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According to a recent analysis conducted by Wood Mackenzie, the expansion of the free market will play a crucial role in driving the growth of onshore wind energy in South America over the next decade. The study predicts that the total wind market in the region will witness the addition of 41.2 gigawatts (GW) of onshore projects by 2032.
Wood Mackenzie’s report, titled “South America onshore power outlook,” indicates that the cumulative capacity of onshore wind projects in South America is projected to reach 75 GW by 2032, a substantial increase from the current 34 GW as of the end of 2022. The report further highlights that Brazil will lead this growth, accounting for 23 GW and 56% of the overall expansion, followed by Chile.
Traditionally, the region’s wind energy growth has been driven by regulated processes, such as auctions. However, Wood Mackenzie’s analysis reveals a shift towards a new wave of free market activity. Large commercial and industrial consumers are increasingly seeking favorable power purchase agreements in the unregulated market, propelling the development of onshore wind projects in South America. This trend is expected to have a significant impact on countries like Argentina, Brazil, Chile, and Peru. Meanwhile, Colombia and Ecuador, considered less mature markets, are likely to continue relying on the regulated market.
Furthermore, the report identifies green hydrogen as a potential catalyst for long-term growth. Brazil and Chile are anticipated to add 1.5 GW of capacity by 2032 to support green hydrogen initiatives. While several multi-gigawatt projects have been announced, they are currently in early-stage development and are expected to scale up after 2030.
Despite the positive outlook, the onshore wind market in South America does face challenges. Grid constraints in wind-rich areas, like Colombia’s La Guajira, and growing competition from solar energy could limit the capacity additions. Solar energy projects offer wider geographic distribution and are expected to become increasingly cost-effective, eroding the historical advantage enjoyed by wind energy.
Wood Mackenzie’s analysis provides valuable insights into the future trajectory of onshore wind energy in South America, highlighting the shift towards the free market and the potential of green hydrogen.