Fully tapping into Latin America’s bullish solar market will require challenging preconceptions around a region that is more stable than is sometimes assumed, local operators have told PV Tech.
Brazilian and Mexican developers, lawyers and lobbyists approached for a soon-to-be published feature urged foreign solar players to read beyond the headlines painting both countries as hotbeds of political chaos.
Rodrigo Sauaia, CEO of Brazilian PV body ABSOLAR, was keen to bust “myths” surrounding the government led by controversial captain-turned-politician Jair Bolsonaro. As he noted, the same president drawing global ire over Amazon deforestation and attacks on green NGOs is openly championing low-carbon solar growth, personally fronting major PV schemes and allowing the industry’s first-time inclusion in the so-called A-6 auction scheme.
“Some of the people I meet talk about Brazil’s tough politics after the elections,” Sauaia said. “There may be scepticism with climate policy but this is a liberal government interested in efficiency and competitiveness. They’ve come to office with an open mind, to hear what is actually going on and act based on technical knowledge, not political influence.”
“Brazil’s electricity system and regulatory framework are both very well run. The grid’s development is far superior to many other states,” said Powertis CEO Pablo Otin, when asked to compare the country with the firm’s home market of Spain. “The country has been in the renewable business for over a decade and has learned a lot.”
Post-energy reform life in AMLO’s Mexico
The talk of Brazil’s PV potential did not blind interviewees from lingering risks. Powertis’ Otin spoke of currency volatility and somewhat limited financing options, while ABSOLAR’s Sauaia acknowledged the country is “not for beginners”, noting bureaucracy issues with grid connection – if not outright congestion – and heavier red-tape for non-auctioned solar projects.
Interviews for the feature extended to Mexico, where headlines since the rise of new president Andrés Manuel López Obrador (known under the AMLO acronym) have produced a far bleaker picture of renewable auction cancellations and the potential re-opening of old state-sponsored PPAs.
Those citing impacts of the tender u-turn on Mexico’s image abroad ranged from an unnamed developer – which has spent years trying to deploy a double-digit-megawatt pipeline to no avail – to Nicolás Escallón, energy director at private equity outfit Actis. Marco Nieto-Vázquez, partner of Baker McKenzie Mexico predicted energy price rises if Mexico's grid upgrades lose steam, as he noted AMLO’s axing this year of two major transmission projects.
Nieto-Vázquez felt however that headlines around AMLO’s supposed renewable pushback have been hyperbolic. “The big problem I see today is many developers believe the way they operated before AMLO is the only way,” he said. “As ideological as the government may yet become, energy will be needed and solar’s costs are very attractive. It’s time to be flexible, to listen beyond the show in the media, to realise that change does not mean opportunities are gone.
The prospects and challenges of Latin American solar and storage will take centre stage at Solar Media's Energy Storage Latin America, to be held in Colombia on 28-29 April 2020.