The largest solar power development pipeline outside of Eastern Asia and North America is in Latin America and the Caribbean, making the region a key renewable hot spot to watch over the next ten years.
According to data from Global Energy Monitor (GEM) as of January 2023, the region is building more solar capacity than is being built in Europe and nearly seven times more than is being built in India, the third largest solar producer in the world.
According to data from the think tank Ember, solar energy only produces 3%–4% of the electricity produced in Latin America and the Caribbean (LAC).
The potential for the region’s solar power supply, however, is set to increase by at least 70% from current levels once projects are finished, according to GEM data, as nearly 250 projects are currently building 19,429 megawatts (MW) of solar power capacity.
According to GEM, an additional 97,119 MW of capacity has been announced or is in the pre-construction stage, which is more than what is planned in the same categories in North America.
The collective increase in solar output looks set to sharply boost clean energy supply across LAC, along with planned and ongoing expansions in wind energy capacity, and may help slow the escalation of power sector emissions, which have already increased by more than 25% since 2010.
Largest economic and industrial powerhouses in the region, including Brazil, Mexico, Colombia, Chile, and Peru, are the main proponents of the solar push.
Over 88% of the solar capacity that is currently installed and 97% of the capacity expansions that are currently under construction are shared by those five nations.
According to Ember, those same nations also produce about 65% of the region’s carbon dioxide (CO2) emissions from the power sector. Since 2010, their pollution levels have increased by almost 36%, as opposed to the 25% increase in the LAC region as a whole.
This means that any increase in the availability of clean energy in the five LAC economies with the largest economies could help reduce the region’s overall pollution and advance efforts to limit the release of CO2 into the atmosphere before 2050.
Any success stories in terms of clean energy policy shifts will probably inspire copycat behavior within their spheres of influence because major regional economies like Brazil and Mexico have trend-setting clout among neighboring nations.
Brazilian President-elect Luiz Inacio Lula da Silva campaigned last year on promises to steer Brazil toward a lower emitting trajectory, and Brazil recently held talks with Mexico, Colombia, and Chile to establish a framework for sustainability-linked bonds.
Mexico declared last year that it would double its renewable energy capacity by 2030 and reduce greenhouse gas emissions by 30% below current levels.
This suggests that both nations will strive to lead among their peers in terms of clean energy endeavors and carry out renewable power initiatives.
By 2030, Mexico, a significant center for the production of automobiles, wants to sell 50% of vehicles that emit no emissions.
These objectives add up to a higher demand for clean energy, which supports the acceleration of solar energy production even beyond the currently announced projects.
According to a study by Solargis supported by the World Bank, several nations in Latin America and the Caribbean rank highly in terms of solar photovoltaic economic potential, or the anticipated cost of utility-scale solar farms.
The cost of building and running a solar power plant over its lifetime divided by the amount of electricity it produces over its lifetime is used to rank countries according to their levelized cost of electricity.
Brazil, Latin America’s top solar performer in terms of installed capacity, has an average economic potential of $0.12/kWh, while Chile’s is $0.07/kWH, expressed in U.S. dollars per kilowatt hour (USD/kWh).
The top three solar producers in the world, China, the United States, and India, produce solar energy at $0.07/kWh, $0.10/kWh, and $0.07/kWH respectively.
In terms of theoretical solar potential, which gauges how much solar irradiance is available in each nation, Mexico, Peru, and Colombia perform similarly to China and the United States in terms of average economic potential scores and outperform them both.
This suggests that much of Latin America and the Caribbean have both desirable amounts of sunshine and reasonable payback times for large solar projects, which means the area should keep expanding as a significant global solar hotspot.