Latin America: The New Solar Hotbed?
High electricity costs (both wholesale and retail), rumors of government tenders, and significant price declines of photovoltaic equipment have attracted a rush of solar development in Latin America and the Caribbean. At the start of 2013, more than 10 gigawatts of large-scale projects have been announced in the region, but just 91 megawatts are currently operating. While 766 megawatts have signed offtake agreements in place, much of the remaining pipeline is highly speculative. Depending on the country, developers are waiting either on interest from large industrial offtakers or for governments to announce solar-specific energy auctions, neither of which has yet to materialize in a meaningful way.
To date, little grid-connected solar has been installed in Latin America, and the industry in these countries is primarily composed of distributors serving the off-grid market. This lack of domestic competition is seen by developers and component manufacturers as an opportunity to be a first-mover in markets with tremendous growth potential. While there are few pure-play solar companies operating in these countries, there are incumbent firms that operate in similar industries that could easily transition into the solar space. As some foreign entrants have already discovered, local knowledge has proven far more valuable than solar-specific experience when operating in these new markets.
In the near term, Chile, Mexico, and Brazil have the most potential for growth, but there has also been development in other markets such as Peru, Ecuador, and some Caribbean island nations. While each national market differs in energy policy, generation resources, and economic strength, they all share some, if not all, of the following characteristics: significant solar resources, high electricity prices, and growing electricity demand.
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