GTM Research just released the latest edition of the Latin America PV Playbook, which tracks solar projects, policies and market developments across South America, Central America, Mexico and the Caribbean. According to the report, the region is on pace to install 2.2 gigawatts of PV in 2016, up 55 percent over last year’s 1.4 gigawatts.
Chile currently is the leading market in the region, with a cumulative 1.4 gigawatts installed so far, eight times more than that in Mexico, Latin America’s No. 2 market. However, this will soon change. GTM Research expects both Mexico and Brazil to install more PV than Chile in 2017 and eventually to outdo it in cumulative installations by 2018 if downside risks hold back.
All three markets are benefiting from utility-scale auctions in which solar is out-competing other clean technologies. In recent auctions, solar won 20 percent of the offered capacity in Chile, 63 percent in Brazil, 40 percent in Peru and 72 percent in Mexico.
Mexico in particular is now home to the lowest PPA prices ever recorded, thanks to its latest auction. Driven in large part by these auctions, GTM Research forecasts that Mexico will install 2 gigawatts in 2017, accounting for nearly half of the installations in the entire Latin America solar market next year.
Brazil, a small solar market today, has a massive 3-gigawatt project pipeline. The report notes that few installations have come on-line to date.
“Projects are struggling to construct because of a lack of affordable financing,” said Mohit Anand, senior solar analyst and lead author of the report. “An economic downturn coupled with significant political risk has made it impossible to access debt globally. On the other hand, low-cost financing from the Brazilian development bank BNDES is available only by using domestically manufacturing modules, which again are hard to procure because of the dearth of local manufacturing.”
Project deadlines loom in 2016 and 2017, and several could be delayed. But attractive PPA prices in the more recent auctions are attracting international investors looking to buy out struggling projects and equity-finance their construction.
GTM Research anticipates Latin America will install 7.7 gigawatts of PV annually by 2020
Download the free Latin America PV Playbook executive summary here.