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Outbound to Latin America: Solar Market Showing Big Potential

The solar industry in Latin America is starting to take off, aided by shrinking costs for photovoltaics and new government programs that facilitate business, experts said Wednesday at Solar Power International 2012.

The Latin American region of nearly 600 million residents holds great promise for solar, thanks to relatively high costs for electricity, ample sunlight and a fast-expanding middle class that is increasing its energy consumption, panelists said.

Puerto Rico, the U.S. Caribbean island of 4 million people, offers one of the best solar markets short-term. The island has ambitious renewable energy targets and offers both federal and local incentives for solar, said industry veteran Elias Behar, who runs Latin American sales for manufacturer SolarWorld Americas.

Chile, the South American nation of 15 million people that often ranks top for business in Latin America, also offers strong opportunities now. While its government offers no specific solar incentives, Chile has an open market and excellent sun to tap, especially in the  Atacama desert, said Behar.

Brazil, the South American giant with nearly 200 million people, offers a more mid-term play instead. The country is setting up a net-metering program that will allow solar producers to obtain credits for energy sold to the grid. The government’s electricity agency expects to finalize details of net-metering this year, likely prompting a spike in solar business starting next year, said Jose Renato Colaferro, director of projects and operations for Blue Sol Solar Energy, a Brazilian distributor.

Brazil has only a small solar market now and is on pace to import just 5 MW of PV panels this year. Residential and commercial projects offer the best opportunities mid-term, but even then, small demonstration projects likely will be key to convince customers to invest in solar, said Colaferro.

 “It’s not going to be quick. It’s not going to be explosive,” Colaferro said of Brazil’s solar future. “But it’s probably going to be much more organic and much more solid, when it starts.”

Mexico, with its 112 million residents, now has roughly 40 MW of installed PV, some of it from Walmart, the largest Mexican retailer. The country has started a net-metering program, allowing sales to the sole electric utility, the government’s CFE. But to gain approvals for solar projects, “put your patience hat on,” suggested Luis Cejudo, chief executive of Mexico’s Solargreen.

Financing remains a key challenge for Mexico’s solar industry, discouraging investment even when electricity can run 31 cents a kilowatt hour, triple the rates in nearby Texas, Cejudo said.

“it is easier to buy a car in Mexico now than to finance a PV system,” agreed Carlos Flores, managing director of Conermex, a Mexican distributor now expanding into Central America.

Panelists said they’re optimistic that financing options in Latin America will expand, as more U.S. and European firms look to the region to grow their solar business. Local banks and governments also may help with funding as the solar industry matures in countries south of the United States, they added.

In the meantime, veteran Behar warned solar newcomers to the region, “it’ a serious issue how to get paid.”

Lead image: Solar panels via Shutterstock

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