Chile is leading Latin American countries when it comes to investing in new renewable energy capacity, S&P Global Ratings’ latest credit update for utilities in the region has highlighted.
The country’s decarbonisation strategy, which includes the decommissioning of 1.6GW of coal power generation, will see solar and wind replace this capacity in the next two-to-three years, according to S&P Global Ratings infrastructure and utilities director Julyana Yokota.
Other markets in the region expected to result in new investment in renewables capacity include Colombia, which plans to launch a long-term auction for clean energy in the coming months, which failed to take place in the first quarter of 2019.
S&P Global Ratings also expects Brazil’s new energy auction, LENA-A6, with delivery by January 2025, to take place by the end of this year.
The agency expects investments in new energy and grid projects in Brazil to pick up in the second half of 2019.
Brazil held energy auctions in June totalling 400MW in contracts, which fell far short of expectations for 51GW.
According to Yokota a key reason may be because renewable energy prices may have reach bottom, with 200MW in solar achieving $17 (€15) per megawatt hour and 100MW in onshore wind achieving $21/MWh.
“We believe prices of about $30/MWh are aggressive from a credit rating perspective because there’s a very small cushion to absorb the resource and operating costs and management of risk during the life of the renewable energy asset,” she said.