Paraguay is a country that relied almost totally on thermoelectric power until 1968. In the same year, first turbine was inaugurated at the most important hydroelectric project which was at the juncture of the Monday and Acaray rivers.

Planned together with Brazil, the project's first stage had a capacity of 45MW. The project, with a capacity of 190 MW, was completed by 1976. In 1973, Brazil and Paraguay agreed on the joint construction of the world's largest hydroelectric known as Itaipu power plant.

The plant with a generating capacity of 12,600 MW became operational in 1984. By the end of the year 1982, the overall cost shared by Brazil and Paraguay exceeded $20 billion; power plant construction and auxiliary facilities employed 39,000 Paraguayan workers. Paraguay gets about 95% of its electricity from Itaipu power plant. Itaipu's 50% of the output is entitled to Paraguay, (Paraguay is entitled to Itapu’s 50% output) but can sell the unused power, to Brazil. Every year, the power plant produces about 75 billion kWh of electricity.

Paraguay's consumption of oil was 28,000 bbl/d in 2006. Currently, it does not produce any crude oil. In February of 2006, Public Works Ministry of Paraguay announced that the British oil company known as CDS, discovered oil in the western Chaco region. The Paraguayan national oil company called as Petroleos Paraguayos, has a monopoly on crude oil and petroleum product sales and imports in Paraguay. Like several oil-importing countries situated in the Western Hemisphere, Paraguay tried to develop the special deals for importing refined products and crude oil from Venezuela.

Paraguay neither consumes nor produces natural gas and it is not having any proven natural gas reserves. In recent years, Paraguay has desired to promote the natural gas consumption as a way to decrease the use of charcoal and firewood which resulted in deforestation. However, the barriers to the consumption of natural gas include the absence of import pipelines and lack of domestic natural gas production. Paraguay has pursued many natural gas import options. Brazil proposed the Gasin (Gas Integration Project), a natural gas pipeline which links to Brazil, Paraguay and Argentina.