Latin America levelized cost of electricity (LCOE)’ which examines the power technology and generation landscape across the region to 2050. Solar will also displace onshore wind, currently the most attractive renewable energy source in Brazil, by 2025.
Power demand in Latin America is set to almost double by 2040 compared to 2021 levels a higher growth rate than North America. Yet, despite the region already being a frontrunner for renewable power generation, questions remain about how Latin America will contribute to the global energy transition effort.
Offshore wind will be the most competitive in Brazil and Colombia, offering the two lowest LCOEs in the region, with US$ 79.7/MWh and US$ 57.3/MWh respectively by 2035. On-site electrolyzers preclude the need for transmission investment, which translates to an additional 13% in offshore wind LCOE reduction. However, offshore wind costs will drop 46% in the region and will not reach grid parity with other renewable technologies.
For onshore wind, current supply chain challenges and high inflation will cause a sharp increase in costs by 2024, followed by a slow recovery. Onshore wind LOCE in Latin America already falls below Combined Cycle Gas Turbines (CCGT), except for Argentina.
Off-grid applications for green hydrogen production is currently the main driver for offshore projects in Latin America, with the first projects expected to be online as early as 2032.
Standalone storage has the highest cost reduction rate among all technologies, averaging 64% across countries in the region. The rapid cost reduction of solar and standalone energy storage will result in extremely attractive LCOE levels for hybrid projects in the region, with US$ 21.4/MWh anticipated by 2050.