2016 Electric Power Outlook for Latin America
BNamericas is a business intelligence companies that focuses Latin America. They have been providing business intelligence for the last 20 years with subscribers from most of the region’s top companies. This is their 2016 Power Outlook for Latin America.
Every year they publish a report that is based on surveys that are completed by industry experts for a number of sectors. Participants included C-suite executives, project managers, engineers, researchers and analysts.
We find this report to be interesting as it acts as a barometer of the Latin American industries present attitudes and expectations for the sectors they cover.
With this post, we have decided to focus on the electric generation sector and provide an overview from this years report. We highly recommend companies subscribe.
Chile regained its position as the most appealing market in this year’s survey, with 34% of respondents identifying it as the most attractive country for electricity sector investments. In 2015, the South American country had lost the No. 1 spot to Mexico, which came in a close second this year at 32%.
Chile’s and Mexico’s ratings rose in the survey compared to the 2015 results, but most other countries saw a decline in their attractiveness. Most notably, Brazil and Colombia both fell to 5.4% from 13.2%.
As for the demand outlook, 56% of survey participants said they expect Mexico to see a significant increase in electricity use over the next five years, followed by Colombia (39%), Peru (37%), Argentina (36%), Chile (35%) and Brazil (29%).
Latin America is blessed with natural resources and this year the respondents commented on the growth of renewable energies in the Region.
Many countries have also started to tap into the region’s tremendous wind and, more recently, solar energy resource – with world-class insolation levels in the Atacama and Sonora deserts of Chile and Mexico, respectively, but also with great potential in Peru, Central America, parts of Brazil and elsewhere.
Interestingly then, 69% of participants in this year’s survey said that, in order to cover demand over the next 10 years, non-conventional renewable energy (NCRE) sources will contribute more than 15% of total electricity generation (they currently provide around 5% on average).
This is a notable change from the 2015 survey, when just 35% of respondents expected the same outcome. Moreover, only 9.3% said new hydro plants over 20MW will be built, versus 31.5% in 2015.
This year’s survey also indicates a growing confidence in clean energy as an independent and self-sustaining industry, with 22% of respondents saying that NCREs can compete on their own, versus 15% in 2015.
Interestingly, 62% of participants expect solar power to grow the most over the next five years, versus 36% for wind. This is a change from the 2015 survey, when the two sources were more or less tied. Activity in the regional solar industry – more specifically, photovoltaic (PV) solar – has only recently started to pick up, and the sector starting from a smaller base, whereas wind developers have been completing projects throughout Latin America for several years now.
For example, in Brazil alone there is 8.7GW of winds farms with an expected 10GW to be built according to local wind energy association Abeeólica.
In contrast, installed PV solar capacity in Latin America is only just nearing 2GW, but developers in Chile are building an additional 2.2GW, while the local pipeline of early stage PV projects exceeds 10GW.
For the Future:
Nearly 38% of respondents pointed to integration as the best way to strengthen energy security in Latin America. Some of the earliest forms of regional integration occurred during the 1970s with the construction of binational dams like Itaipu. More recently, international interconnections have become increasingly important as the region faces the effects of climate change combined with growing power consumption habits.
Interconnection would allow countries with surplus capacity to sell energy to neighbours in need, much as Argentina recently sought emergency electricity imports from Brazil during a heat wave in Buenos Aires. It could also present an export opportunity for energy-rich countries, like some hope that Chile may do with its northern solar resources sometime in the future.
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