Latin America: One of the most dynamic solar markets in the world

During the  Intersolar South America Digital Xperience, SolarPower Europe’s  Emerging Markets Workstream,  supported by the  Global Solar Council,  held a launch session for the Latin America Solar Investment Opportunities  Report. The session took a deep dive into “one of the most dynamic market regions in the world in terms of PV developments” and highlighted the potential and desire to bring companies from Latin America and Europe closer together to do business (Rodrigo Sauaia, ABSOLAR). Brazil, Chile, Colombia, and Mexico were covered in detail by the four speakers. 

To start with the Brazilian market: according to the World Bank (2020) Brazil is the third-largest country in terms of renewables total installed capacity worldwide, with 83% of its total electricity generated by renewables. Daria Langenberger, Powertis, said: “A unique aspect of the Brazilian market, is that it’s 3 GW is divided equally so that half is distributed generation (in projects up to 5 MW) and the other half is centralized generation. This is a remarkably interesting balance for market opportunities. (…) Brazil is now seeing the first large scale projects being constructed that will sell energy to the free market and here the sky is the limit. We do not need government auctions. We need nothing but land and availability of grid connections. Therefore, though the market growth is predicted at 3GW installed capacity next year, I think it will be more, as there is the potential for more. The limit is only the appetite of investors and the appetite of purchasers of electricity in the free market.” 

Chile, with more than four thousand hours of sunshine per year in its northern regions, and very high irradiation levels, is one of the most sought-after locations in Latin America to invest in solar energy projects. Speaking about Chile, Carlos Marron, Finergreen, shared good news for solar in years to come: “Chile has set a target to be carbon neutral by 2040. This means decommissioning all their coal mines and relying on other flexible, firm capacity generation, such as solar. This could be based on storage or green hydrogen.” Furthermore, 2.3 GW were just announced for an auction including power and storage. Once the details of this come out in the new year, “it will be exciting to see how storage is envisioned and how it will go ahead and play into the system.” 

When speaking about Colombia, Karsten Schlageter, ABO Wind, said that Europe can learn a lot from this Latin American country: “Colombia already has a very green electricity system as between 60-70% of the energy system is based on hydrogen. This makes Colombia especially interesting for solar, as solar is complementary to this as shown in multiple research studies. What we see from the Latin America report launched today, is that Colombia has the potential to be a +1 GW per year market. According to our medium and high scenario this is the case and even in our conservative scenario we expect 300 MW to be added every year. Moreover, Colombia is also one of the OECD countries. This is sometimes forgotten, but it has a very stable economy and a good banking system to finance renewable projects.”  

Mexico is compelling market as well, with substantial amounts of untapped potential. For example, in 2019 solar roofs in Mexico had spectacular growth with an installed capacity of 1 GW and 129,893 accumulated interconnection contracts. Mario PaniBayWa r.e., spoke about how this growth should be fostered: “Mexico has the second largest economy in Latin America. It is a country where we are blessed with renewable resources and demand is growing quickly. In the wake of the Mexican energy reform, it was one of the fastest growing renewable markets across the world two years ago. But as we know this is always linked to policy. When countries want to bring renewables and push for penetration or development of renewables from the top down, this will work. In this vein Mexiko held three auctions where we were able to reach some incredibly competitive prices for large scale solar. But a lack of understanding from the new administration, about the current potential and benefits of renewables in Mexico and the world at large, has slowed this growth. But despite this lack of support from the administration, demand is still growing, even despite Covid-19 GDP contraction. The sustained demand means that generation capacity must double in the next 15 years, going from 70 GW to 140 GW just to deal with a conservative demand estimate at about 3% yearly. This is where the private sector is needed, to invest in this country where you have some of the best solar resources in the world, no lack of land, development is simple because you have one utility and one gird operator. Although currently the market is affected and people are waiting to see where it goes, in the middle to long term Mexico will come back as one of the fastest growing renewable energy markets.” 

SolarPower Europe’s Latin America Solar Investment Opportunities Report can be downloaded here. If you would like to be part of our activities and discover new solar business opportunities, join SolarPower Europe’s Emerging Markets Workstream.

(c) Photo: Fermin Koop

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