Major synergies between solar PV and cities can make a real difference for people and climate
Solar PV is poised to contribute strongly to the overall growth of renewables in the Latin American region despite proceeding at different speeds, financial barriers and uncertainty of legal frameworks in some countries, and of course the pandemic.
In 10 years, the region’s installed capacity has grown from just 60 MW to 20 GW. However, more than 85% of that capacity is concentrated in four countries – Brazil, Mexico, Chile, Argentina. For the regional market to grow faster and more evenly, some countries need to finalize their decarbonization roadmaps and targets to give foreign investors visibility about the next 10 years.
To stimulate PV market development, the Global Solar Council’s LATAM Task Force held a webinar on “Large scale, off-grid and distributed solar PV in Latin America – Promoting market growth after COP26”. The event was a moment to understand the current status and future outlook of solar PV in Latin America taking into account financial opportunities for the market, and to present success stories of solar PV applications in major cities.
“Solar PV is one of the cleanest and cheapest ways to produce electricity and this gives us a strong confidence in the industry’s future,” said José Donoso, Director General of Union Espanola Fotovoltaica (UNEF) and Chairman of the Global Solar Council. “We expect that all decision-makers will understand that solar PV is a real gateway to a future characterized by cleaner environment, inclusive access to power and at cheaper prices. And Latin America has a particularly high solar power potential. Corporates are ready to do their part in the region, but they need better planning to be put in place by governments and retroactive measures to be absolutely avoided”. Donoso congratulated Brazil for surpassing the 10 GW mark of solar PV installed.
The GSC LATAM Task Force is led by Rodrigo Sauaia, CEO of Brazilian Solar Photovoltaic Energy Association (ABSOLAR) & Co-Chair of GSC, and by Marcelo Alvarez, President of the Camara Argentina de Energia Renovable (CADER) & GSC Secretary. They outlined how the Task Force in contributing to a faster growth for solar PV in the region, and offered the latest policy and market updates.
The GSC LATAM Task Force was established to drive the huge potential solar PV in the region and is complemented by similar initiatives for Africa and South East Asia. The Task Force promotes cooperation among industry players and governments, shares best practices among industry associations with the objective of stimulating uptake of solar PV, and supports the establishment of associations where they are not yet in place. Ultimately, the Task Force aims to help all countries in the region remove barriers and give a new impulse to the solar market for more efficient authorization processes and faster growth.
“The majority of new jobs in the renewables sector is generated by solar PV: in Brazil, more than 360,000 solar jobs were created over the past decade. Moreover, thanks to its versatility, solar PV has numerous applications in cities and will be responsible for increasingly high shares of global electricity production,” said ABSOLAR’s Rodrigo Sauaia. “The Brazilian market – the largest in Latin America – was characterized by good auction prices also after the pandemic and successful PPAs, driving the installed capacity up to more than 12 GW in 2021, of which two thirds are distributed.”
“The Argentinian market suffers from complex bureaucracy and very uneven tariffs across the country. So the payback time isn’t always good and results can differ even within the same legal framework. The good news is that what are now market niches are growing fast, such as water pumping, industrial parks, end of distribution lines, energy storage. Agrivoltaics, in particular, is a promise for our region because of land availability,” said Marcelo Alvarez from CADER. “With much still to be done and despite high interest rates driving up prices, solar PV holds plenty of room to grow in Argentina, where a target of 20% of power demand to be supplied with renewables by 2025 entails additional 10 GW of capacity”.
“Mexican solar PV grew from 171 MW in 2017 to more than 7 GW in 2021, almost all at utility scale and unevenly across the country. Still, there is huge potential for the market to grow: according to IRENA, Mexico could install 30 GW with 40% distributed solar, which currently accounts for only 1.8 GW. Thus, distributed solar PV is key for a successful energy transition,” said Nelson Delgado, Managing Director of the Mexican Association of Solar Energy (ASOLMEX). “However, the discussion on the government’s proposed energy reform which attempts to give back full control of the market to the state owned company, including eliminating long-term auctions and cancelling all PPAs in place, will take place in 2022 and requires full attention.”
The GSC is monitoring the situation in Mexico and already took a strong position against the retroactive measures proposed by the government alongside ASOLMEX, and will follow the developments in 2022 with continued promotion of a resolution in favor of renewables and a free market.
“New business models were really important in the past years to overcome issues related to price fluctuation and bring installed solar capacity to more than 3 GW in Chile. The development of residential solar is a key target for the country on the path to net-zero, but it is necessary to modernize electricity distribution networks, with the aim of automating and digitizing the new requirements that users need, and to accompany this with a massive change in the regulation for the distributed sector,” said David Rau, Vice President, Chilean Association of Solar Energy (ACESOL), a new member of GSC. “Overall, the level of substitution of fossil sources is still not high enough for Chile, but the outlook is positive for next year.”
The outcome of the recent elections should be good news, with the new government promising to make climate action and renewables key points of the plan for the country. In addition to having the highest solar radiation in the world, Chile is also the global largest producer of copper and second-largest of lithium, both key for electronics and for manufacturing renewable energy technologies.
“Peru is blessed with natural resources: the renewable energy potential is 10 times the installed capacity. Through the decentralized deployment of renewables, in particular solar energy, the costs implied by long transmission lines can be curbed and clean energy access for isolated populations can be achieved. Even though there has not been much development in remuneration schemes and incentives following the last auction in 2015, more than 2GW of solar PV are foreseen over the next 8-10 years, accounting for almost USD 1.5bn potential investment and more than 10.000 new jobs,” said Paloma Sarria, Executive Director, Peruvian Renewable Energy Association (SPR). “But the country still does not have an established regulatory framework, promotion or incentive mechanism for distributed generation. In 2018 the regulation was pre-published, but its approval is still pending.”
“Cities occupy 2% of the space on Earth yet they are at the forefront of what is causing climate change as they consume around 75% of the world’s energy and create over 70% of energy-related GHG emissions”, said Ilan Cuperstein, Deputy Regional Director for Latin America at C40 Cities.
Indeed, cities play key role in fostering renewables: they can set climate and renewable energy targets, issue regulations to transition away from fossil fuels by enforcing the adoption of renewables in buildings, operate their own plants and produce huge savings in power consumption, dedicate resources to financing and advocacy.
“As the world needs average per capita CO2 emissions to drop to 2.4 tonnes, the C40 LATAM cities are the only ones already under the threshold, but it will be challenging to maintain such level while pursuing economic growth,” added Cuperstein. “Thus, the energy sector is key for Latin America to stay within that range. The most important action for cities is to decarbonize through distributed renewable energy in buildings and solar PV is the most promising asset in this regard.”
Ana Paula Matos, Vice Mayor of the city of Salvador in Brazil, shared the experience of a successful program that empowers people through solar PV, for climate action and justice in cities.
“The Salvador Solar Program includes tax incentives for homeowners to implement solar PV and a map of solar potential of the city’s rooftops which offers a public database for any citizen to check the potential of their roof,” explained Matos. “We also offer training course to create new jobs for the installation of solar modules. This shows how the entire value chain of solar PV can bring benefits to the economic and social spheres.”
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