Brazil will account for 90% of a total of 50 GW of distributed solar energy expected to be installed in Latin America by 2028. The country is expected to add an average of 7 GW per year between 2023 and 2028. information is from a study published by the International Energy Agency (IEA).
According to the IEA, Brazil's generous energy compensation system has led to a boom in distributed solar energy growth, with the country adding more than 15 GW since 2015.
However, since January 2023 there has been a change in the net metering system, which began to charge consumers for gradual payment for using the distributors' network.
“While in many markets drastic changes in policies or offsets often lead to dramatic declines in new capacity, Brazil’s distributed solar PV sector is expected to remain strong, with average additions of over 7 GW per year through 2028,” the report says.
For the Agency, this scenario is reinforced due to the sharp increase in energy tariffs in Brazil combined with the reducing the costs of photovoltaic systems in the country.
“So the combination of these factors means that the payback period for residential systems has increased only moderately, from an average of just under 5 years to around 5,6 years, helping to drive growth.”
Bilateral contracts drive the expansion of centralized generation
According to the study, Latin America will add more than 165 GW of installed renewable energy capacity between 2023 and 2028, led by solar power and followed by wind power. Four markets account for 90% of the region’s additions: Brazil (108 GW), Chile (25 GW), Mexico (10 GW) and Argentina (4 GW).
The IEA highlights that auctions promoted by governments are no longer mainly responsible for the expansion of large-scale solar and wind sources, especially in these four countries.
“In Brazil, bilateral free market agreements allow for more than 85% of utility-scale solar PV and wind power additions in the forecast period. In Argentina, up to 80% of additions are coming from corporate PPAs (Power Purchase Agreements), while most additions in Chile are through corporate PPAs or commercial projects.”
In the agency's view, companies seeking renewable energy are focused on having greater certainty about prices, as well as aiming to achieve decarbonization objectives for their activities, with a focus on the ESG agenda.
“Although auctions are no longer the main driver of growth in Brazil and Chile, increased demand and price adjustments could lead to greater participation, accelerating expansion in both countries. In Argentina, macroeconomic challenges hamper growth.”
The IEA also highlights the importance of expanding transmission systems and deploying energy storage technologies to support the growth of renewable sources.
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