Economic and policy assessment on nuclear energy for Latin America’s energy transition

José Alejandro Barrera Giraldo, David Galeano, Daniel Morales and Alfredo Trespalacios

Energy Policy, 2025, vol. 206, issue C

Abstract: Latin America is projected to face significant energy deficits in the long term due to the increasing demand for electricity and the challenges surrounding the development of new energy infrastructure. While renewable sources, such as solar and wind, have shown remarkable progress, their intermittent nature and storage limitations prevent them from fully meeting the region’s growing energy needs. This paper explores the potential of nuclear energy to complement renewable sources, focusing on six target countries: Peru, Ecuador, Bolivia, Chile, Colombia, and El Salvador. We examine the techno-economic and policy factors that influence the deployment of nuclear power in the region, including the adoption of SMRs, which may offer more flexible and cost-effective solutions compared to large-scale nuclear power plants. We obtain deterministic LCOE values ranging from 70.88 USD/MWh to 158.57 USD/MWh according to different scenarios. In the case of Colombia, the implementation of fiscal incentives for non-conventional energy sources significantly reduces the financial leverage required for project development. Our analysis demonstrates that these incentives reduce financial leverage requirements from 65 % to 30 %, significantly enhancing the feasibility of nuclear energy projects in the region. Monte Carlo simulations were conducted to generate probability density functions (PDFs) for the LCOE of each country. We highlight the scarcity of academic and policy studies on nuclear electricity generation in Latin America, in contrast to other regions. The findings suggest that nuclear energy can be pivotal in securing a reliable, low-carbon energy future for Latin America. However, the lack of region-specific data, especially on CAPEX and OPEX, poses significant barriers to its implementation. The paper concludes with policy recommendations for Latin American governments to facilitate the integration of nuclear energy into their energy strategies, ensuring that it complements the growth of renewables and supports the transition to a low-carbon economy.

Keywords: Energy policy; LCOE reduction; Nuclear energy; Tax incentives; Financial assessment; Stochastic simulation (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:206:y:2025:i:c:s0301421525002782

DOI: 10.1016/j.enpol.2025.114771

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