Latin America Is Emerging as a Force in Solar: Here’s What Early Developers Have Learned

GREENTECH MEDIA.  ByAdam James, March 11, 2014. Large-scale solar in Latin America’s major markets has finally had a breakthrough year.   As the market goes from talk to reality, market participants should start looking over their experiences and distilling some lessons learned. Evaluating what strategies were used to overcome barriers in the market is an essential part of developing a model for future growth, particularly in sorting scalable approaches in early-market development. This discussion will focus on what’s happened with financing, offtakers, land acquisition, and permitting, and offer some insight into what to expect in the year ahead. More than 140 megawatts were connected in the last twelve months, 70 percent of that in January alone. Around 200 megawatts more is expected to be installed between Mexico and Chile before 2014 is over, according to GTM Research's Latin America PV Playbook.  

Investing in large-scale solar projects in Latin America is attractive due to rapidly growing demand, as well as high insolation levels and power prices. Even if the market doesn’t offer the same lucrative subsidies as are available in other parts of the world, many companies are interested. However, there have been serious challenges, including getting access to land; navigating the federal, state, and local permitting process; securing offtakers; and acquiring financing. Of course, to some extent those problems were all exacerbated for the early players. Understanding the permitting structure for the first solar project is tough, from the point of view of the developers and the grid operators or regulators. Being the first bank to finance a project, or the first company to sign a long-term offtaker agreement is a particularly risky proposition, for example. Some of those difficulties do not yet have solutions, but the outlook on others will improve.
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