Solar power is just starting to gain traction in Latin America, which has remained mostly absent from the global solar boom.

With an estimated 3GW of installed capacity at present, the region barely registers in the international market for photovoltaic (PV) power generation, which reached 303GW at end-2016, mostly on growth in China, the US, Japan, India and the UK, according to this year's REN21 Global Status Report.

But governments and investors in Latin America are beginning to tap into the region's enormous renewable energy potential, which includes some of the best solar energy resources in the world. The Atacama Desert in northern Chile and the Sonora Desert in northwestern Mexico receive more solar radiation than almost anywhere else on the planet, while many countries in the region enjoy above-average insolation levels.

For some Latin American countries, solar is a domestic and renewable alternative to the expensive liquid imports that fuel their power grids. For others, it is an opportunity to diversify the hydropower-dependent supply mix, in response to intensifying droughts and environmental opposition to the construction of new dams.

Although the region is not itself a major producer of greenhouse gases, concerns about the effects of climate change motivate the interest in solar and other clean energy sources as well.

The renewable energy business is also seen as a potential driver of growth in the current period of economic stagnation. For two consecutive years, renewables have attracted more foreign capital than any other sector in the region, accounting for 18% of the US$167 billion of FDI flowing into Latin America during 2016, according to the UN Economic Commission for Latin American and the Caribbean (Eclac).

Capital costs for PV plants - in particular, panel and module technologies - have also declined to the point where solar projects are now competitive, or nearly competitive, with the region's conventional sources of electricity, hydropower and natural gas. In the last two years, PV projects have won contracts at power supply auctions across Latin America with record-breaking bids.

This report will examine the main markets for solar power in Latin America, identifying trends, opportunities and challenges.

Figure: PV Prices

Figure: Global PV Market


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