Wednesday, December 19, 2012

Latin American PV markets triple growth

Article published in PV insiders by Jason Deign on Dec 18, 2012

Solar installation investment have tripled in the past year across Latin America as the cost of PV falls and administrations embrace greener energy agendas.

It is a rare thing these days to hear a Spanish PV developer announcing a multi-megawatt project win. And in the case of Isofoton, which recently unveiled a 50MW development, the cause for jubilation was readily apparent: the solar plant in question is not being built in Spain, but Ecuador.

The UDS$100m project, located in the parish of Calderón, 10 km from the Ecuadorian capital Quito, will be one of the largest in Latin America, employing 500 workers and producing more than 84,000MW-hours of clean energy a year.

That is not all. Isofoton, which has been working on solar rural electrification projects in Latin America for the last 20 years, has also recently tied up a deal to build a 50MW plant in the Dominican Republic and has a 1.5MW project on the go in Mexico.

The company is also weighing up the creation of a manufacturing centre in the region, according to a press release.

New PV markets

“We are looking at new markets for PV, and Latin America is one of our bets,” confirms Gemma Martín, Isofoton’s director of communications and institutional relations.

It is no wonder. Latin America, hitherto a continent with great solar potential but little real action, is slowly emerging as a significant region for PV development.

Maria Gabriela da Rocha Oliveira, head of Latin American research and analysis with Bloomberg New Energy Finance, reports that this year has seen record levels of new asset finance investment into utility-scale solar assets in the region.

Excluding Brazil, around $806m has been pumped into the sector to date this year, more than three times the 2011 level of $262m.

Leading the charge so far has been Peru, where assets auctioned under the country’s first renewable energy auction in 2009 were due to reach financial close.

Attracting investment

Other significant markets included Mexico, which attracted $241m in investment, Chile, with $159m, and Ecuador, with $6.4m.

“Last year, Bloomberg New Energy Finance had forecasted Latin America would see some 133MW of new utility-scale solar capacity online by year-end 2012, including Brazil,” says da Rocha Oliveira. “We have recorded some 105MW of utility-scale solar online in the region this year.”

Add to this 20MW due to join the grid in December from Panamericana, a Peruvian plant recently bought by Conduit Capital Partners and the development bank Corporación Andina de Fomento, and “growth has come right on the target we had predicted last year,” she says.

This bodes well for Bloomberg New Energy Finance’s forecast of a 1.2GW solar market across Latin America by 2017, with 424MW coming online next year in what da Rocha Oliveira calls “an optimistic scenario.”

Sunny forecasts

Other forecasts are even sunnier. In European Photovoltaic Industry Association figures quoted by Isofoton, for example, the potential could be for as much as 3.5GW by 2016.

In any event, it is clear that Latin America has a lot more going for it than many of the stagnant markets across Europe. Thanks to a common language, the opportunity there is particularly attractive to Spanish developers, and da Rocha Oliveira says that in addition to Isofoton the Latin American nations are getting a lot of attention from companies such as Gestamp, Solaria, Solarpack and T-Solar.

The latter, for example, confirmed in October it was bringing online two projects in Arequipa, Peru, with a combined capacity of 44MW, after being awarded 20-year supply contracts in 2010.

Looking ahead, there is considerable scope for further utility-scale projects in at least three Latin American nations.

Chile, for instance, has a 10% Renewable Portfolio Standard, high electricity costs and, in its Sistema Interconectado del Norte Grande grid system, very high power demand from mining companies coupled with excellent solar irradiation, making PV projects economically attractive.

Carbon emissions

Peru, meanwhile, has adopted a reverse-auction process to award renewable energy contracts and is likely to continue down this route in order to meet carbon emissions reduction commitments.

Finally, Ecuador has introduced a feed-in tariff and its irradiation levels make it a prime candidate for further solar development. “Ecuador is one of the key countries within the Latin American region,” said Isofoton in a press statement.

“It has a privileged position with a homogeneous irradiation throughout the year, varying between 3.35kWh/m2 in May and 4.33kWh/m2 in September, which makes it more efficient and less costly to use photovoltaic energy to drive its industry than with other sources.”

Off the grid opps

Beyond these utility-scale stars, there are a number of other Latin American nations where off-grid projects could represent an important source of income for PV developers.

“While Brazil and Mexico have been developing some utility-scale assets, the growth market for the two Latin American giants will be in the rooftop or distributed level,” believes da Rocha Oliveira.

Surveying the state of the PV sector worldwide that should be just fine for the solar players currently eying Latin America.

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