The countries of Latin America are expected to see tremendous growth for utility-scale solar energy projects andsome of the big global solar industry players are making the region a priority with an influx of fundingdespite the current recession.
Global investment in new renewable energy capacity and technologies are expected to total $7 trillion over the next 20 years, according to Bloomberg New Energy Finance’s report titled Global Renewable Energy Market Outlook, released on November 16, 2011. Among the regions the report cites as the “big winners” for this targeted funding is Latin America.
For 2012, the Inter-American Development Bank (IDB) plans to boost “clean and sustainable energy” by doubling its lending capacity up to $3 billion for such projects in Latin America, according to the October 2011 report fromBusiness News Americas (BNA) entitled Outlook 2012.
Meanwhile, in June 2011 the U.S.-based Overseas Private Investment Corporation (OPIC) approved $123 million in financing for the construction of two 20-megawatt solar power plants in Peru – the first large-scale solar power project in the country.
Northeastern Brazil and the Atacama Desert in Chile are located in what has been dubbed the “Sunbelt” with some of highest levels of solar radiation in the world. This, and other areas in Latin America, is drawing more international solar businesses setting up area offices to capture larger slices of the region’s new business. China is increasingly a major player in Latin America both as a financier and as a customer for raw materials. China’s JinkoSolar is active in Brazil, Argentina, and Chile and is in talks in all those countries to set up new projects. U.S.-based Sequel Power is working on large-scale photovoltaic-based solar utilities projects in Argentina, Chile and Ecuador. And Spain’s T-Solar is working on two projects in Peru.
Regional companies, such as Colombia’s ISA, EPM and Isagen, are expanding their operations in Central and South America while Brazilian companies are expanding through mergers and acquisitions.
Latin American Energy Demands
As a developing region, Latin America is ripe for solar and other forms of renewable power. Energy demand in the region has increased 35 percent in the last decade and indicators show continued growth in electricity demand thanks to increased use by industry and the large portions of the region’s population that have recently climbed out of poverty. This increased demand is what is attracting new energy investments in order to expand the capacity of existing power infrastructure.
In Colombia alone, the mean annual hike in demand is estimated at 3.6 percent through 2020, according to BNA. Meanwhile, Brazil’s government forecasts that power demand will grow 4.9 percent annually through 2020. Costa Ricaalready gets 99 percent of its energy from renewable sources and that country aims to be the first in the world to be “carbon neutral.” For the entire region in general, analysts expect electricity demand to continue to outstrip GDP growth rates.
Peru
The Spanish solar company T-Solar, a subsidiary of the Isolux Corsan Group, has announced it is expanding in Peru. The company is building two photovoltaic plants in the rural Arequipa region of southwestern Peru, under the terms of a 20-year contract with Peru’s Ministry of Energy and Mines. The U.S.-based Overseas Private Investment Corporation (OPIC) approved $123 million in financing for construction of the two new plants, which are Peru’s first large-scale solar projects. The project will use thin-film amorphous hydrogenated silicon “SunFab” solar panel technology developed by California-based Applied Materials, Inc. When completed in late 2012, the two plants will generate 80 GWh a year - enough power to supply over 18,000 Peruvian homes.
U.S.-based Onyx Service and Solutions, Inc. is also active in Peru. Onyx has secured two Letters of Intent in Peru for the distribution of solar panels and related products. Onyx says it sees an extremely lucrative market for solar panels and projects throughout Latin America.
Chile
In early November 2011, the Chilean government announced it had set a goal of producing 20 percent of the country's power from renewable sources by 2020. As a result, some 30 environmental impact studies for wind and solar projects have been submitted to the government’s Environmental Impact Assessment System - 14 of those are solar projects.
The country is already moving ahead to capitalize on the enormous solar energy potential of the Atacama Desert in northern Chile with the Atacama Solar project, which has the potential to become the world’s largest power generation plant. Atacama Solar is building the $773 million, 250MW PV project which is expected to go online in 2016. The plant will consist of over 11,000 photovoltaic solar units and connect by a 40km, 220kV high-voltage transmission line to the northern SING power grid.
In October 2011, Solar Chile, a subsidiary of Fundación Chile, and First Solar signed a strategic alliance to co-develop utility-scale solar projects in Chile. First Solar will provide its cadmium telluride (CdTe) thin-film PV modules and engineering services to the projects which are still in the planning stage and subject to definitive project agreements.
U.S.-based Tegal Corp. also recently announced that its large-scale solar project subsidiary, Sequel Power, has opened offices in Buenos Aires, and Santiago. Sequel Power has more than a dozen active projects in six countries with major partners in various stages of developing solar utilities, including other large-scale solar projects in Argentina and Ecuador.
Brazil
China’s JinkoSolar Holding Co., Ltd. announced in late October 2011 it has received Brazil's National Institute of Metrology, Quality and Technology certification for photovoltaic systems, a prerequisite for any company wanting to sell solar power products in Brazil. JinkoSolar expects "rapid growth in the Latin America market."
In May 2011, the Inter-American Development Bank announced funding for a solar project in the municipality of Tauá in the State of Ceará in northeast Brazil that will be the first large scale project to connect a PV system to the national interconnected electric system. The IADB grants paved the way for MPX Energia S.A., a Brazilian energy corporation and the executing agency, to develop the project. In its current stage, MPX’s plant will generate 1 MW from 4,680 PV panels and represents the largest PV project incorporated into an electric grid in South America. The project’s capacity is expected to be expanded to 5 MW and can eventually reach a maximum of up to 50 MW.
In September 2011, U.S.-based General Electric Co. stepped in and announced it will add another 1 MW of power capacity to MPX’s plant and may eventually expand the facility to 50 megawatts. MPX has already secured federal and state licenses to expand the project up to 5 megawatts.
Conclusions
Latin America’s electric power sector is facing a favorable scenario with sources of funding provided by international agencies and private capital markets that are willing to back new renewable energy ventures. Industry estimates foresee a continued expansion of power generation in the region and the outlook is that more renewable energy players will jump on the bandwagon, attracted by the region’s energy needs and their huge solar market potential.
What is making the Latin American renewable energy market more interesting is the willingness of some nations and regional blocs to resume efforts to sign regional agreements to foster cross-border energy integration and shared electric power interconnections. In fact, some countries in the region are poised to become energy exporters while others, with lesser resources or more regulatory and political restraints, will become energy importers.