Latin America’s Green Promise: Solar, Wind Capacity Could Rise 460% by 2030
Latin America's potential capacity for non-conventional renewable sources is one of the highest in the world, thanks to the vast natural resources of its countries, such as the Sonora and Atacama deserts in Mexico and Chile, the strong winds of the Patagonia region in Argentina, and the massive coastline of Brazil. Besides, the region has a traditionally strong hydropower generation capacity, supported by its massive hydrographic basins such as the Amazonas in Brazil, Colombia, Peru and Venezuela, del Plata in Brazil, Argentina, Uruguay and Paraguay, and the Orinoco in Colombia and Venezuela.
According to data from IRENA, Brazil is the undisputed leader in the region in terms of renewable power installed capacity, with 175.3 GW as of the end of 2022, more than five times its closest competitor, Mexico, with 31.7 GW. Chile, one of the fastest growing markets for non-conventional renewable power in the region, comes third with 17.9 GW, followed by Venezuela and Argentina, the latter two mainly due to their large hydropower generation sources. Colombia is sixth in terms of renewable power installed capacity with 13.4 GW.
As of the end of 2022, Latin America's renewable power capacity reached 341.4 GW, up by 6.7% y/y. The sector has enjoyed a supportive regulatory trend that started in the region around 2013-2014 and resulted in almost double the average growth rate of its installed capacity. Between 2013 and 2022, installed capacity in the Latin American region increased at a 6% CAGR, compared to a 3.1% CAGR achieved in the 2004-2013 period. Public auctions of long-term supply contracts, fiscal incentives, and clean energy mandates, among other measures, have been key to supporting the development of the sector in recent years.
In the near future the sector is expected to continue experiencing strong growth, supported by a favourable regulatory environment along with its natural potential. According to a March 2023 report by the US-based non-governmental organisation Global Energy Monitor (GEM), Latin America could see a 460% increase in its solar and wind power installed capacity by 2030, adding 319 GW across the region, thanks to the projects currently at different stages of development. Brazil will remain the largest player in the sector, being responsible for 217 GW, or 68% of the total capacity added in the 2023-2030 period. However, the region's giant is not followed by its peer Mexico, according to GEM, but by Chile and Colombia, which are expected to add 38 GW and 37 GW of solar and wind power installed capacity by 2030, respectively. Mexico and Argentina are projected to add 7 GW and 2 GW of solar and wind power capacity during 2023-2030.
Overall, Latin America has the world's third largest pipeline of solar and wind power projects by installed capacity, according to the GEM's report. The region could double its renewable power installed capacity by 2030, if all these projects progress. Similarly, the UK-based energy consultancy Wood Mackenzie forecast in October 2022 that South America will see a 122% expansion of its onshore wind power capacity by 2032, adding 41.2 GW to its current installed capacity. As with GEM's forecast, Wood Mackenzie expects Brazil to lead the way in terms of capacity additions, with 56% of the region's total, followed by Chile. Still, the sector will have to go through significant challenges in order to tap into its full potential, such as electricity transport bottlenecks, increased government intervention and global economic uncertainty, among others.
For more in-depth information and insights on Latin America’s renewable energy sector you can check EMIS Insights’ report Latin America Renewable Energy Sector Report 2023-2024.