Latin America is a shining, promising solar market that will be a lot more difficult to crack. That’s because Latin America doesn’t have the same levels of generous
government incentives that subsidize project costs or guarantee high
prices for solar electricity in countries such as Germany, United
States, Japan and China, said Adam James, a solar analyst at GTM
Research, during a webinar on Thursday.
The global solar industry has grown tremendously in the past
decade as a result of policies for promoting clean energy generation
and reducing carbon footprint. In Japan’s case, a strong desire to
reduce its reliance on nuclear power after the Fukushima disaster in
2011 also has turned it into a booming market for solar.
“Unsubsidized markets grow and develop instead of just
explode,” James said. “What we are seeing (in Latin America) is a steady
growth as developers move from doing mostly off-grid projects to
on-grid projects.”
That lack of lucrative incentives hasn’t stopped solar
companies from Europe, the United States and Asia from landing in Latin
America, though. If anything, figuring out a strategy for an emerging
and unsubsidized market is smart for solar companies that want to stay
ahead of competition.
Plus, changes in politics sometimes cause a boom-and-bust
cycle in subsidized markets that that catches companies off guard,
leaves them with a buildup of unsold equipment or forces them to do
massive layoffs. Back in 2011, First Solar declared
its long-term plan to find anchors in unsubsidized markets after it had
grown to become one of the largest solar panel makers in the world by
doing a brisk business in subsidized markets.
Latin America is expected to install 724 megawatts of solar
panels in 2014, said Shayle Kann, GTM’s senior vice president of
research. It will likely make up 2% of the global demand for solar in the next four years, GTM said.
James highlighted three potentially large markets in Latin
America: Mexico, Brazil and Chile. Generally speaking, high retail
electric rates, a desire to secure a reliable and cheaper source of
electricity for onsite use by industrial operations and government
policies to promote solar generation are driving the growth in those
countries. Those government policies tend to promote solar at a much
smaller scale than the big markets elsewhere in the world.
In Mexico, for example, large energy users pay higher
electric rates from the country’s sole utility, which runs a complex
rate structure. That has made solar a potentially a cheaper source of
power. A policy called met metering, which allows solar energy system
owners to sell power they don’t need to the utility, also makes Mexico
an attractive for solar companies. In Brazil, net metering and plans by state governments to
increase the amount of solar power in their grids make the country one
to watch.
In Chile, the Atacama high desert, a major mining region,
has been a hot bed of solar project development. Mining companies are
turning to solar as an alternative and cheaper source of power. SunPower plans to build a 70-megawatt project there. First Solar is working on a 162-megawatt project in the desert as well.
Solar panels aren’t the only type of solar technology that will be suitable for Latin America. Spain-based Abengoa announced
earlier this month a plan to build a 110-megawatt project in Atacama
that will use mirrors to harvest the sun’s heat to create hot steam and
drive a turbine-generator to produce electricity.
So far, many large-scale projects rely on financing from international development banks, James said. SunEdison, for one, secured a $100.4 million loan
from the Overseas Private Investment Corp. of the U.S. government and
IFC (part of the World Bank) last year for building a $50.7 million
project in Chile.
http://www.forbes.com/sites/uciliawang/2014/01/23/why-latinamerica-will-be-a-tough-solar-market-crack/?ss=business%3Aenergy
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