November 17 (Renewables Now) - Solar PV is expected to achieve the lowest levelised cost of electricity (LCOE) in Latin America in the years after 2023, displacing onshore wind, research firm Wood Mackenzie said.
The solar LCOE in the region is projected to slide down to USD 14 (EUR 13.55) per MWh by 2050, according to WoodMac’s research report “Latin America levelized cost of electricity (LCOE)”.
Mexico’s solar market will boast the lowest LCOE among all countries included WoodMac’s outlook, followed by Chile.
“Expected solar cost reductions are significant, with average capital investment falling by 55% from 2022 to 2050. This is mainly led by technology improvements, such as bifacial modules becoming the norm across the region in the mid-term,” said Leila Garcia da Fonseca, Research Manager - Latin America Power & Renewables at Wood Mackenzie.
The region has also seen standalone storage costs spiralling down by about 64% on average. When solar cost reductions are added to the math, the LCOE for storage and solar hybrids in Latin America comes down to USD 21.4/MWh by 2050.
The LCOE trends for onshore wind will go in the opposite direction, at least in the medium term. Supply chain woes and high inflation that the onshore wind market is currently dealing with will trigger a sharp increase in costs by 2024, before a slow recovery, WoodMac projects.
Costs of offshore wind in Latin America will drop by 46%, but will not reach grid parity with other renewables. Brazil and Colombia are expected to become the region’s most competitive offshore wind markets, with LCOE of USD 79.7/MWh and USD 57.3/MWh, respectively by 2035, according to the research firm.
(USD 1.0 = EUR 0.968)