South America estimated to add 160 GW of PV by 2034
In its latest report on the South American solar PV market, Wood Mackenzie has revealed that the region will add 160 GW of photovoltaic (DC) capacity between 2025 and 2034, driven by diversification efforts, growing energy demand and favorable system economics.
Among the key findings in the report: mature markets Brazil and Chile will account for 78% of total regional installations. However, the South American solar PV market is expected to slow as those mature markets stabilize.
Regional PV installations are expected to peak in 2024 as small-scale and utility-scale solar additions slow in Brazil.
Despite this, growth is expected in emerging markets, such as Colombia or Uruguay.
Felix Delgado, Wood Mackenzie’s senior analyst for the power and renewables sector in the Americas, attributes this “cooling” in annual additions “to lagging transmission infrastructure, increased spills, and rising transmission rates for small-scale solar.”
Small-scale projects (<5 MW DC) will account for 48% of total construction in the region, as distributed generation plans remain attractive across the continent.
Transmission lag and further curtailment hamper growth in mature markets, driving hybridization of solar + storage projects, especially in Brazil and Chile.
The economics of solar PV systems will continue to improve, with a projected 42% reduction in regional LCOE for single-axis trackers and fixed-tilt solar PV by 2035.
Over the longer term, the report indicates that Brazil, Chile and Colombia are well positioned to capitalize on the growing demand for green hydrogen, further driving solar capacity additions and diversifying the region’s energy landscape.
Outlook for Brazil and Chile
Brazil, the largest market in the region, is experiencing a slowdown in solar additions following recent renewables expansion driven by the expiration of incentives.
Specifically, according to the consultancy's forecasts, Brazil will not reach 15 GW this year, and its installation rate will be around 10 GW until 2031, when it will grow again, but without reaching the installation rate recorded in 2024.
Large-scale solar energy faces an environment of energy oversupply and delayed transmission infrastructure. Meanwhile, small-scale solar energy faces rising transmission rates, increased import taxes on solar modules, and interconnection disputes between distributors. However, capacity additions will continue to be driven by power purchase agreements (PPAs) in the free market environment and distributed generation installations.
Chile, on the other hand, will remain at similar levels except for the years 2026 and 2027, when its installation level will decrease. It also faces similar challenges with curtailment and grid restrictions, pushing the solar PV project pipeline towards hybrid projects.
“The transition to solar with storage projects in markets such as Brazil and Chile is a critical development,” Delgado added. “Chile is paving the way for storage adoption in the region and serves as a testing ground highlighting the challenges and solutions available for countries with already high penetration of renewable generation.”
PPAs in Argentina
The report also highlights the role of direct commercial and industrial buyers in driving capacity growth. In Argentina, the corporate renewable PPA market is allowing buyers to sign US-linked PPAs, acting as the main market scheme driving solar capacity additions. In addition, 99% of the current solar pipeline in Brazil is planned to operate in the free market. Nevertheless, regulated auctions remain critical for emerging markets such as Colombia and Peru.