The rise of solar in Central America in 2015

Share on facebook
Share on twitter
Share on linkedin
Share on reddit
Share on email

Some of the smaller players in Latin America’s solar market appear to be taking off this year, leaving some of the bigger names in their wake. Brazil, the region’s largest country with a huge population and energy demand, falls off the top five markets in terms of installed capacity, according to the latest GTM Research forecasts. Meanwhile Honduras, Guatemala and Panama will see huge increases by the end of 2015.

Despite forecasts of its market tripling in size, even the outlook for Mexico has disappointed and surprised many, under GTM’s 'Q1 2015 Latin American PV Playbook’ released this week. Nevertheless, Chile remains the stalwart market accounting for half the region's capacity.

PV Tech spoke to GTM Research solar analyst Adam James in lieu of the latest quarterly results for an in-depth look at what will make up the Latin America’s 2.2GW of solar installations this year.

Adam James: 'Central American nations have finally turned a corner in terms of development of PV'. Image: GTM Research

James said: “Central American nations have finally turned a corner in terms of development of PV. A lot of these markets held auctions, but the development of those projects which won tenders has taken some time, especially in Guatemala. In each of those markets you had a few drivers that accelerated their development, whereas Brazil stayed still for this year.”


Honduras sees an enormous lift this year from 5MW installed in 2014 to an expected 460MW. It has a lucrative incentive in place for the first 300MW of capacity to connect before the end of July, James said, so there is a huge motivation for companies to go out and complete their projects quickly. The utility ENEE had a huge pipeline of projects, which were stalling, but there are now a few projects with credible developers charging ahead.

Honduras to install 460MW of solar PV this year, up from 5MW in 2014. Flickr: Ian Mackenzie

“Sometimes people sign PPAs that are too low and they cannot make the project work, but in Honduras we’ve seen a lot of the projects getting built and we can attribute that to a couple of big sophisticated players getting involved in the market. They have already completed 250MW of projects this year.”


Guatemala is set to increase its annual installations from 6MW to 98MW this year. We are seeing the fruition of several tender processes that they've held over the last two years, James said. The country has had 65MW installed already this year.


Panama is a “mixed bag”, James said: “It actually could have been a much larger market this year, but has been fraught with mismanagement. However, despite that, some development will still trickle through – enough to put it in the top five markets.”

Panama undertook an auction, with relative success, James said, although many bids were far too low for some projects to install. Nevertheless, with 62MW, it will still develop more capacity than Brazil this year.


The Mexican market was waiting for 100-150MW of projects to be started by April to account for a bigger forecast this year, but they stalled for a variety of reasons including the continuation of currency risks.

“That was a surprise. It should temper people’s expectations for Mexico this year,” said James.


Brazil's outlook has actually improved since last year, said James, although there is a lot of uncertainty in the market. Dropping out of the top five for 2015 is more due to other markets improving, rather than Brazil weakening.

Its market is expected to take off in 2016 with distributed generation gaining a lot more traction and utility-scale projects starting to come through. Currently projects over 1MW are very limited with just 16MW of capacity expected this year, down from 22MW last year.

“2016 is when we see a lot of the larger projects getting developed. They have contracts, but they don’t have to start until 2017,” said James. “They would be taking a huge risk to build their projects early. If the currency strengthens against the dollar again then they would be able to get a much better deal on buying equipment. That’s only a real issue because of heavy taxes and an entirely import dependent market; they are a lot more exposed to currency risk. A lot of them are just waiting for macroeconomic conditions to improve.”

Barriers to solar in Brazil

There are two barriers to distributed generation in Brazil, James said. One is access to capital and financing.

“Not everybody has enough money to pay the upfront cost of PV.  The problem is that in Brazil right now interest rates are so high that you can’t really get access to lower cost capital for distributed generation.”

The second barrier is the tax regime on imports, which raises the cost of PV in the country significantly. Furthermore the ICMS tax on electricity consumption means people are taxed the same for the energy they use, even if they produce energy themselves.

There have been two recent developments for net metering in Brazil including the government granting ICMS tax exemptions for three states and the country’s energy regulator, ANEEL, set to revise its net-metering regulations for distributed generation. James said these are steps forward but other taxes are still an issue on top of financing problems.

Despite these barriers, Brazil’s reliance on hydropower has become fragile after recent droughts, which improves the case for solar technology.

“Brazil is taking the approach of viewing solar based on value, rather than just costs. While hydropower may be cheaper on a cost basis in an energy auction bid, the value that resource has to the grid is tempered by its risks. As was demonstrated recently, one risk is that during a drought, hydropower competes with water consumption. Another is that reduction in hydropower generation exposes the consumers to fuel oil volatility.”

This means that despite expense in energy auctions, solar offers additional value to the market, James said. There is no fuel risk, the intermittency is predictable, and the production tends to correspond to hours where energy is needed most. Solar can be valuable not just as a resource, but also as a hedge.

“That lesson has been learned the hard way over the last year, but will be a boon to solar in Brazil.”

22 September 2021
To commemorate the World Energy Storage Day(WESD) on 22 September, being recognized worldwide, Customized Energy Solutions (CES) and India Energy Storage Alliance (IESA) is organising the 5th global conference and virtual expo, which will be held virtually on 22 September 2021. WESD is a global movement initiated by various apex trade bodies working to promote and adopt energy storage, e-mobility & green hydrogen technologies for a sustainable future. The forthcoming edition of WESD is expected to attract global participation with an intent to facilitate bi-lateral trade, market development and new research and innovation, which will invite 100+ countries, 100+ regulators & policy makers, 100+ International speakers,1000+ organisations, 100+ partners & exhibitors and 20,000+ global delegates.
28 September 2021
Solar Solutions International is the largest trade show for solar energy in Northwest Europe. Now the solar market has grown up, it's time for the next step. Solar Solutions International displays more than 500 innovations and over 100 practical seminars concerning the latest in energy storage, smart products, and an ever evolving array of solar panels. As an exclusively B2B trade show, Solar Solutions International offers both exhibitors and visitors the chance to network at the highest level. Duurzaam Verwarmd, the largest trade show for sustainable HVAC technology in the Benelux, is held simultaneously. This way your one visit gets you up to date with all of the developments in both sustainable energy and heating.
6 October 2021
Intersolar Europe is the world’s leading exhibition for the solar industry. It takes place as part of The smarter E Europe – the continent’s largest platform for the energy industry. Under the motto “Connecting solar business,” manufacturers, suppliers, distributors, service providers and project planners and developers from around the world meet in Munich every year to discuss the latest developments and trends, explore innovations firsthand and meet potential new customers.
6 October 2021
The future is bright for a new era of US solar and storage, and the 8th annual Solar & Storage Finance Summit will provide opportunities to discuss solutions to the industry’s challenges and provide a networking platform designed to bring together the top minds in the industry to do business. With a mix of high-level, informative presentations and panels, a stellar cast of speakers and audience members with deal-making capacity, the 2021 edition of the event will be a sell-out success.
18 October 2021
Intersolar South America, South America’s largest exhibition and conference for the solar industry, takes place at the Expo Center Norte in São Paulo, Brazil on October 18–20, 2021, and has a focus on the areas of photovoltaics, PV production and solar thermal technologies. At the accompanying Intersolar South America Conference, renowned experts shed light on hot topics in the solar industry.
19 October 2021
This year’s EV World Congress will hold a special role, not only as the first live EverythingEV event in over a year – a chance to renew your connections and re-engage with the EV sector face to face – but also as a chance to share insight and inspiration as world starts to look towards move on post COVID towards hitting ambitious decarbonisation goals in 2030 and beyond. As ever, we will be bringing world leading organisations, cities, and technology providers to the UK to inspire EV innovators, and delve into the challenges facing the sector as the UK looks to revolutionise road transport.

Read Next

September 17, 2021
BP, Abu Dhabi National Oil Company (ADNOC) and Masdar have partnered up to develop low carbon hydrogen hubs and create decarbonised air travel corridors between the UK and UAE in a deal that will see “billions” of dollars of investment.
September 17, 2021
US utility company Dominion Energy Virginia has proposed 15 new energy projects totalling 1GW of power for the state, which Dominion Energy claimed was the largest group of projects to be submitted to the Virginia State Corporation Commission (SCC)
September 17, 2021
Renewables developer Ørsted has promoted Neil O'Donovan to CEO of its onshore business unit following the resignation of his predecessor in August.
September 17, 2021
A 58.5MW floating PV plant in Thailand, said to be the largest install of its kind in the country, has been connected to the grid, according to inverter and floating solutions supplier Sungrow.
PV Tech Premium
September 17, 2021
PV Tech spoke to investors and analysts about why Brazil is fast becoming an attractive market for solar investment.
September 16, 2021
Vistra Energy has welcomed the enactment of clean energy policies in Illinois which the power generation company said will support 300MW of solar and 150MW of battery storage to be built at nine of its coal plant sites. 

Subscribe to Newsletter

Upcoming Events

Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
Solar Media Events
December 1, 2021