Latin America has adopted the practice of renewable energy auctions. As a result, it’s experiencing some of the most robust renewable energy growth globally – a trend expected to increase from this point forward. The region is an emerging green powerhouse!
Experts from Rystad Energy, the independent energy research and business intelligence company, expects Latin America’s current capacity of 49 gigawatts (GW) to skyrocket to 123 GW by 2025. The most significant increases will come from Argentina, Brazil, Chile, Colombia, and Mexico – all of which have held renewable energy auctions in recent years.
Brazil’s auctions generated a 50 GW pipeline and Mexico 40 GW. Meanwhile, prices have dropped to as low as $18 per MWh in Brazil. For the most part, they sit at the mid-$20s per megawatt-hour (MWh) range now, which is still great.
The combination of ample land availability and low prices has sparked increasing competition, and consequently, a wave of megaprojects. Since 2018, most wind and solar PV assets boast capacities in the range of 50 MW to 300 MW. Large-scale projects will continue to dominate the market. Rystad Energy expects them to make up around 70% of wind and solar assets by 2025.
Minh Khoi Le, a Rystad Energy renewable energy analyst, said:
The proliferation of mega-scale projects and the relatively consistent auctions with little to no local content requirements make Latin America a good market for large European developers.
European developers have dominated auctions in Latin America, especially in Brazil, Chile, and Mexico. Most of the top ten companies with the largest renewable capacity are European. For example, EDF, Enel, Engie, and Iberdrola are among the top five.
Engie is the most significant player. The company’s been busy replacing 1GW of coal plants with renewable energy in South America, among other things. The company owns the Campo Largo complex in Brazil, consisting of multiple mega wind farms – the 326.7 MW Campo Largo 1, 361.2 MW Campo Largo 2, and 342.5 MW Umburanas.
Enel owns the 828 MW Villanueva solar PV site in Mexico, the region’s largest solar farm. However, Aurora Energias’s 1.3 GW solar PV farm in Minas Gerais, Brazil, will soon take over the title of ‘largest solar farm in the region.’ Enel also runs a mega wind complex in Brazil – the 716 MW Ventos de Santa Angela (Lagoa dos Ventos).
Meanwhile, in Chile, the government has vowed to eradicate coal by 2040 and become carbon neutral by 2050. It also has plans to become a world-leading green hydrogen producer by taking advantage of its sunny weather up north and windy weather down south. The energy company Colbún is set to build a 788 MW Solar Park in the country.
Furthermore, any auctions that have experienced pandemic-related delays have not been canceled and are likely to move forward regardless. The only potential halt to progress is in Mexico, where recent political tumult may affect future auctions from taking place.
