Promising Investment Opportunities Mobilize the Nascent Southern Cone Solar Market, Finds Frost & Sullivan
- Tariff changes will allow solar technologies to compete favorably with conventional power plants in terms of price per kilowatt-hour
BUENOS AIRES, Argentina, Oct. 23, 2012 /PRNewswire/ -- The budding Southern Cone solar (SCS) market is set to grow steadily over the next few years, as the installed power capacity in the region keeps growing to meet the fast-paced electricity demand. With governments looking to diversify the national generation base and ensure energy security, the solar energy market in the area is fast becoming the hub for investment and business opportunities.
New analysis from Frost & Sullivan (http://www.energy.frost.com), Attractiveness Analysis of the Southern Cone Solar Markets, finds that the market earned revenues of over $9.9 million in 2011 and estimates this to reach $61.8 million by 2016.
The solar markets in Argentina, Chile, and Uruguay subscribe to different public policies and mechanisms for market support. While Argentina favors feed-in tariffs under the Renewable Generation Program (GENREN), Chile promotes strategic partnerships between local and foreign companies, and compulsory renewable electricity shares to power utilities. Uruguay endorses fiscal benefits and net metering for grid-connected photovoltaic (PV) systems.
"In 2011, the SCS market in the region reached an installed capacity of 3.5 megawatt-peak (MWp), which is less than 0.5 percent of the global market," said Frost & Sullivan Industry Analyst Martin Cataife. "Nevertheless, with a compound annual growth rate of 51 percent till 2016, the market will reach a cumulative installed capacity of 42 MWp."
The fundamental driver for the solar market is the unique sunlight exposure in the region, which heightens the plant's capacity factor and increases opportunities for solar electricity generation. Additionally, global prices of PV modules have decreased significantly, and solar costs have dropped four times in the past few years.
Since prices in the region are determined by regular kilowatts-per-hour tariffs, independent power producers (IPP) or micro-producers can sell electricity easily. Power purchase agreements (PPA) are permitted, and off-grid applications are encouraged over grid connected systems.
However, the capital costs of PV and concentrating solar power (CSP) plants pose a major barrier to electricity generation from solar power. Return-on-investments is still based on a 15-year term, and currently, solar technology is behind conventional fossil fuels and hydroelectric power plants in terms of price per kilowatt-hour.
Inadequate support systems, incentives, and finances prevent local companies from entering the solar business, especially the solar supply division. Importers, distributors, and local representatives from leading world firms are the key market players, as companies narrow their product stock to imported modules.
While this has created significant potential for partnerships in the form of mergers and acquisitions, the lack of investment in research and development has led to a systemic deficit of trained personnel.
"Governments need to build up public awareness on solar technologies," noted Cataife. "Exhaustive segment regulation and specific programs addressing the needs of the solar market are also vital."
Added focus on research and development will consolidate the promising SCS market and take it to new heights.
If you are interested in more information on this research, please send an email to Francesca Valente, Corporate Communications, at francesca.valente@frost.com, with your full name, company name, job title, telephone number, company email address, company website, city, state and country.
Attractiveness Analysis of the Southern Cone Solar Markets is part of the Energy & Power Growth Partnership Services program, which also includes research in the following markets: Attractiveness Analysis of the Southern Cone Wind Turbines Markets, The Chilean Electricity Industry, and The Mexican Solar Energy Markets. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.
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Attractiveness Analysis of the Southern Cone Solar Markets
NB2C-14
Contact:
Francesca Valente
Corporate Communications – Latin America
P: +54 11 4777 5300
F: +54 11 4777 5300
E: francesca.valente@frost.com
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