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    THE GREAT POTENTIAL OF SOLAR AND WIND ENERGY IN LATIN AMERICA


    May 23, 2022 - CE Noticias Financieras

     

      The multiplication of wind turbines and photovoltaic panels are the symptom of a fundamental change: wind and solar are taking over from hydro in the regional electricity matrix.

      With hydropower having been fully incorporated for decades in the electricity matrices of some of the major Latin American powers, with Brazil leading the way, wind and solar are beginning to take over. Windmills and photovoltaic panels have gone, in just a few years, from being a rarity in the region's landscapes to being inconspicuous as they gradually gain weight in the mix. The figures are still modest, but they are steadily increasing: in the last decade, installed capacity has grown by 8%, above the global average, and investment has soared to $54 billion in the last three years. And, more importantly, with unlimited potential, more than enough to make the region the new renewable mecca on a global scale. Big words: there is no longer any doubt in anyone's mind that the global transition is taking place in Latin America.

      The change is long overdue. Latin America has had a greener electricity matrix than the rest of the world for decades, but until now this has been solely and exclusively due to the boom in hydroelectric power plants, especially in Brazil, where 70% of the electricity consumed comes from waterfalls. The bad news today is that hydroelectric power, which brought about that first renewable revolution, is not going through its best days: its environmental impact and episodes of severe drought - which will only increase in frequency and power with global warming - have called into question its capacity for growth. Costa Rica's recent decision - along with Uruguay, one of only six countries in the world that has already achieved 100% renewable electricity - to cancel Central America's largest hydroelectric project is a symbol of the changing times.

      The good news, however, is that waterfalls and highly polluting fossil fuels have a reliable substitute in the so-called non-conventional renewables: wind and solar. "To get to where we want to be, we need to do much more, but there are clear signs that the transition is already here," says Juan Roberto Paredes of the Inter-American Development Bank.

      Among the large regional economies, progress is especially relevant in Chile, where renewables will cover 90% of demand by 2050, and in Mexico, where, if nothing goes wrong, by 2020 a wind project will generate the cheapest electricity in the world and will reach 50% from green sources by 2050. The North American country has an additional advantage over its neighbors: it has "preferential access" - in the words of Luis Aguirre Torres, CEO of GreenMomentum - to one of the cheapest gas molecules in the world, which is key to the development of backup options to cover demand when renewables, by definition intermittent, are not sufficient.

      Chile and Mexico are the most outstanding success stories thanks to regulatory openness, according to Jorge Barrigh, president of the Latin American and Caribbean Renewable Energy Council. But they are not the only ones: Brazil invested, in 2015 alone, more than $7 billion in non-conventional renewables; in Central America, Honduras has emerged as an emerging power in solar and, until the onset of its brutal political crisis, Nicaragua had followed the path of its neighbor Costa Rica. Argentina has also seen in its neighbors Chile and Uruguay the perfect mirror in which to project its already belated commitment to renewables. And Colombia does not want to be left behind in a niche that is essential to ensure energy sovereignty in a future that is, more than ever, just around the corner. If the big players - Brazil, Mexico, Colombia, Argentina and Chile, responsible for almost 80% of Latin America's energy consumption - get moving, they will have covered a good part of the road ahead.

      "The region is on a very interesting path," says Alfonso Blanco, executive secretary of the Latin American Energy Organization (Olade). "Not only in wind and solar, but also in geothermal energy, which almost never enters the media agenda but which has great potential in all the countries of the Ring of Fire: from Chile to El Salvador." The contribution of this resource is, for now, testimonial, "but its potential is unquestionable," adds the head of ECLAC's Energy and Natural Resources Unit at its subregional headquarters in Mexico, Víctor Hugo Ventura, another optimist -one more- about the region's green future. "The margin for growth is as large as it is difficult to calculate," he said.

      It is no coincidence that Latin America has become the new Dorado of renewable energies. In addition to its unique natural conditions - "there are no better areas for wind power than Patagonia, the Colombian Guajira or southern Mexico, nor better regions for solar than northern Chile and Mexico or southern Peru," says Barrigh - there is also a sense of urgency: after a 2017 marked by floods and hurricanes, the region is on the front line of climate change and the need to move towards another model is imperative. Most are beginning to see the wolf's ears. If global emissions are not drastically reduced and global warming is not reversed, 17 million Latin Americans will be forced to migrate between now and 2050 because of rising sea levels, hurricanes and declining harvests, according to the World Bank.

      In the mid-1990s - the day before yesterday, as it were, in historical terms - virtually no one wanted to work in the renewables sector in Latin America, says an executive of an investment fund that has redoubled its green bets in the region. It was not attractive: what was really profitable was to take advantage of privatizations, especially in the hydrocarbons field. Today, the tables have turned. "Renewables can now compete on equal terms with traditional energy sources," says Marie Vandendriessche, a researcher at EsadeGeo. The long-term decline of oil is inexorable. And wind, solar and geothermal energy are set to take their place, also in the portfolios of international investors: in the heat of this second renewable revolution, dozens of companies in the sector from all over the world have set up in the region. "Countries and companies are specializing in one technology or another, depending on their geographical location," says Fernando Branger, energy expert at CAF-Development Bank of Latin America. "But they are all, in one way or another, seeking to incorporate clean energy into their matrix.

      The boom in non-conventional renewables, however, is far from being massive or uniform. Despite the recent furor, the expansion is far from equitable. The subcontinent is moving at various speeds and several challenges - and brakes - are looming on the horizon. Financing and interconnections are common complaints among specialists. But there is more. "There is still a problem of mentality: in many citizens and governments there is still an extractivist, very short-term vision. And there is very little cooperation between countries," adds Bárbara Valenzuela, professor at the Faculty of Engineering and Technology of the San Sebastián University in Chile. Corruption also has an influence: "Institutional quality is fundamental for the development of these projects," she concludes. The recent victory of the ultra-right-wing Jair Bolsonaro in Brazil completes the picture of risks: if the by far largest economy in Latin America slackens in its green bet, the renewable revolution of the entire region is at risk.

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