Gonzalo de Castro, Senior Director at Latin America’s development bank discussed the regions clean energy potential at a renewable conference hosted by Canning House.
Castro firstly acknowledged that the worlds and Latin America’s economy are looking up as global economic growth is stabilising at 3.9%, with experts predicting Latin America will grow at 2.8% in 2019, which is a big jump from the 2016 growth of just 0.6%.
The status of the economy is important because Latin America’s clean energy boom will be funded by a number of regional governments, companies and international investors, therefore a steady healthy market results in people and organisations bring willing to invest. Meanwhile, Latin American economic growth is fuelling an increase in power demand that CAF estimates will increase by 79% between 2017 and 2030. Another positive factor is that Venezuela inflation is under control standing at 4.1%.
Latin America has already made significant transitions to renewable energy. Hydroelectric power is responsible for 54% of the regions power supply which is significantly higher than when compared to the rest of the worlds 16%. It also outperforms renewable technology such as solar and geothermal – which make up 8% of the electricity matrix in Latin America compared to the global figure of 6%.
Latin America also uses less coal than other regions in the world, this is due to the region no holding the commodity with just 1.2% of global supplies. This has worked in Latin America’s favour as the region is not reliant of coal supplies making it easier to further transition to the use of renewable energy.
Even the negative aspects can be seen as positive for investors. In Latin America, the use of oil is higher than other regions in the middle east with it being home to 20% of the world’s supply. This creates the opportunity for competitive sources of renewable energy to replace oil-burning power stations.
What is the potential?
The 1920s and 30s saw British oil firms start the oil boom. Now international investors have the unique opportunity to start another groundbreaking boom with renewable energy. To give an idea of the potential of energy, Latin America’s solar power potential is estimated at 4,050 terawatt-hours per year (TWh/year) that’s enough energy to supply all of Latin America’s current yearly electricity demand 36 times over. This is a fact that excites and entices investors.