Demand for solar energy across Latin America and the Caribbean is poised for explosive growth through 2017, with a forecast compound annual growth rate (CAGR) of 45%, according to NPD Solarbuzz.
According to Chris Sunsong, analyst at NPD Solarbuzz, "Historically, solar demand was confined to rural off-grid and niche applications, but new renewable energy policies and incentive programs are now opening up the region for strong solar deployment. Set against a backdrop of strong economic growth, expanding energy demand, and increasing electricity prices, the conditions for PV adoption appear particularly attractive."
Mexico, Chile, and Brazil are emerging as market leaders within the region, driven by a combination of net-metering, Renewable Portfolio Standards (RPS), and other policies. These three countries are forecast to have almost 70% of solar demand within the region by 2017.
By the end of 2012, energy regulators across the region will have received solar project applications in excess of 6GW, stimulating a healthy pipeline of new opportunities for solar component suppliers, developers and installers.
The dominant ground-mount segment is forecast to provide 60% of solar demand by 2017. However, commercial and residential segments will see increased solar adoption from 2015 onwards, as solar prices continue to decline and local installers target new revenue opportunities. The off-grid sector will continue to benefit from increased demand from rural electrification and development initiatives.
While the fundamentals for solar adoption remain particularly strong and the long-term prospects are highly appealing, a variety of technical, economic, and political obstacles still exist that must be overcome. "Solar connection and integration procedures are not yet clearly defined, and there are concerns about grid stability as solar contributions come online," noted Sunsong. "Electricity subsidies in Mexico and low natural gas prices in Peru are also delaying the onset of solar grid parity for some end-user categories, while import tariffs across the region are keeping solar PV system costs on the high side."
With solar demand softening across established countries in Europe and growing uncertainty regarding access to solar markets in the US, China and India, emerging solar regions are essential to sustain revenue growth targets. "Having a successful market-entry strategy for Latin America is now essential for leading solar suppliers before key markets develop in the region and supply chains and purchasing channels are established," concluded Sunsong.
