Developing countries in this region have a huge advantage: prolonged sunlight near the equator and warmer climates for higher outputs of solar energy.
When considering solar energy and especially the global expansion that the industry has continually seen, much of the attention is focused on European growth and developed countries. It only makes sense – developed countries generally have the funding, resources, manpower, and economic environment needed for an industry like solar that is cash-hungry and in necessity of solid investors.
However, one region that is being overlooked in terms of solar energy and industry expansion is Latin America including South and Central America. While political situations and poor business environments consistently hinder overall economic growth in these mostly Spanish and Portuguese-speaking countries, there are many hotspots of innovation that are worth exploring.
Brazil continues to innovate
First and foremost, the most obvious name will come to mind with investors is the largest economy in terms of GDP in Latin America: the gigantic, reaching nation of Brazil. Being a member of BRICS (Brazil, Russia, India, China, South Africa) and owning the largest global share of wealth in Latin America, Brazil has not disappointed in terms of solar energy: 2.2 GW of solar energy was produced in 2019.
In addition, projections place the estimated output to grow to 8.5 GW by 2027, marking an enormous leap in solar production. Through a pipeline of utility-scale projects intended to increase the rural output of Brazilian renewable energy, the government has capitalized on falling photovoltaic costs and new power tariffs to increase growth to the sector. The distributed generation (DG) sector has also allowed growth to occur under smaller-scale projects. Overall, Brazil looks poised to become one of the top leaders in solar energy in the Western Hemisphere over the next ten years.
Looking at Honduras, a counter-intuitive choice
The second nation to consider is not Mexico, as many would guess due to the expansion that the emerging Latin American economy has been experiencing, but rather the small and overlooked nation of Honduras. Although poverty and corruption have been all too familiar for this country, the government has still managed to produce over 500 MW of energy in 2017.
A hugely successful segment of the solar breakout for the Central American nation has been public projects, including the government-funded Renewable Energy Project for Sustained Rural Development which has initiated more than $41 million of investment. Overall, Honduras has repeatedly demonstrated a proactive sense of initiative to further solar energy development within the nation and meet goals for renewable energy production, leading experts to call it “the Central American solar success story.â€
Between Honduras and Brazil, investors have two countries to consider; both come with risks regarding government regulation and potential lack of sustained funding but regardless, the risk is worth the reward. Investing in sustainable energy in third-world countries like Honduras improve social initiatives and are a great way for family offices and VC firms to better connect to clients in lesser-recognized areas of the world trying to innovate solar energy and get in on the global hype.
