Contents

Introduction

Latin America is rapidly tapping into its solar potential, with growth of large-scale projects spurred by auctions in Argentina, Brazil, Chile, Mexico and Peru, with Colombia planning an auction for 2019, while new regulations in a number of countries are paving the way for a buildout of smaller scale installation that will allow for distributed generation.

But with lead-in times lengthening between projects being awarded at auction and their completion, due to hesitant financiers wary of low prices for electricity making projects unviable, the need for often lengthy processes of environmental permitting and community consultations, the growth of capacity may be slower than anticipated.

Despite the advances in solar photovoltaic (PV) deployment, the power source still only represents 0.1% of total energy generation across all of Latin America. The region's solar capacity buildout is led by Chile, which is way out in front, with three times the number of PV plants compared with second-placed Brazil, and which is followed by Mexico. Chile alone operates 15 of the 30 largest PV plants in Latin America, while Brazil boasts five, Honduras three and Mexico two.

In Chile, solar accounts for almost 5% of total capacity, according to BNamericas figures, while it accounts for 0.56% in Brazil, but just 0.003% in Mexico.

Latin America's installed solar capacity is estimated at 6.34GW currently, and is forecast to reach 46GW in 2022, but development could be slowed by some or all of the factors mentioned above, in addition to changes in government policy, particularly as new administrations take office in two of the region's largest solar markets, Brazil and Mexico, where uncertainty has emerged concerning renewable energy policies.

Meanwhile, new markets are expected to emerge, such as Colombia and Peru, while some Central American nations, such as Honduras, Costa Rica and Panama, will likely see a PV buildout, albeit at a slower pace than their larger North and South American neighbours.  

This report aims to shine a light on the state of PV development across the region, identifying the challenges and opportunities the sector offers, as well as the obstacles it still faces. 

According to John Padilla, managing director at energy consultancy IPD Latin America, the region can be seen as part of a global trend, in which markets are consolidating but in which there is now an over-supply.

"Transmission and infrastructure are a must, and countries need to undertake grid expansion to meet the capacity growth and ensure a rapid adoption of new technology, such as large-scale storage and smart grid solutions, as well as combined wind-and-solar combinations."

He said that, while the cost of generation is dropping, fees continues to rise for the end consumer, and a solution to that will be the adoption of smart grids.

Figure: New Projects Coming Online in 2019

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