Contents

Introduction

The world's energy sector has embarked on a path towards decarbonization. Faced with alarming reports about the effects and risks of climate change, most countries have pledged to reduce greenhouse gas emissions (with the notable exception of the United States, which withdrew from the Paris Agreement ). These commitments have a direct and significant impact on the energy sector. Some 71% of greenhouse gas emissions come from the generation of all types of energy, according to data cited by the Virginia-based Center for Climate and Energy Solutions. The majority (31%) of emissions corresponding to the energy sector originate in the generation of electricity and heat.

However, although political commitments and public policies implemented to limit greenhouse gas emissions are an important factor in the transformation of the world's energy sector, the main force behind this process is economic. The so-called unconventional renewable energies are now very competitive from an economic standpoint and form the central part of a series of new technologies that are changing the nature of the electricity business.

Latin America is fully involved in this process and its effects have been strongly felt over the past two years, with massive investments in wind and solar generation, a growing fragmentation of the generation market, a fall in electricity prices and the strong growth of the deregulated market. In addition, some of the region's main players - such as Enel, AES and Engie - have decided to decarbonize their businesses, investing solely in renewable energy and natural gas.

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The 2019 outlook for the sector is framed by the energy transformation process: with the entry into operation of new wind and solar power plants; generation project tenders; the start-up of a new LNG regasification plant in Panama; the launch of Vaca Muerta natural gas production; as well as expected growth in ​​distributed generation alongside rising investments in small to medium-sized generation projects. 

Meanwhile, changes of government in the region's two largest economies, Mexico and Brazil, will strongly impact the electricity sectors of both countries. In Mexico, there are doubts about how the profound energy reform initiated by the outgoing government will continue to advance. In Brazil, the focus is on the possible liberalization of the economy and the eventual privatization of energy assets.

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