Renewable leadership

Latin America is aiming for 70% renewable energy but how is it progressing?

Latin America is on its way to becoming a global leader in the context of its energy transition. After 15 countries in the region signed the 2019 Renewables in Latin America and the Caribbean (“RELAC”) initiative, which established that 70% of the energy’s electric consumption must come from renewable sources, significant progress has been made and the growth potential is high.

Latin American countries already generate 25% of their power from renewable sources, mostly from hydroelectric power, which accounts for 80% of the region’s renewable energy production, and biofuels. Beyond this, there is huge potential to tap into the regions solar and wind resources, which accounted for only 16% of total renewable energy generation in 2020, according to the International Renewable Energy Agency (“IRENA”). For example, Chile and Mexico have the world’s highest levels of sunlight while high winds in northern Colombia and southern Argentina could meet each countries’ energy demands by themselves.

An investment director at an European asset manager, exposed to the region, was well versed in the opportunities and the risks, “The Latin American energy transition has opportunities for every type of renewables investor: wind, solar, lithium, hydro, biofuels – there is something for everyone, if you can get comfortable with the political, regulatory, and operational risks.”

“The Latin American energy transition has opportunities for every type of renewables investor: wind, solar, lithium, hydro, biofuels – there is something for everyone.”

Investment Director, European asset manager.

However, a large-scale push into solar and wind won’t come cheap, according to IRENA, the 70% goal set by RELAC would require USD 118 billion of investment. This has led countries in the region to accelerate incentives for investors in the renewable energies sector. Through RELAC, states receive the support of a technical secretariat, international agencies, and the Inter-American Development Bank (“IADB”), among other organisations, to improve local regulations and attract investment into the sector.

In terms of recent progress, the installation of solar energy projects in Latin America increased by 50% in 2021, reported Bloomberg New Energy Finance, but investment in wind and solar only amounted to USD 18 billion with Argentina, Mexico, Chile, and Brazil each producing less than 10% of their energy matrix from these sources.

“Solar has become Brazil’s third largest energy source and distributed solar is driving a large part of this due to increasing electricity rates and new regulation.”

Investment Director, European asset manager.

Interestingly, Brazil is also experiencing a boom of small-scale photovoltaic projects which has attracted both regional and international investors. The investment director confirmed, “Solar has become Brazil’s third largest energy source and distributed solar is driving a large part of this due to increasing electricity rates and new regulation – the law states that you can fix your current rates until 2045 if you install rooftop solar by January 2023.”

As each country advances at a different pace, governments need to step up their alignment with private companies and local communities to avoid repeating past mistakes. Transparent energy transition projects will lead to greater commitment from investors that will fulfil the interests of the ultimate customers and local communities while working together to achieve the 2030 RELAC goals.

Important Notice
While the information in this article has been prepared in good faith, no representation, warranty, assurance or undertaking (express or implied) is or will be made, and no responsibility or liability is or will be accepted by Deheza Limited or by its officers, employees or agents in relation to the adequacy, accuracy, completeness or reasonableness of this article, or of any other information (whether written or oral), notice or document supplied or otherwise made available in connection with this article. All and any such responsibility and liability is expressly disclaimed.
This article has been delivered to interested parties for information only. Deheza Limited gives no undertaking to provide the recipient with access to any additional information or to update this article or any additional information, or to correct any inaccuracies in it which may become apparent.

Most recent in Energy

Methanol Marvel

Sinaloa's sustainable industrial revolution in Mexico.

Green horizons

Chile's ENAP and global partners forge the path to hydrogen future. 

Suriname’s oil dream

Total's investment sparks economic transformation.

The green Chile

Chile’s hot renewable energy aspirations...

IBAMA said no!

Brazil’s environment agency stops Petrobras from drilling in the Foz do Amazonas basin.

Batteries not included

With a new operating model, Bolivia dumps the Germans in favour of the Chinese to exploit its lithium reserves.

Petro against petroleum

Petro plans to accelerate Colombia’s energy transition with ban on new exploration contracts.

Water harvesting

Saint Kitts and Nevis look for rainwater harvesting sites to improve access to water.

Tricky transition

With an economy reliant on fossil fuels, Trinidad and Tobago’s energy transition isn’t easy.

Petroperú mulls IPO

Peru’s government clears a path for USD 1 billion public offering of Petroperú shares but will investors bite?