NEW REPORT: Latin America's energy future is blowing in the wind

Driven by a decision by many countries to prioritize renewable energy and by falling generation costs, wind power is expanding at a dizzying pace in Latin America and the Caribbean. In the past decade, the renewable source's installed capacity in the region multiplied by 16: from 1.5 Gigawatts (GW) in 2009 to 25.2GW in 2018, according to data from the International Renewable Energy Agency (IRENA).

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There is every indication that this trend will continue in the short and medium term. A good part of the new generation capacity planned or under construction in Mexico, Brazil, Argentina and Chile corresponds to wind energy. In addition, there is increasing interest in adopting the technology in Peru, Colombia and throughout Central America.

There are two key drivers in this process. On the one hand, almost all countries in the region are actively replacing fossil fuels, such as coal and oil, with renewable energy. On the other, the cost of generating electricity through the use of wind continues to decline. In 2018, the global weighted average cost of electricity generated by onshore wind power fell by 13% compared to the previous year, according to data collected by IRENA. That trend promises to continue: the price of more than three quarters of the terrestrial wind energy launched in 2019 is on track to be lower than coal, oil or natural gas, according to the agency.
Suffice to say, Latin America's wind potential is considerable. But there are also obstacles that threaten the sector's development. A common challenge to several countries in the region is the need to develop transmission and distribution networks in line with the expected growth of renewables. Another emerging difficulty is the decrease in the sector's profit margins. "The low prices that are emerging from auctions can be risky for project developers because margins fall and that makes the financing criteria for these projects more demanding," says Juan Roberto Paredes, a senior renewable energy specialist at the Inter-American Development Bank (IDB), in Washington.

In this report we will look at the current state of Latin America's wind industry and its prospects for growth. In addition, we will identify the factors that could provide impetus for the technology in the coming years and those that could slow its proliferation.