A subnational approach to energy transition costs in Venezuela

Venezuela's prolonged electricity crisis, characterized by frequent blackouts and deteriorating generation assets, has received renewed attention amid recent geopolitical tensions. Systematic analysis of the power sector remains severely constrained by data scarcity, limited transparency, and the absence of reliable state-level generation statistics. This study addresses these constraints by adopting a state-based framework and reconstructing electricity generation capacity by converting annual energy figures into required capacity using generic capacity factors, based on historical infrastructure development and fuel availability. With this reconstructed dataset, we evaluate three investment scenarios and their associated economic outcomes. Results show that maintaining the current system without new investment minimizes short-term costs but fails to resolve reliability failures. In contrast, targeted investments yield heterogeneous benefits. States with existing gas infrastructure favor natural gas generation, while resource-rich regions achieve lower costs through renewable deployment. Leveraging existing infrastructure and localized resource endowments is essential for stabilizing Venezuela's electricity system under institutional and data limitations.