Wood Mackenzie’s latest report on the South American solar PV market reveals that the region will add 160 GW_dc of solar capacity between 2025 and 2034, driven by diversification efforts, growing power demand, and favourable system economics.

The report “South America Solar PV Market Outlook 2025” provides a comprehensive analysis of the region’s solar energy landscape, power sector dynamics, 10-year solar PV installation outlook, and policy impacts across key markets.

Wood Mackenzie’s Senior Analyst for Americas Power & Renewables, Felix Delgado, stated that South America’s solar PV market is expected to decelerate as mature markets stabilize, while growth will continue in emerging markets. He noted that despite expansion in these markets, regional annual additions are likely to decline due to transmission constraints, increased curtailment, and rising tariffs for small-scale solar.

Key findings from the report include:

• Mature markets Brazil and Chile will account for 78% of total regional installations.
• Small-scale projects (<5 MW_dc) will account for 48% of the total regional buildout, as distributed generation schemes remain attractive across the continent.
• Regional PV installations are expected to have peaked in 2024, as both small-scale and utility-scale solar additions slow down in Brazil.
• Lagging transmission and higher curtailment hinder growth in mature markets, driving project solar + storage hybridization, particularly in Brazil and Chile.
• Solar PV system economics will continue to improve, with a projected 42% reduction in regional LCOE for single-axis trackers and fixed-tilt solar PV by 2035.

Country-specific insights

Brazil, the region’s largest market, is experiencing a deceleration in solar additions after recent renewable expansion fuelled by expiring incentives. Utility-scale solar faces an environment of oversupply of energy and lagging transmission infrastructure. Meanwhile, small-scale solar faces rising transmission tariffs, increased import taxes on solar modules, and distributor interconnection disputes. Nonetheless, capacity additions will continue to be driven by Power Purchase Agreements (PPAs) under the free-market environment and distributed generation installations.

Chile is facing similar challenges with curtailment and grid constraints, pushing the solar PV pipeline towards hybrid projects.

Delgado emphasized that the shift toward solar-plus-storage projects in markets such as Brazil and Chile represents a significant development. He noted that Chile is leading the region in storage adoption, serving as a testing ground that showcases both the challenges and solutions for countries with high renewable energy penetration.

The report also emphasizes the role of direct C&I off-takers in driving capacity growth. In Argentina, the corporate renewable PPA market is allowing off-takers to sign US$- Linked PPAs, acting as the main market scheme driving solar capacity additions. Furthermore, 99% of the current solar pipeline in Brazil is set to operate under the free market. Nonetheless, regulated auctions remain critical for emerging markets like Colombia and Peru.

In the long term, the report indicates that Brazil, Chile, and Colombia are well-positioned to capitalize on growing green hydrogen demand, further driving solar capacity additions and diversifying the region’s energy landscape.