LONDON (July 19, 2016) – Across Latin America, public tenders for photovoltaic (PV) projects are raising the pulse of the market, but challenges remain. A recent spike in new solar installations in Latin America is putting the region on track to reach 2.7 gigawatts (GW) of installed photovoltaic (PV) module capacity this year, according to IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions.
Chile continues to spearhead the region’s PV installations, accounting for 44 percent of new additions this year. After a few years of rapid growth, the installation intensity of this regional giant is projected to decline over the next years, as parts of the grid continue to reach the saturation point, and as power prices fall as anticipated. Currently the second largest market in the region, Honduras, has approximately 0.5 GW of installed PV capacity, the result of a boom in 2015, according to the IHS Markit Emerging PV Markets Tracker. This year, Honduras is set to be overtaken by Mexico.
After Brazil, Uruguay, Mexico and Peru, the next market to announce tenders is Argentina, where the World Bank plans to step in with guarantees for a 1 GW renewable power tender, of which 300 megawatts (MW) will be supplied by PV. “Recent record-low bid prices -- as low as $48 per megawatt-hour in Mexico -- are attracting the interest of governments,” said Josefin Berg, Senior Analyst, Solar Demand, IHS Markit. “Meanwhile, these bid levels raise the pressure on suppliers, as the procurers will be squeezing the total system costs to make the projects viable.”
While tenders spur optimism regarding market growth, actual project deployment often takes longer than initially planned, as developers struggle with administrative barriers, or simply seek to postpone construction to benefit from declining component prices. Planned tenders also risk delays, as most recently shown in Brazil where the power auction scheduled for July 2016 has not yet been set.
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