Policy message 4 Streamline permitting and administrative processes The following measures could help alleviate permitting and administrative delays: –Promote a predictable, sound and agile permitting process for new grid infrastructure and upgrades by digitalizing the process and establishing coordination mechanisms among relevant authorities (see policy message 1) and harmonizing environmental study requirements based on project complexity. –Adopt the World Economic Forum’s Principles for Responsible Deployment of Renewables Infrastructure to involve communities and collectively speed timelines.13 –Create a one-stop-shop centralizing all permitting procedures. –Clarify risk allocation and streamline processes for land acquisition in grid infrastructure projects to reduce delays and uncertainties.CASE STUDY 2 Italy’s targeted incentive scheme Italy’s energy regulator, ARERA, has introduced a targeted incentive scheme to accelerate private investment in grid development. Distribution companies receive a premium – up to 13% of project costs – on top of standard remuneration based on the regulatory asset base (RAB), provided their projects pass a cost-benefit analysis. This mechanism improves financial returns while ensuring regulatory stability, effectively aligning investor incentives with national grid expansion priorities, supporting the broader goal of modernizing infrastructure for a low- carbon energy transition.Policy message 3 Supportive policy-making and incentive mechanisms The following measures could help create a conducive environment for innovation, incentivizing investments in new technologies: –Maximize the use of existing grid infrastructure by promoting digital technologies and smart applications for demand-side management, as well as deploying grid-enhancing technologies to increase transmission capacity and efficiency. –Support performance-based regulation models that reward outcomes such as efficiency, reliability and flexibility as opposed to traditional cost-of-service models, which may not incentivize innovation or operational optimization. –Introduce resilience schemes – subject to results-based monitoring to avoid distortions and inefficiencies – to enhance specific objectives, such as resilience of grids or storage, which current regulations may not support (see case study 2). Barriers Investment in the LAC grid infrastructure is constrained by persistent, interlinked financial barriers that limit the mobilization of capital and slow the pace of modernization. In many markets, grid projects continue to depend on government- backed loans, as attracting large-scale private capital remains challenging under prevailing market conditions. This reliance on public funding reflects persistent challenges to mobilize more private capital in the financing of infrastructure: structural weaknesses in the investment 2.2 Finance and investment Advancing Latin America’s Power System Transformation 9

Advancing Latin America%27s Power System Transformation 2025