With nearly a billion solar panels’ worth of large-scale clean-electricity projects slated to come online in the next seven years, Latin America is poised to become a major renewable energy producer. A newly published report by the Global Energy Monitor (GEM) tallies more than 319 gigawatts (GW) of utility-scale solar and wind-power projects continent-wide due to be launched by 2030 – nearly equal to 70 percent of the region’s combined total of all current electrical capacity today. Since 2022, investing in this region’s energy potential has both accelerated and taken on more importance as Europe races to replace Russian fossil fuels with cleaner sources, including soon truly green hydrogen. Lead blogger and podcaster, Michael Buchsbaum reviews how clean energy growth throughout Latin America is reaching a tipping point – and how they’ll be competing with China too.

Current regional leaders

With the costs of new solar and wind plummeting between 2010–2020 (down 89% for solar and 70% for wind), utility-scale solar development regionally has grown quickly and widely.

According to the Global Energy Monitor (GEM), a US-based non-profit that tracks clean-energy development, as of 2023, Latin America had a combined total of 69 GW of operating utility-scale solar and wind generating capacity, which amounts to slightly more than 15% of the region’s total electrical capacity, they write in their new report, ‘A Race to the Top: Latin America 2023’.

Brazil, Chile, Colombia and Mexico currently lead in renewable capacity with Latin America, with a collective capacity of over 57 GW – representing almost 85% of all utility scale solar and wind farms across the region.

While solar, wind and increasingly renewable hydrogen are getting more new investment attention, to be clear, the main source of renewable energy generation throughout Latin America remains hydro-electricity.

Latin America is a global leader here, particularly Brazil.

By harnessing the might of river systems such as the Amazon, Paraná and Tocantins, the largest nation on the continent has the world’s second highest amount of installed hydro-electric capacity, nearly 110 GW.

Colombia, Argentina, Chile, Peru and Mexico also have high percentages of hydro-electricity in their mixes.

But most Latin America nations also enjoy high solar irradiance. Additionally, those with coastlines generally have a strong potential for offshore wind development too.

Looking ahead

‘Rich in wind and solar resources, Latin America has the potential to be a global leader for renewable energy’, write GEM’s researchers.

New projects — including planned installations and those already under construction — would expand Latin America’s current utility-scale solar- and wind-power capacity by more than 460 percent by 2030, GEM’s report states.

Even if not every planned project gets built, the region appears to be at an inflexion point, with even more projects likely to be announced in the coming years, GEM’s researchers say.

Brazil, Latin America’s biggest economy, is leading the green energy boom with 27 GW of utility-scale solar and wind plants already operating, and well over 200 gigawatts of capacity slated to come online by 2030.

President Luiz Inacio Lula da Silva, who took office in January, has vowed to expand clean energy and restore Brazil’s leadership role on climate change, after four years under far-right predecessor Jair Bolsonaro.

GEM’s research also highlighted developments in Colombia which has 37 gigawatts of new solar and wind capacity slated to come online by 2030.

Likewise, Chile has very much changed its energy course. Previously heavily dependent on imported fossil fuels, wind and solar currently represent over 37 percent of total installed electricity capacity there.

Now under construction near San Gregorio, Chile is Latin America’s largest onshore wind project: the 10 GW H2 Magallanes wind farm.

Set for commissioning in 2027, it is dedicated primarily for green hydrogen production ­with the intent to export much of it.

Much of the growth in clean energy is being driven by the Renewables in Latin America and the Caribbean (RELAC) Initiative. Signed by 15 countries, it states that by 2030, 70% of the region’s electric energy would come from renewable sources.

Additionally, according to the latest economic report of the Economic Commission for Latin America and the Caribbean (ECLAC), by the end of the decade, the clean transition could create some 15 million jobs as well.

Becoming a green hydrogen supplier to the EU

Investing in Latin American energy offers the EU diversification of energy origins, increased areas to market EU energy components, technology and know-how, and the potential for cooperation on truly green hydrogen as well as crucial ‘transition’ minerals like lithium.

Since 2011, foreign direct investment (FDI) in renewables projects in Latin America has consistently outstripped investment in hydrocarbons. European companies have driven this trend, making up 75% of FDI in renewable energies, with Spanish, Italian and French electricity companies playing a key role.

These low-carbon investments by EU Member States have significantly (but alas not entirely) replaced past investments made in Latin America’s oil sector.

EU investments are also linked to development cooperation with a growing climate and energy component as part of the EU’s multiannual financial framework for 2021-27 and projects such as Euroclima+.

EU tools include the new Global Europe instrument, the European Fund for Sustainable Development Plus (EFSD+) and the Global Gateway initiative, all of which aim to drive European investment in sustainable infrastructure at the same time as promoting convergence on regulatory and legal frameworks.

European investment in renewables are mainly concentrated in Chile, Brazil, Mexico and Colombia.

As EU investments in other renewables expand, green hydrogen production and export to Europe has emerged as a driver of offshore wind development in Latin America.

This has accelerated following the publication of Chile’s ambitious National Green Hydrogen Strategy in 2020. Intending to spur growth of additional exports to the EU, in November 2021, Chile signed its first green hydrogen supply agreements with the key Belgian ports of Antwerp and Zeebrugge in Belgium.

China’s role in Brazil’s Transition

China has long occupied an outsize role for Brazil, its top trading partner, with transactions between the countries rising to USD 150.4 billion in 2022, per Brazilian government figures.

But China’s Latin America strategy has shifted from oil loans, which proved vulnerable to price volatility, to tech and energy transition investments.

In 2022, Chinese companies agreed on some USD 3.5 billion in greenfield investment throughout Latin America, primarily within emerging supply chains for lithium, and to secure renewable energy and EV projects.

Looking ahead, China and Brazil recently signed 15 agreements worth 50 billion reals (USD 10 billion) from monitoring Amazon deforestation, to, according to Chinese state broadcaster CCTV, backing clean energy and green hydrogen production in Brazil.

For President Lula, such investments are a win-win — addressing his priorities to strengthen industrial policy and create jobs while bolstering Brazil’s already-robust transition stance.

The deal also enables China to grow its overseas influence and exports as a clean-energy provider as some segments like solar panels or electric vehicles (EVs) reach saturation at home.

The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union.