The International Renewable Energy Agency (IRENA) recently released its report entitled Renewable Energy Market Analysis: Latin America confirming that the total renewable energy investment in Latin America in 2015 amounted to $ 16.4 billion USD, representing about 6% of the global total!
Over the period 2010-2015, IRENA Director-General, Adnan Z. Amin, confirmed that Latin America has seen significant investment in renewable energy in recent years, exceeding USD 80 billion.
On a national level, Mexico, Chile and Brazil have now joined the list of the top 10 renewable energy markets in the world. In 2015, investment in Brazil represented 40% of the Latin American region’s total. Mexico, where renewable energy investment doubled between 2014 and 2015, reach USD 4 billion. Chile ranked third within Latin America with USD 3.4 billion invested, a 150% growth from 2014.
But why does Latin America have such a large share of renewables?
IRENA explains that this derives from the historical development of hydropower and bioenergy. It estimates that the total regional investment in large hydropower at USD 9 billion in 2015.
Bioenergy is mainly used in the industrial and transport sectors. Both sectors dominate regional energy consumption, mainly due to a less efficient vehicle fleet and differing modal composition. For this reason, transport represents a larger share than in other major regions of the world.
Wind power is growing the most in Brazil, where a record capacity of 2.7 GW was commissioned in 2015 – almost three times the level installed in 2013!
Overall, the high share of hydropower in the electricity mix of some Latin American countries (from 100% in Paraguay to 9% in Mexico, and averaging 50% for the whole region) creates opportunities for scaling up other renewable energy technologies.
Countries with different degrees of power sector liberalisation, such as Chile or Brazil, ranked among the top destinations of renewable energy investments. Yet, top performers also include Uruguay and Costa Rica, which have vertically integrated utilities and where private participation in the power sector follows the model of independent power producers.
Sources of finance and local economic growth opportunities
National public financing institutions play an important role within the region to promote investment in renewable energy. In 2015, they accounted for over one-third of new clean energy project finance in Latin America.
Private finance for renewable energy has a special role in certain niche segments such as short term and bridge loans; refinancing; financing the acquisition of already operational assets; and mezzanine financing.
As of today, close to two million people already work in renewables in the region. Liquid biofuels is the main employer, accounting for nearly 1 million jobs, mostly in Brazil, Colombia and Argentina.
The next employer is large hydropower with more than half a million jobs, and wind at 64,000 jobs.
Renewables are also supporting the creation of local industries, especially if synergistic activities already exist, as the case of the Brazilian wind sector shows. This is an attractive proposition for a region with a relatively low contribution of manufacturing to GDP.
An opportunity for accelerating renewables uptake
Rapid cost reductions, maturing renewable energy technologies and the consolidation of renewable energy policies in a region endowed with some of the world’s best renewable resources offer an unprecedented opportunity to accelerate the uptake of renewables across all sectors. This is particularly so specifically in a region where linguistic unity and a shared history heighten the replicability of successful projects.
To find out more please read the official report available here.