IHS highlights the relevance which public auctions have acquired for the growth of solar PV in Latin America. Argentina is among the new PV markets in the region, where a new renewable energy auction was recently launched with a quota of 300 MW of solar.
Market analysis company IHS Markit has estimated that new PV installations in Latin America will be around 2.7 GW this year, according to a press release.
Chile will remain the largest PV market in the region, as it has been in previous years. IHS estimates that this market will represent 44% of the total installations in all of Latin America this year.
However, after the big growth predicted in the Chilean PV market his year, IHS expects this market to decline in coming years. Among the factors cited is grid saturation which make it difficult to incorporate new PV plants.
IHS has highlighted the importance of public auctions for growing solar PV in this region. Various nations such as Brazil and Mexico have awarded a large volume of solar recently, and additionally Peru has awarded projects in a public auction.
Other markets, such as Argentina, are planning auctions which include solar in the near future. Recently the nation launched an auction to contract a gigawatt of renewable energy, and from this capacity reserved a block of 300 MW for PV projects. The rules for this auction will be published soon.
The last public auctions where renewables have been awarded in the region have registered very lower prices, including the auction in Mexico in March, Peru in February and Chile last October.
"Record low prices in auctions, as low as US$48 per megawatt-hour in Mexico, are attracting the interest of governments," stated IHS Senior Analyst Josefin Berg. However, she also notes that "these levels in tenders increase pressure on suppliers."
Furthermore, IHS highlights that while the first of these auctions was motivated by optimism over the growth of solar PV in the region, that there are delays associated with these types of processes such as in Brazil where recently postponed its July auction and has not yet set an alternative date.
Additionally IHS notes that delays are possible when developers decide to delay construction in order to obtain a lower price for components.