​Solar Energy in Latin America: Market Growth Hits Record 12.3 GW in 2025

Latin American energy markets are witnessing a solar expansion that feels both inevitable and surprising. Installed photovoltaic capacity crossed 85 gigawatts in 2024, a figure that would have seemed ambitious just five years ago. Solar power has become the region's fastest-growing renewable source, with industry forecasts pointing toward cumulative capacity of 120 to 175 gigawatts by 2030. These aren't just numbers on a spreadsheet – they represent a fundamental shift in how Latin America powers itself.

Brazil dominates this space in a way that's hard to ignore. The country installed roughly 17 gigawatts of solar capacity last year – essentially doubling what it had built through all of 2021.Brazil now captures over 80% of regional clean energy investment, a concentration that speaks to both the country's market maturity and the opportunities that remain elsewhere. With 65% of regional photovoltaic demand and installations running between 16.3 and 17.5 gigawatts, Brazil's influence on Latin American solar development is substantial.

What makes Brazil's growth particularly interesting is the driver behind it. The sub-5 megawatt segment has become the real engine, benefiting from net-metering policies that allow residential and commercial consumers to earn credits for the power they generate. This isn't utility-scale development leading the charge – it's distributed generation creating its own momentum.

Electricity generation from photovoltaics across the region should reach somewhere between 186 and 305 terawatt hours by 2030. The range reflects both the potential and the uncertainty that characterizes Latin American energy markets. What follows examines the forces shaping this growth, the obstacles that could derail it, and how different countries are positioning themselves in an increasingly competitive renewable energy landscape.

Brazil's Distributed Generation Revolution

Brazil's distributed generation sector tells the story of what happens when policy, economics, and technology align properly. Approximately 67% of Brazil's installed photovoltaic capacity now sits in distributed generation, a remarkable shift from less than 50 MW at the start of the 2010s to 50 GW by early 2025. This isn't incremental growth – it's a structural change in how Brazil approaches energy.

The Regulatory Foundation That Works

Federal Law No. 14,300/2022 created the framework that made this possible. The law established a distributed generation model allowing systems under 5 MW to offset surplus energy against consumption. More importantly, these projects qualify for the Special Regime of Incentives for Infrastructure Development (REIDI), which reduces capital costs through tax suspensions.

The net metering structure provides certainty – systems below 5 MW maintain eligibility until 2045.Grid fees arrived in 2023, as they inevitably would, but the distributed generation sector remains highly profitable. Brazil's approach of offering energy credits rather than monetary compensation has proven particularly effective at driving adoption. The economics work because the policy was designed to make them work.

Economic Impact Beyond the Headlines

The numbers behind Brazil's distributed solar surge are substantial. Small-scale solar drew over USD 17 billion in investment during 2023alone.Since the framework took effect, the sector has generated more than 1.6 million jobs nationwide while facilitating USD 43 billion in solar photovoltaics investment. These installations have prevented 65.6 million tons of carbon emissions and reduced dependency on hydro and thermal sources.

The employment creation matters particularly in a country where energy policy often intersects with social policy. Distributed generation creates jobs across the value chain, from installation to maintenance, spreading economic benefits more broadly than utility-scale projects typically manage.

Why Rooftop Solar Makes Sense in Brazil

Brazil's captive electricity market creates conditions where residential solar becomes almost inevitable. High electricity tariffs, combined with attractive financing options and abundant solar radiation, have made rooftop installations particularly compelling. The residential sector now commands a 48% market share in rooftop solar deployment as of March 2024.

The driver is straightforward – consumers frustrated with high electricity rates view solar as a practical alternative, especially during tariff flag periods and water crises. When the alternative is paying elevated rates for grid electricity, the economics of rooftop solar become compelling enough to overcome the usual barriers to adoption.

The Reality Check – Where Latin American Solar Hits Roadblocks

Growth numbers tell one story, but the operational reality often tells another. Latin America's solar boom faces headwinds that could determine whether the current momentum continues or stalls in the coming years.

Grid Bottlenecks and the Infrastructure Gap

Transmission infrastructure hasn't kept pace with renewable energy expansion across Latin American markets. Grid bottlenecks are becoming a real problem, with curtailment cases rising in Brazil and Chile. Industry experts point to transmission delays, permitting bottlenecks, and regulatory unpredictability as the main threats to clean energy deployment. Brazil has committed over USD 10.5 billion in transmission concessions since 2023, yet annual capacity additions are expected to slow as transmission tariffs eat into small-scale solar economics.

The concern is that grid limitations could create serious delays across Colombia, Chile, Brazil, and Mexico in the next few years. It's the kind of infrastructure challenge that's easier to identify than solve.

Trade Policy Working Against Itself

Brazil's approach to import tariffs reveals the tension between protecting domestic industry and maintaining market growth. The government recently pushed solar module tariffs from 9.6% to 25%, a move that industry association Absolar described as a "setback in the energy transition". This was the second tariff increase in 2024.

Here's the problem: Brazil has only two local PV module manufacturers, capable of supplying less than 5% of market needs. Mexico has more manufacturing capacity – 10 local solar PV manufacturers with 1.5 GW annual production– but still struggles to develop a complete industry value chain. These tariff policies, designed to boost domestic manufacturing, risk increasing project costs and could potentially cancel over 25 GW of solar projects by 2026.

Financial Realities Hit Different

The financing landscape for renewable projects in Latin America looks challenging compared to developed markets. The weighted average cost of capital for renewable projects in lower-income countries runs 8-10% versus under 4% in high-income nations. High loan rates make end-users reluctant to install systems, which creates inventory pressure for distributors sitting on expensive stock.

Price competition has become "intense", with TOPC on module prices to Brazil dropping to USD 0.08-0.09/W FOB China. That's good for consumers but creates margin pressure throughout the supply chain.

Government Policy and Public Sentiment – The Human Side of Solar

The technical challenges facing Latin American solar are well documented, but the human factors often prove more complex to navigate. Government policies and public attitudes shape solar adoption in ways that engineering solutions alone cannot address.

Mexico's Demographics Tell a Story

Research from Mexico reveals some predictable patterns about solar acceptance. Younger people and those with higher education levels show greater enthusiasm for photovoltaic projects. The correlation between education and solar adoption rates is particularly strong, which suggests that information campaigns could move the needle on public support. This isn't groundbreaking social science, but it does highlight how much work remains in reaching broader demographic groups.

The challenge isn't just about awareness – it's about making the case compelling enough to overcome inertia and scepticism.

Money Talks, Trust Walks

Perhaps unsurprisingly, economics drives most household decisions about solar systems.Around 72% of studies point to financial factors as the primary consideration. High upfront costs remain a significant barrier, making government incentives crucial for widespread adoption. What's more concerning is the trust deficit.When people don't believe "the government considers the opinions of the people," project viability suffers.

This trust issue creates a circular problem – without public buy-in, policies struggle to gain traction, and without effective policies, public confidence in government energy initiatives erodes further.

Colombia's Ambitious Experiment

Colombia has taken an interesting approach with its Comunidades Energéticas program, allowing communities to generate, use, and sell renewable energy. The concept sounds promising on paper. The reality has been more complicated –fewer than 150 energy communities are actually operational despite receiving 18,000 applications.

This gap between applications and implementation tells a familiar story across Latin America. Traditional policymaking tends to exclude local stakeholders, with climate and energy policies typically developed within government agencies without meaningful public input. The result is often well-intentioned programs that struggle to translate into real-world success.

The disconnect between policy ambition and community-level execution remains one of the most persistent challenges facing solar deployment across the region.

Wind, Hydrogen, and the Bigger Energy Picture

Solar tells only part of Latin America's renewable story. The region's energy potential becomes genuinely compelling when you consider how different clean technologies complement each other.

Brazil's Northeast Wind Performance

Brazil's Northeast states deliver wind performance that would make European offshore developers envious. The region managed an average capacity factor of 41.5% in 2022, with September hitting 56.5%.These numbers rival offshore wind in many established markets, which is remarkable for onshore installations. Bahia leads with 44.9% capacity factors, followed by Piauí at 43.1%, Maranhão at 42.5%, and Pernambuco at 42.3%.The consistency of these wind resources helps Brazil produce some of the world's cheapest green power, creating a foundation that solar alone couldn't provide.

Green Hydrogen Economics

This renewable abundance positions Latin America for something bigger than just domestic energy needs. The region could realistically supply 25-33% of global clean hydrogen demand. Current hydrogen production costs range from $3.70 to $5.90 per kg, already undercutting the global average of $3.80 to $8.50 per kg. Argentina and Chile are targeting production costs of $1.20 to $1.50 per kg by 2030, while BloombergNEF expects Brazil to achieve the world's lowest-cost green hydrogen production.

The economics work because you can run electrolysers when solar and wind generation peaks, then export hydrogen when global markets need it. It's a way of turning renewable abundance into tradeable energy exports.

Storage and Carbon Markets

Energy storage becomes crucial as renewable capacity grows. The technology stores excess generation during peak solar hours for use when demand peaks, smoothing out the intermittency challenges that have historically limited renewable expansion.

Brazil's natural assets extend beyond energy generation. The country's forests and ecosystems position it to supply over one-fifth of global carbon offset supply through 2050. Combined with cheap renewable energy, this creates multiple revenue streams from the same land base.

Drawing the Lines

Latin America's solar story reveals something important about how energy transitions actually unfold. The region now stands at 12.3 GW of expected capacity in 2025, but the real insight lies in how that growth happened. Brazil's distributed generation didn't emerge from grand central planning – it grew from the interplay of smart policy design, economic necessity, and genuine consumer demand.

The challenges we've discussed aren't going anywhere soon. Grid bottlenecks will continue to test the system's ability to absorb new capacity. Import tariffs and manufacturing gaps will create ongoing tensions between protecting domestic industry and maintaining cost competitiveness. Financial constraints will keep projects on the margins of viability.

Yet there's something compelling about Latin America's renewable resource base that goes beyond solar. Brazil's Northeast achieves wind capacity factors of 41.5%– performance that rivals offshore wind elsewhere. When you combine that with the region's solar potential and its emerging position in green hydrogen (potentially meeting 25-33% of global demand by 2030), you're looking at an energy powerhouse in the making.

The social dynamics matter too. Younger, more educated populations are driving solar acceptance, particularly in Mexico. This suggests the momentum has demographic support that should strengthen over time. Financial incentives remain crucial (72% of studies identify economics as the primary driver), but public backing creates the political space for supportive policies.

Ultimately, Latin America offers a case study in how renewable energy transitions can be both policy-driven and market-led. The region's experience suggests that when the economics align with supportive regulation and genuine resource advantages, growth can be substantial. Whether that growth translates into global energy leadership depends on how well countries navigate the infrastructure, manufacturing, and financial challenges ahead.

Companies entering this space need people who understand both the opportunities and the complexities. TGRC provides staffing support for renewable energy projects across LATAM markets. For organizations seeking qualified professionals for their renewable initiatives, Stephen Redmond, Group Marketing & Operations Director at stephen@greenrecruitmentcompany.com, offers tailored talent solutions to meet specific project needs.

Key Takeaways

Latin America's solar energy sector is experiencing unprecedented growth, with Brazil leading the charge and the region positioning itself as a global renewable energy powerhouse.

• Brazil dominates regional solar growth- Installing 17 GW in 2024 alone, accounting for 80% of clean energy investment and 65% of regional photovoltaic demand through distributed generation.

• Small-scale solar drives expansion- Sub-5 MW projects benefit from net metering policies, attracting $17 billion in investment and creating 1.6 million jobs while preventing 65.6 million tons of carbon emissions.

• Infrastructure and policy challenges persist- Grid bottlenecks, rising import tariffs (25% on solar modules), and limited local manufacturing capacity threaten continued growth momentum.

• Financial barriers impact adoption- High loan rates (8-10% vs under 4% in developed countries) and installation costs remain primary obstacles, making government incentives crucial for widespread adoption.

• Exceptional renewable resource potential- Brazil's Northeast achieves 41.5% wind capacity factors, positioning Latin America to supply 25-33% of global green hydrogen demand by 2030 at world-leading low costs.

The region's combination of abundant renewable resources, supportive policies, and growing market demand creates significant opportunities for companies willing to navigate the regulatory and infrastructure challenges while capitalizing on Latin America's energy transition leadership potential.