South America is projected to add 160 gigawatts of direct current (GWdc) solar capacity between 2025 and 2034, according to a new report by Wood Mackenzie. The growth will be driven by efforts to diversify energy sources, rising power demand, and improving economics for solar power systems across the region.
The South America Solar PV Market Outlook 2025 report provides an in-depth analysis of the region's solar energy landscape, including power sector dynamics, solar installation forecasts for the next decade, and the impact of policies in key markets.
Felix Delgado, senior analyst for Americas power & renewables at Wood Mackenzie, highlighted that while mature markets like Brazil and Chile are expected to stabilize, emerging markets will see growth in solar installations. “South America's solar PV market is expected to slow down as mature markets stabilize, but growth is expected in emerging markets,” Delgado said. “While there is growth in emerging markets, regional annual additions are expected to cool down as mature markets face lagging transmission infrastructure, increased curtailment, and rising transmission tariffs for small-scale solar.”
Brazil and Chile will continue to dominate the regional solar market, accounting for 78% of total installations. Small-scale projects, defined as those less than 5 MWdc, are expected to represent nearly half (48%) of the total regional buildout, as distributed generation schemes remain attractive throughout the continent.
The report also suggests that 2024 will likely mark the peak of solar installations in the region, with both small-scale and utility-scale projects seeing slower growth in Brazil due to challenges such as limited transmission infrastructure and higher curtailment rates. To mitigate these issues, solar projects are increasingly being paired with energy storage systems, particularly in Brazil and Chile.
Wood Mackenzie also forecasts a 42% reduction in the levelized cost of energy (LCOE) for single-axis trackers and fixed-tilt solar PV systems by 2035, further boosting the competitiveness of solar energy in South America.
The report underscores the importance of corporate renewable power purchase agreements (PPAs) in driving solar capacity growth. In Argentina, for example, corporate off-takers are using US dollar-linked PPAs to sign long-term contracts, helping to expand the country's solar capacity. Additionally, 99% of Brazil's current solar pipeline is expected to operate in the free market, while regulated auctions will remain important for emerging markets like Colombia and Peru.
Looking further ahead, Wood Mackenzie projects that Brazil, Chile, and Colombia are well-positioned to benefit from the increasing demand for green hydrogen, which will further drive solar capacity additions and diversify the region's energy landscape.
