Unifying a fragmented market and having a diverse energy supply will be crucial to meeting the growing energy needs of Latin American and Caribbean (LAC) countries, according to a study by the World Energy Council (WEC).

Researchers determined that, in addition to global recession, major issues of concern to energy experts and policymakers in the region include energy prices and development of unconventionals and large-scale hydro systems.

The “World Energy Scenarios: Composing Energy Futures to 2050” study was released in 2013 but was the topic of discussion recently at an event organized by the Colombian member committee of the WEC. Meeting future electricity demand alone will take a cumulative investment from 2010 to 2010 of between an estimated $1.33 trillion to $1.36 trillion, according to a news release.

“Our study finds that even in the best case, the growth of energy supply in the region will still be insufficient to meet the rising energy demand associated with economic growth,” Karl Rose, senior director of the WEC study, said in a prepared statement. “Latin America and the Caribbean region have a fragmented energy market. This fragmentation has been hindering the effective use of energy resources nationally and across the region and has compromised the competitiveness of national energy markets.”

Countries’ potential contributions to the energy mix vary. The Brazilian powerhouse leads the way with presalt discoveries attracting international attention. Unconventional plays such as Argentina’s Vaca Muerta Shale play are not going unnoticed. Venezuela’s proven oil assets still have appeal, and Bolivia has gained importance as a gas supplier.

But integrating the region’s markets will be necessary to meet the region’s energy needs as demand grows here and globally, some say.

The study examined two policy scenarios: one dubbed the Jazz scenario and the other called the Symphony scenario. The former put greater consumer focus on access to energy, affordability and quality of supply using the best available energy sources, while the latter was driven by voter consensus on environmental sustainability and energy security through corresponding practices and policies.

Under the Jazz scenario, Brazil blossoms into an economic powerhouse fueling growth in the region, subsequently leading to an economy 4.5 times larger than in 2010 with a total primary energy supply growing by 2.3 times.

The economy sees less growth—3.8 times larger than in 2010—under the Symphony scenario. The primary energy supply grows by nearly 1.8 times by 2050. With a goal of securing national self-sufficiency, the LAC countries push to develop a regional energy market with gas, biofuels and electricity freely traded across borders under this scenario, according to the study.

“The region will continue to struggle with energy supply problems unless concrete measures are made to integrate its energy markets,” Rose said.

Oil and gas E&P continue, with both still accounting for a large share of the primary energy supply under each scenario. However, biomass plays a dominate role in the region in both scenarios. “The biomass share increases, especially in Symphony where it accounts for roughly 44% of the total primary energy supply, whereas in Jazz this is only 32% compared to 22% in 2010,” the study said.

Unconventional oil and gas might become economic in some LAC countries to meet energy needs; however, the report said that investment in hydro will become more significant in some areas, including in Brazil.

“Venezuela is potentially a global player in oil. Gas is important in Bolivia. In total, LAC will be a region that is a net exporter of energy and, because of its endowment, is best suited to fight climate change,” the study said. “Renewables will play a crucial role: Argentina and Brazil are large exporters of RES-E, and Uruguay is already generating most of its energy from renewable. The energy-water-food nexus will potentially be very important in the region, especially due to the conflicting interests of electricity generation and food production.”

José Antonio Vargas Lleras, WEC vice chairman for the LAC region, added that the region faces challenges just like the rest of the world.

“The WEC’s Jazz and Symphony scenarios show that despite variations in regional priorities and solutions, the common global message is how choosing one policy solution or the other can have significant impact on the energy sector,” he said. “It’s clear that concerted urgent action is needed now from governments and industry to meet our common challenges.”

Contact the author, Velda Addison, at vaddison@hartenergy.com.