4.2.1. Aggregate Spatial Analysis of the Overall Efficiency Measure

We calculate the efficiencies with the proposed model with a CRS and with a VRS to test the assumption of a CRS following the Banker test [44]. To calculate the *F* value, we eliminate the measured efficiency of Guyana due to the lack of information for the first five years. Our calculated *F* is 1.501/7.58 = 1.981; that is smaller than 2.014, and thus, the null hypothesis of a CRS is not rejected with a *p*-value of 0.05.

Figure 2 presents the spatial distribution of the overall measure of efficiency, aggregated in four ranges from the information in Table 2.

**Figure 2.** Global measure of efficiency of electricity generation.


**Table 2.** Term and global efficiency measurement.

According to the map, it is difficult to establish a spatial pattern that contributes to the explanation of global efficiency levels for each country. However, at least three aspects can be highlighted.

On the one hand, all of the six Central American countries—Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama—belong to the two lowest global efficiency levels. On the other hand, of the five countries in the Caribbean—Cuba, Jamaica, Dominican Republic, Haiti and Trinidad and Tobago—only Cuba is in the highest global efficiency level. Finally, of the 12 South American countries, eight are in the two highest levels—Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru and Venezuela—and four are in the two lowest global efficiency levels—Bolivia, Guyana, Suriname, and Uruguay.

It is worth investigating whether there is any spatial pattern in the distribution of the global efficiency measure. Moran's Index (Moran's I) is the most commonly used measure of spatial autocorrelation to describe the degree of spatial concentration or dispersion for variables included in an analysis [46]. According to Moran (1950), Moran's *I* is calculated as follows:

$$I = \frac{N}{S} \frac{\sum\_{i=1}^{N} \sum\_{j=1}^{N} w\_{ij} (\mathbf{x}\_i - \overline{\mathbf{x}}) \left(\mathbf{x}\_j - \overline{\mathbf{x}}\right)}{\sum\_{i=1} (\mathbf{x}\_i - \overline{\mathbf{x}})^2} \tag{17}$$

where *N* is the number of spatial units indexed by *i* and *j*; *x* is the variable of interest; *x* is the mean of *x*; and *wij* is a matrix of spatial weights such that (1) the diagonal elements *wii* are equal to zero and (2) the non-diagonal elements *wij* indicate the way that a region *i* is spatially connected with the region *j*. *S* is a scalar term that is equal to the sum of all *wij*.

When the Moran's *I* is positive, this implies that large values for the variable are surrounded by other large values, and when the Moran's *I* for a variable is negative, then the large values are surrounded by small values. Therefore, a positive spatial autocorrelation implies a spatial clustering for a variable, whereas a negative spatial autocorrelation suggests a spatial dispersion.

Figure 3 presents the Moran's *I* of global efficiency measures of electricity generation for 21 countries that have at least one neighbor.

**Figure 3.** Moran Index of global efficiency measure of electricity generation.

According to the figure, the global efficiency measure presents a very slight negative spatial autocorrelation of −0.0326; thus, the null hypothesis of a random spatial distribution of the measure is not rejected with a *p*-value of 0.05.

## 4.2.2. Measure of Efficiency of Electricity Generation

Table 2 presents the evolution of the efficiency for each country and for each year of the period 2000–2016; in addition, it contains the global measure of efficiency for each country, which was calculated as the yearly average of efficiency.

On the left-hand side of Figure 4, we present the evolution of the efficiency of the 24 countries for the period 2000–2016, dividing them into the three groups. On the right-hand side, we show the participation of slacks for each country. Slacks can be interpreted as deficits in desirable outputs or excesses in undesirable output given the production possibilities set.

Our results confirm that, although there is currently a common agenda for Latin America to improve its energy efficiency, the incentives granted to increase efficiency have been heterogeneous throughout the countries in the region [47]. Usually, programs related to energy efficiency are led by public organizations [47], who tend to be more efficient in the development of multi-tasking than private firms [48]. Energy-efficiency entities are key to control and implement programs to support energy efficiency, but they are not enough by themselves to promote energy-efficiency improvements [47], and a complementary mechanism would be the use of incentives. There are different types of incentives that can be used to improve the energy efficiency of a country; among the most used in generation sector are mandatory performance standards and market-based and information-based incentives [49]. Mandatory codes and standards are regulatory instruments regarding energy efficiency. Market-based incentives are related to the development of auctions and tradable emission products, among others [49]. Finally, governance and support represent the final step for the implementation of energy-efficiency policies. This refers to the mechanisms used by governments in order to incentivize energy efficiency.

According to their level of efficiency, we have classified the countries into three groups: high efficiency level, medium–high efficiency level and low–medium efficiency level.

The first group is made up of 11 countries, four of which are not in the figure because they make up an efficient border and registered efficiency levels of 100 for all years; they are Brazil, Cuba, Mexico and Paraguay. These countries have an overall efficiency of 100, which is equivalent to a solution of zero slacks in each year, and implies that they have no deficiencies in desirable outputs or excesses in undesirable output given the set of inputs. In relation to Mexico and Paraguay, the results coincide with the work of Sánchez et al. [6], who found complete efficiency between 2006 and 2013 for these countries.

We highlight Mexico and Brazil because they have consolidated their institutional and regulatory frameworks to support energy efficiency activities [50], and have been recognized by IEA [51] for having a high coverage potential of regulatory instruments in terms of energy efficiency. Auctions focused on improving the efficiency of energy were conducted in the state of Roraima in Brazil [47], and also this country has implemented the Energy Efficiency Obligation Program [52]. In Paraguay, the National Committee for Energy Efficiency (CNEE) was created in 2011, which is responsible for the preparation and implementation of the National Plan for the Efficient Use of Energy [47]. Regarding Cuba, we consider that it is part of this ranking because the relationship between electricity generation, GDP and CO2 emissions corresponds to an efficient behavior, confirming the results of Somoza et al.[53], who used a stochastic frontier as their methodology for analysis.

The other seven countries in the first group are Argentina, Chile, Colombia, Perú, Venezuela, Ecuador and Jamaica. In this group, a greater variability of efficiency is observed for the first years compared to the variability of the last years. For these countries, the most important source of inefficiency was non-fossil generation. In Venezuela and Argentina, their total inefficiency came from this source. Chile and Colombia presented deficiencies in the two desirable outputs, with non-fossil generation being their main source of inefficiency. Finally, Jamaica, Ecuador and Peru had deficiencies in the two desirable outputs and excesses in the undesirable output. For Jamaica and Ecuador, the main source of inefficiency was non-fossil generation followed by fossil generation, while for Peru the main source of inefficiency was CO2 emissions followed by fossil generation.

**Figure 4.** Efficiency evolution and relative slacks by groups.

We note that the level of consolidation of the institutional environment of these countries is mixed. Colombia, Perú, Venezuela and Ecuador established legal and regulatory frameworks; Colombia did this in the same year as Brazil, while Peru, Venezuela and Ecuador did this long before the other countries. Chile is currently in the process of preparing or discussing a national law, while Jamaica does not include energy efficiency in its main national laws [47]. Similar to Mexico and Brazil, Chile is recognized for having defined some regulatory instruments in terms of energy efficiency [51], and also, similar to Brazil, for having an obligation scheme [52]. Colombia is the country with the highest number of uncharged entities to regulate and monitor the energy efficiency law.

In the second group, there are eight countries with medium-high efficiency levels, ranging from 73 to 82. The countries of Bolivia, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, Panamá and Suriname are included in this group. This group is characterized by exhibiting an

increasing trend in the evolution of efficiency and degree of convergence. However, this claim should be tested. In Suriname, Bolivia, El Salvador, Guatemala and Nicaragua, the main source of inefficiency came from CO2 emissions followed by non-fossil generation; however, of these five, only Suriname did not present slacks in fossil generation. In Honduras and Panama, the main source of inefficiency was non-fossil generation, followed by CO2 emissions. Finally, almost all of the inefficiency of the Dominican Republic came from non-fossil generation, and it did not present excesses in CO2 emissions.

The legal framework in terms of energy efficiency in these countries is varied. For example, in the early 2010s, Panamá developed a national law on energy efficiency, while Nicaragua did so in the mid-decade. However, Panamá is aligned with Mexican labeling standards, while the rest of the Latin Americas countries are aligned with the programs defined in the European Union or the United States [47]. The Dominican Republic, El Salvador, Guatemala and Honduras are currently developing national laws, which are either in the process of preparation or in discussion, and we highlight the fact that the Dominican Republic and Guatemala have planned to have only one uncharged entity to regulate and monitor the national law. Finally, Bolivia is the only country that has not shown any regulatory development in this matter [47].

Finally, the last group comprises five countries with medium and low global efficiency, with scores below 54. The countries are Costa Rica, Guyana, Haiti, Trinidad and Tobago and Uruguay. Regarding Costa Rica, Uruguay and Haiti, the results coincide with those obtained by Sánchez et al. [6], who found very low efficiency levels for these countries. This group presents a very high volatility in its efficiency levels, exhibiting scores above 70 and below 25, as is the case of Uruguay, Costa Rica, Guyana and Trinidad and Tobago. In this group, the most important source of inefficiency was CO2 emissions. Trinidad and Tobago was the only country in this group in which the inefficiency measure depended on only one component: non-fossil generation. The inefficiency of Guyana and Haiti depended on two sources—non-fossil generation and CO2 emissions—although in Guyana, non-fossil generation was the main source of inefficiency while CO2 emissions were predominantly responsible in Haiti. Finally, the inefficiency in Costa Rica and Uruguay was caused by deficiencies in the two desirable outputs and excesses in the undesirable output, with the latter being the main source of inefficiency. Finally, the inefficiency in Costa Rica and Uruguay was caused by deficiencies in the two desirable outputs and excesses in the undesirable output, with the latter being the main source of inefficiency. Regarding Uruguay and Costa Rica, they present an average annual efficiency of around 51 and 38, respectively, although Uruguay established both legal and regulatory frameworks in the same year as Brazil and Mexico, and Costa Rica was the first country in Latin America to define a Law of Rational Use of Energy [47]. In addition, IEA [51] did not report the coverage potential of existing mandatory codes and standards in terms of energy efficiency. Haiti and Trinidad and Tobago do not include energy efficiency in any major national laws.
