Tuesday, December 23, 2014

Attention Investors "Why Latin America is a Hotbed For Solar Growth"

I worked in the Latin American markets with renewables for years and I can say with full confidence that the potential for investment is astounding. Having said that one needs to be very careful in where and how you invest. I made some good money and lost some money. Most are emerging economies and corruption is ALWAYS a issue. Having said that if you have the right partners and team these waters can be easily navigated. I was involved in projects in one form or another in just about every country in Latin America and really enjoyed it. I still sometimes if the project is right work consulting for companies looking to enter these markets and always suggest that the first thing folks need to remember is that it can be highly lucrative but that comes with risk.

Originally posted at The Motley Fool
If you're a company looking to grow in the solar industry you have to have an eye on Latin America. It's sunny, energy prices are high, and countries are desperate for investment in new energy infrastructure. 
That's a perfect combination of factors for the solar industry and it's why some of the industry's largest players see Latin America as a key to the industry's future. Interestingly, solar energy's growth won't be dampened by low oil or coal prices because those energy sources supplied just 14% and 6% of electricity according to a 2010 report from The World Bank. Instead, it's hydro power that supplies most of the region's energy and it's under pressure from environmental groups because of its impact on Latin America's ecosystem. As a result, countries are turning to solar energy for new electricity production and the boom is just getting started.
SunEdison's Chile power plant, which was once the largest merchant solar plant in the world. Image source: SunEdison.

Where Latin American Solar stands today
GTM Research expects 2014 to see 805 megawatts installed in Latin America, more than 500% growth from a year ago. That's not a lot compared to 6.5 gigawatts, or eight times as much, installed in the U.S., but Latin America is a very nascent market that's growing quickly.
Next year, Latin America is expected to grow to 2.3 gigawatts and be over 3.6 gigawatts by 2018. Companies are just beginning to learn where and how solar energy will be economical and allowed into the grid, and as they do the opportunity grows. The amazing thing is that most of this growth is happening simply based on market forces.

Who said solar is too expensive?

Here's the amazing thing about solar in Latin America: It's growing without subsidies.

SunPower is also one of the largest utility scale solar plant builders in the world. Image source: SunPower.
Merchant power plants, which sell power to the electric grid at spot prices, are competitive in the market today. In Chile, SunEdison (NYSE:SUNE  ) built the 50 megawatt Maria Elena Project that was the largest merchant solar power plant until earlier this year when SunPower (NASDAQ: SPWR  ) completed its 70 megawatt Salvador Project. 
With the cost of solar energy only coming down, the potential in Latin America is incredible. Residential and commercial markets have yet to be developed and as they are the opportunity to save consumers money by going solar is incredible. Just imagine how many millions of lives would be improved by installing solar panels and energy storage in the region, giving consumers full control of their power. 

Who is winning in Latin America?

The next question for investors is who is winning in this potentially lucrative market? For now, the winners are some of the biggest solar developers in the U.S.
I mentioned SunEdison and SunPower as major players already and First Solar (NASDAQ:FSLR  ) is in the mix as well. It has a 141 megawatt plant in Chile and a growing pipeline in the region. For now, SunEdison is the market leader and it could use the region as a hub for an emerging markets yieldco it has planned.
I'd look for Latin America, particularly Mexico and Chile, to be a boon for these three companies in the future and SunPower in particular will move into the distributed market as well. This is just another growth opportunity for solar companies, presenting a very bright opportunity for investors.

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