South America is expected to significantly strengthen its solar photovoltaic (PV) capacity over the next decade, with an additional 160 GW projected by 2034. This expansion is supported by diversification strategies, rising electricity demand, and continuous improvements in installation and operational costs.
The central role of Brazil and Chile
Brazil and Chile will account for 78% of new solar installations in the region. However, growth is slowing in these mature markets, hampered by insufficient transmission infrastructure, increasing curtailment, and rising tariffs for small-scale solar electricity transport.
Small-scale solar installations, defined as those under 5 MWdc, will make up nearly 48% of the regional development. This trend is driven by the attractiveness of distributed generation schemes, which continue to gain traction across the continent.
A shifting Brazilian solar market
In Brazil, the largest solar market in South America, the pace of new installations is slowing after a period of expansion fuelled by now-expired incentives. Utility-scale solar is facing an oversupply of energy and delayed transmission infrastructure. Meanwhile, small-scale projects are dealing with rising transmission tariffs, increased import taxes on solar modules, and disputes over distributor interconnection.
Despite these constraints, market growth continues, particularly through Power Purchase Agreements (PPAs) in the free market and distributed generation installations. Nearly 99% of Brazil’s current solar pipeline is set to operate under this regime.
Chile accelerates towards hybrid solutions
In Chile, grid saturation and transmission constraints are pushing the sector towards hybrid solar projects incorporating energy storage. The country is becoming a testing ground for integrating storage into a market that has already achieved a high penetration of renewable energy.
This transition towards solar-plus-battery projects aims to stabilise production and optimise grid usage while providing solutions to the challenges of integrating intermittent energy sources.
Emerging markets and the rise of green hydrogen
Argentina, Colombia, and Peru are also advancing their solar development with various support mechanisms. In Argentina, the PPA market allows companies to sign US dollar-linked contracts, contributing to the growth of solar installations.
In the long term, Brazil, Chile, and Colombia are positioning themselves to capitalise on the growing demand for green hydrogen, further supporting solar capacity expansion and diversifying the region’s energy landscape.
