Climate change, and the challenges of Covid-19, has forced countries around the world to realize that more effort is needed to harness renewable energy. Latin American countries last year collectively pledged to meet a 70% renewable energy use target by 2030 – a total of 312 GW in power – while a number of governments, including those in Colombia and Chile, have committed to putting sustainability and decarbonization at the heart of their countries’ Covid-19 recovery plans. Although the Covid-19 pandemic means some South American renewable energy projects that are already in development are likely to be delayed, the market is expected to continue to grow in the years ahead, with focus likely to increasingly turn to using digital technologies to build ‘smart grids’ where the balancing of demand and supply can be optimized. Brazil has capacity to generate approximately 170 GW of power from various sources. Hydropower makes up more than 100 GW of that capacity. In a bid to decrease dependency on hydropower, following the 2001 drought in the country, Brazil bolstered the development of onshore windfarms. As a result, there are now more than 600 wind farms in operation. Capacity from wind is currently 16 GW and is expected to reach 20 GW by 2023.
Further growth in wind energy projects, both onshore and offshore, will follow if the Brazilian government elects to participate in Latin America’s goal of 70% renewable energy by 2030 and if it wants to achieve its stated target of meeting 48% of energy use in the country from wind and solar by 2027. The offshore wind market could prove to be highly lucrative for foreign investors and energy companies – the Ministry of Mines and Energy’s research firm EPE has estimated that wind farms at water depths of up to 50 metres could generate up to 700 GW of electricity. Ten new offshore wind projects have already been announced in 2020, mostly located in the north-east of Brazil’s waters, while seven offshore wind projects – all of which involve structures fixed to the seabed – are currently applying for environmental licensing. However, there is a push to reduce the environmental impacts of offshore wind projects by reducing the weight of wind turbines so that they can operate via floating structures. This would have the benefit of reducing regulatory hurdles and costs for offshore wind projects, which already have higher installation costs. With financing only available for non-Brazilian machinery if domestically-manufactured machinery is unavailable. This condition to FINAME financing has led to a number of renewables entities including turbine suppliers setting up manufacturing or assembly facilities in Brazil. It is clear that the scale of the development of renewables projects in South America is growing at a far greater rate than in other renewables markets. It is also important to note that developments in this sector are not limited to Brazil, Chile and Columbia, but can be seen across the continent, with noticeable activity also taking place in Peru and Argentina. As a result, the South American markets are attracting a number of foreign investors. With the likes of BP currently developing 2 GW of solar projects in Brazil, and Total undertaking a multitude of renewables projects in Chile, the sector is certainly one to watch.