The Renewable Energy Ecosystem in Latin America

Dennis Chang
October 11, 2017

Submitted as coursework for PH240, Stanford University, Fall 2017

Renewable Energy Market in Latin America

Fig. 1: Solar Panels Project in Northern Chile. (Source: Wikimedia Commons)

Power generation in Latin America has more than quadrupled between 1980 and 2013, expanding steadily over the past 3 decades. Electricity demand growth has been driven largely by urbanization, economic growth, better living standards and improvements in electricity access, currently reaching over 95% of the population. [1]

Increase in energy demand amid energy security concerns and increasing climate change consequences presented Latin American countries with the opportunity to rethink their energy- producing resources. The Latin American region has vast amounts of energy resources, both renewable and fossil fuels. [1]

Furthermore, Latin American countries are trying to reduce their carbon dioxide emissions, while still producing enough energy to sustain their own economic growth. Given energy security risks in past years and changes in hydrological cycles (such as those occurring in El Niño years), energy diversification has become a huge area of investment in the past several years. [1]

In Latin America, enormous hydropower projects have previously resulted in floods, environmental damage and large-scale displacement of local populations, while geothermal, wind and solar projects have encountered little resistance from nearby communities. [2]


Most Latin American countries have established goals for renewable energy, and most countries have promulgated laws for such end. The most commonly used political mechanism for promoting renewable energy sources in the electric power generation sector are subsidies and fiscal incentives. Lots of innovative policies promoting renewable energies have been identified and designed, especially those that combine regulatory mechanisms with subsidies. [1]

The opportunity is huge, as Latin America is a part of the world with over 600 million people. Renewable energy is a very good form of investment nowadays, especially because both wind and solar are very competitive nowadays, even cheaper than traditional fossil fuel sources of energy. [3]

Specific Case Example

In Chile, the renewable energy market is ready to make a leap in development, as evidenced in 2015, when it attracted more than 50% of the total investment I the renewable energies market for Latin America. [3] Chile had 47 renewable energy projects under construction, and by August 2018, they are expected to inject a total of 2336 MW to the grid. [3]

Chile's expansion of green energy infrastructure has dramatically reduced the cost of producing electricity. Severe weather events like floods or droughts have made hydropower plants in Chile less reliable, which is why the government has started diversifying its power resources to prevent power outages in the future. [2]

Alternately, Chile's geography offers a wide range of opportunities for renewable energy. Wind farms in the northern Chilean desert along the countrys 2653 mile coastline are feeding energy into the national power grid. Even though solar and wind power sources are intermittent, geothermal plants helps make the grid less vulnerable to disruptions. [2]

© Dennis chang. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] "Renewable Energy Market Analysis: Latin America," International Renewable Energy Agency, 2016.

[2] E. Londoño, " Chile's Energy Transformation Is Powered by Wind, Sun and Volcanoes," New York Times, 12 Aug 12.

[3] "Renewable Energy in Latin America, Norton Rose Fulbright, February 2017.