Latin America has struggled in 2015 as the decade-long commodities boom that underpinned its recent growth comes to a close. Prices for metals and agricultural products have been in decline since 2011; during 2014, they were joined by crude oil.

Growth rates have stagnated in the region's largely export-oriented economies, contributing to the declining popularity of many of its leaders. Moreover, corruption scandals (often long simmering) have rocked the political and business establishments in numerous countries. The strengthening of the US dollar and volatile financial markets, causing investors to pull back from emerging economies, further weigh on the regional outlook.

Latin America's GDP is likely to contract 0.3% this year and expand just 0.7% in 2016, according to the most recent predictions by the UN Economic Commission for Latin America and the Caribbean (Eclac). Compare that to an average growth rate of 3.7% in the last 10 years.

However, these forecasts hide significant variations within the region: South America is "expected to experience contractions of about -1.3% in 2015 and -0.1% in 2016," the Santiago-based Eclac said in an October release.

"Meanwhile, those economies with greater ties to the US will be able to sustain their rhythm of growth. Mexico and Central America will grow 2.6% in 2015 and 2.9% in 2016, while the Caribbean economies could grow around 1.6% in 2015 and 1.8% in 2016."

In most of Latin America, power use tends to track fairly closely with the economy and has, in many cases, reflected the deceleration of the last few years. But the power business is a long-term game, and in most countries growth is expected to pick up within the next couple of years.

Furthermore, the region has changed substantially in the last decade and a half. Millions of Latin Americans have joined the middle class, and in doing so have acquired new electrical appliances and electronic devices, and thus consume more electricity. According to the World Bank, around 96.4% of the regional population of 626 million now has regular electricity service (versus 92.7% in 2000 and 89% in 1990). Governments are working to expand access to the remainder, most of whom live in rural areas.

With an abundance of cheap hydroelectricity generated by large dams, the Latin American grid is one of the cleanest in the world in terms of emissions. In recent years, external and internal factors have led a growing number of countries to explore other renewable sources. Many are also expanding their transmission and distribution (T&D) networks to accommodate new power sources, as well as growing demand.

This report will examine the opportunities and challenges around these trends and others with an eye toward 2016.

Figure: Generation Mix

Figure: Installed Capacity


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