Latin American Power Transformation Outlook

2023-12-21

Recent data on Latin America’s renewable energy markets suggest that the region is in the early stages of a significant transition toward a decarbonized future.The power sector is already relatively clean by global standards.This unique starting point influences the pace and depth of power decarbonization in the coming years. 


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As a result, Latin America's electricity sector will be more decarbonized by 2050 than most other regions, and this transition can be achieved through a different mix of technologies.The economics-led scenario brings the region closer to a policy-driven net zero scenario by 2050 than many other markets,suggesting that a single economic driver will remain a strong determinant of Latin America's energy transition.

 

While wind and photovoltaic growth has accelerated over the past decade, hydropower remains critical to meeting the region’s current electricity needs. Hydropower accounts for the vast majority of the 62% existing zero-carbon electricity. Hydropower growth should be limited over the next 30 years, but it still has the potential to provide a quarter of Latin America's electricity generation in 2050.

 

As a clean, dispatchable form of electricity generation, hydropower also complements the region’s increasingly intermittent power supplies. Wind power,in particular,benefits from the synergies of seasonal generation.This relationship is fundamental to increasing the share of wind and photovoltaic power in Latin America’s electricity generation from 12% today to 63% in 2050.


By 2050, the proportion of zero-carbon power generation in the Latin American power industry will reach approximately 90%, second only to Europe.Wind power and photovoltaic power account for the vast majority of newly installed capacity, replacing less economical fossil fuels. By 2050, CO2 emissions will drop by 58%.


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