MAKE: 2015 to beat 2014’s record in new wind power installations in Latin America

MAKE’s outlook foresees new wind power capacity connections in Latin America setting records in 2015 and 2016, approaching 4.8GW and 5.4GW, respectively. Mexico, Uruguay, Panama and the Dominican Republic are expected to set new capacity installation records in 2015, however, Latin America demand is forecast to drop between 2017 and 2020, primarily due to economic risk in Brazil, before recovering to previous levels in 2021.  

MAKE expects Brazil to connect nearly 23GW of new wind power capacity through 2024, which will account for 43% of regional capacity installations in that timeframe. 2015 will be a critical year for wind power capacity within the Brazilian power auctions, as a faltering economy and an extended power market crisis caused by prolonged drought are pushing demand for new power generation technology in opposite directions.

Wind power development in Mexico will accelerate in 2016 after the conclusion of electricity market reform, which began in late 2013. MAKE expects PPA signing activity to increase, as Mexico seeks to achieve its ambitious 35%-non fossil fuel generation target by 2024. Wind power developers will benefit from new power auctions and clean energy certificates while wind’s scalability and LCOE advantages increase its competiveness versus competing renewable technologies.

Wind power development elsewhere in Latin America will be driven by a combination of high electricity prices and strong power demand growth. Furthermore, wind power is proving to be highly compatible with hydroelectricity, which is the most prevalent generation technology in the region. Prolonged drought in several markets such as Brazil and Panama has highlighted the importance of diversifying renewable generation portfolios with wind power.
MAKE predicts another record year for regional wind power connections in 2016, led by a strong year for commissioning in Brazil, largely corresponding to strong power auction performance by Brazilian wind power developers in 2013. Mexico will also support the forecasted regional record in 2016, as MAKE expects annual installations to eclipse the 1GW level for the first time.

New grid connected capacity installations will decrease in 2017 and 2018, after commissioning bubbles created by grid infrastructure delays are resolved in Brazil. Growing weakness within the Brazilian economy is likely to keep the country from replicating peak years expected in 2015 and 2016. Increased regional diversification will begin in 2018 as reduced installation levels in Brazil coincide with increased capacity additions in Colombia, Peru and Argentina. Sustained geographic diversification of new wind power installations and demand acceleration within larger markets are expected to fuel six years of consecutive growth in Latin America between 2019 and 2024. Overall, MAKE expects a 20% regional CAGR for Latin America between 2015 and 2024.

MAKE’s Latin America Wind Power Outlook 2015 is a 81-page report containing more than 100 charts, tables and graphs providing in-depth analysis of wind markets in Brazil, Mexico, Chile, Uruguay, Peru, Argentina, Panama, Colombia, Venezuela, Central America and the Caribbean. It includes 10-year market outlooks for each of these markets as well as three forecast scenarios (bull, base, and bear) for both Brazil and Mexico.