of frequency regulation, dispatch security and transmission system contingency planning. Such issues will result in the development of operating agreements among system operators, and will include both technical operating issues as well as compensation schedules. In some cases the issue of transmission access and loop flows will also be involved.

8.5 Schedule for System Expansion and Extension

The schedule for transmission system expansion and extension tends to be driven by load growth and development of new generation facilities. However in the case of Central America, the injection of the concept on an interconnection between Colombia - Venezuela and Mexico will have an impact. If plans for such an interconnection become firm, and the several countries become involved to the point of becoming committed to the interconnection, then the schedule for in-country development plans will be affected.

As dates for the south - north interconnection firm up, each country will be forced to adjust its development plans to accommodate the impending interconnection. Each country will be required to estimate the timing and amount of capacity and energy it may receive from the line. After the quantity and timing are known, then the focus will shift to how and where. In the following sections we discuss the possible alignment of a south - north interconnection.

9. Regional Multi-Terminal HVDC System Interconnections

The desire for express power transmission between Colombia - Venezuela and Mexico drives the selection of the type of transmission line. Given the parameters of magnitude, distance and specific source and destination, the selection of a high voltage direct current HVDC line is indicated. This decision would not be quite so obvious if there were an existing mature alternating current system in place. However, despite prior attempts to build such a transmission system, one does not exist. The way is clear for a HVDC line.

Plans for transmission interconnection of several utility partners using direct current transmission must come to grips with the fact that present direct current transmission technology has some limitations. These limitations have an economic and engineering component.

The economic components is the relationship between the electric capacity of the line terminal equipment and unit cost. The manufacturers of terminal equipment for HVDC transmission lines have developed a pricing structure that favors the largest sizes. That is, as the capacity rating of the terminal increases, the cost per unit of capacity decreases. This situation favors the large capacity HVDC interconnections, and works against the smaller capacity interconnections.

The technical issue to be considered is a limitation of multi-terminal direct current transmission lines. At present, HVDC lines are two terminal. A three terminal line is under design for the Hydro Quebec - New England interconnection. While the technology for lines with more than two terminals is available, there yet remains significant development work to bring the three terminal line to a commercially available level.

It is doubtful that HVDC technology will be developed beyond the three terminal level in the time frame for the south - north Central American line. Thus, transmission planners are confronted with the challenge of designing a three terminal direct current transmission system that can serve sender and receiver and six intermediary systems. It is obvious that with the three terminal constraint, the solution will be a hybrid system, and will also have to use alternating current transmission.

9.1 Proposed Multi-Terminal HVDC System Interconnections.

The plan for interconnection of the south and north continents of the western hemisphere by way of Central America could be based on the use of high voltage direct current transmission. The simplest plan would be to construct a direct current line between Columbia and Mexico over one of several routes. The line could initially be a two terminal line, and be converted to a three terminal line in the future. See Figure II for a schematic diagram of the proposed line.

The operation of the initial line with two terminals would allow the realization of the basic economic benefits of such a line -- namely the export of hydro electric capacity from Columbia to Mexico. The countries along the right of way would initially be compensated for the use of the right-of-way but would not receive energy.

A second phase of the development would be to install a third terminal near the midpoint of the line. From the midpoint, terminal energy would flow over alternating current transmission to each of the participating countries. There is also a possibility to supply Guatemala directly from Mexico and Panama from Colombia. With such a system in place it would be possible for all participating systems to buy and sell energy throughout the region.

To achieve the goal of interconnected operation each country must have a national control center, and that there must be a Central American regional dispatch center (Energy Management Center).

9.2 Location of Converter and Invertor Terminal Stations

As noted in the initial description, a three terminal direct current line would be constructed. Two terminals would be located, one each in Colombia and Mexico, and the third terminal would be located in the vicinity of the mid point. Alternating current transmission connections would allow power to flow from the midpoint terminal to each participating system. A map of a proposed system with the midpoint terminal located in the vicinity of the Gulf of Fonseca, is shown in Figure II.

Figure II

Proposed Multi-Terminal HVDC Interconnection

9.3 Logical System Expansion and Approximate Schedule

The staging of such a project would be driven by practical considerations such as: calculation of power flows, determining levels of excess capacity, priority ranking of projects, equipment delivery and construction times, and by the time required to make necessary international agreements as well as power sales agreements.

An estimate of the construction value of the transmission lines, substations, communications, and control centers for the interconnection of the six Central American countries is on the order of two billion dollars. It is estimated that design and construction of necessary facilities will cover a period of 10 to 15 years.

A preliminary list of subject and topics to be covered in the planning of the proposed interconnection include;

• Review of the CEPAL transmission interconnection plan
• State of the art in Energy Management Systems
• System Control and Data Acquisition
• Communication requirements
• Power sales agreements for interconnected system operation
• Resource optimization
• Economic cost/benefit analysis
• Project planning and international financing

9.4 Optimization of Resources and HVDC System Development

In an ideal world, free of economic and national interest considerations, one could consider the task of optimizing the combined development of generation and transmission interconnection between South and North America via Central America. From an academic perspective this would be a worthwhile activity. Such a study would establish a bench mark against which to measure the plans developed along the lines dictated by various real world considerations.

10. Regional Environmental Development Compact

In order to realize regional and environmental benefits of long term duration, with the requisite cooperation necessary for successful development, mutual benefits are essential to reward the lengthy process of negotiation between participants during implementation of a major interconnection such as the Inter-American Transmission System. This could be done within the framework of a regional environmental development compact for the Americas. The compact would provide the overall strategy and objectives that would provide the desired mutuality of aims and purposes for participants. It would naturally evolve through time to reflect experience gained in the development process.

10.1 Principal Economic and Environmental Benefits

The economic benefits to interconnection are several, the primary one being the tangible support to economic integration in the subregion. Investment in future generation and transmission facilities could be rationalized, enabling capital to be allocated to jointly-owned facilities to be built sequentially, rather than simultaneously. Operating costs for the interconnected system would be reduced, with these reductions being passed on to participating utilities. If hydropower is made available to the interconnected system at delivered cost levels sufficient to displace thermal generation, foreign exchange requirements for fuel importation are reduced. Efficiently operated electrical systems enable cost levels and tariffs to be maintained to the benefit of customers. Stable rates assist industry and commerce to produce at competitive cost levels and sustain economic growth.

Utilization of renewable resources rather than fossil fuels enables regional environmental benefits to be realized. As combustion of fossil fuels is the main contributor to carbon dioxide and nitrous oxide emissions, the eduction of combustion for power generation contributes to slowing global warming and reducing precipitation of acid rain. If long-distance interconnections are an essential component to greater utilization of renewable resources, the entire region benefits from coupling remote resources to distant markets. There is an additional benefit from this energy export and that is the additional revenue resulting from energy trade which can be used for other development needs. In the future, it may be desirable to assess environmental benefits also in terms of incremental revenue resulting from renewable energy sales. Profit margin becomes an environmental royalty, particularly if the carbon component of fossil fuel is assessed as a tax penalty. This would encourage renewed interest in the export of hydropower as an environmentally beneficial commodity.

The balance of economic and environmental benefits would then be the basis for a regional environmental development compact, mutuality being preserved between the interests of nations with renewable resources to develop for energy export and nations that would purchase this energy at economically advantageous terms to enable displacement of polluting fossil-fired thermal generation. All other economic and operational benefits of interconnection would be in addition to this basic strategy to utilize renewable energy resources to long term regional advantage for all participants.

10.2 Institutional and Organizational Development

Organizational coordination during the initial implementation period could be the responsibility of the Electrification Council of Central America (CEAC), augmented by representatives of Colombia, Mexico, and Venezuela. Institutions that would be instrumental in guiding the process with support and advisory assistance during its evolution would be the Latin American Energy Organization (OLADE), and the Economic Commission for Latin America and the Caribbean (ECLAC). System planning and technical coordination throughout implementation of interconnection stages would be the responsibility of participating electric utilities. Financial support of regional interconnection to realize economic and environmental benefits would require the active support of the World Bank and the regional banks, such as the Inter-American Development Bank (IDB), and the Central American Bank of Economic Integration (BCIE). One potential innovation that could be considered for optimized investment strategy would be to combine new funding with conversion of existing commercial debt at maximum discount to local currency for investment in project facilities. In this way, both a short-term economic boost would be given to the regional economy and the necessary capitalization for new facilities would be minimized.

As, through time, the overview of the planning horizon would extend to the 21st century, the above participants could be joined by representatives of Brazil, Ecuador and Peru, to further expand the potential for Inter-American energy via long distance power system interconnections.

References

[1] :"Latin America: Ready for Partnership?", Abraham F. Lowenthal, America and the World 1992/93, Foreign Affairs, Vol. 72, No. 12.

[2a]Summary 3.2 - Prospects for Electrical Integration in the

Andean Countries and the North of South America.

[2b]Summary 3.3 - Central American Electrical Interconnection.

Source: Based for a Latin American and Caribbean Energy Strategy for the Nineties, OLADE, Quito, February 1991

[3] "Solar Energy Conversion in Mexico for Export to the United States to Supplement Imports of Canadian Hydropower",

Wolfe, M. H., 25th IECEC, Vol. 4, pp. 465-470, 1990

[4] World Population Prospects, United Nations, Department of Economic and Social Affairs, 1988

[5] "A Model for the Quality of Life as a Function of Electrical Energy Consumption", Bangladesh Institute of Technology and University of Engineering and Technology, Vol. 16, No. 4, Energy, 1991, M.S. Alam, B.K. Bala, A.M.Z. Huo, M.A. Matin

[6] "Present Limits of Very Long Distance Transmission Systems", Committee 37, CIGRE, 1984 paper, L.Paris, G. Zini, M. Valtorta, G. Manzoni, A. Invernizzi, N. DeFranco, A. Vian

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