Renewables Could Drive Recovery in Latin America


Countries in Latin America did not feel the effects of the COVID-19 pandemic until several weeks after Europe and the U.S., but the impacts of the coronavirus when it arrived were swift on the region’s economy. The United Nations in a policy brief in July said “COVID-19 will result in the worst recession in the region in a century, causing a 9.1% contraction in regional [gross domestic product] in 2020.” That contraction had analysts looking at what could drive the region’s recovery from the pandemic, and most agreed with what the U.N. said in that policy brief—that Latin American countries should begin “fostering sustainable industrial and technological policies, including measures to encourage a low-carbon growth path [and] promote the transition to renewable energy.” The brief said economic development should focus on “strengthening domestic technological capabilities, particularly in the digital and green energy sectors.”


Fiona Clouder, the UK COP26 (Conference of the Parties) regional ambassador for Latin America and the Caribbean, in a recent webcast said the region’s recovery needs to focus on clean and sustainable power, led by renewable energy. The webcast, co-hosted by the International Renewable Energy Agency and the Latin America Energy Organization, and titled “Accelerating Latin America’s Energy Transformation: RE and Economic Recovery,” discussed the importance of low-carbon energy policy to securing stable, long-term prosperity across regional economies.


“In our changing world, building a green recovery and a sustainable future is even more important,” Clouder said. “With vision, ambition, and natural resources, countries in Latin America are well-placed to transition to low-carbon economies, using renewable energy as part of that transformation.”


Several Latin American countries have developed renewable energy goals. Corporate power purchase agreements (PPAs) for renewable energy, with businesses buying electricity directly from independent generators instead of from a utility, have been popular. Such deals had a threefold increase in 2019, according to Atlas Renewable Energy, which recently announced it has signed a large-scale solar PPA in Brazil with multinational company Dow.


The need for more decentralized power generation, including renewable power, in Latin America has been highlighted in recent years. Many countries in the region share a central, hundreds-of-miles-long power grid. As a result, a disruption in one country can affect other countries within the region. In September of last year, the failure of a supply line in Honduras caused a full blackout in that country and in Nicaragua, and partial outages in El Salvador and Guatemala. Costa Rica experienced a nationwide power outage in 2017 as a result of a downed power transmission line in Panama.