Latin America is highly vulnerable to various natural hazards, affecting the region’s living conditions, resulting in the current people displacement and massive economic losses. Driven by the increasing needs for climate change mitigation and adaptation measures and investments, the region has been actively advocating for climate change investments. In the energy sector, climate change effects on the environment pose pressing challenges to the energy generation matrix in the region, which is heavily dependent on hydropower. There is a need to diversify energy sources in the region, and decrease dependency on fossil fuels and hydropower generation.
To achieve this goal, the inclusion of other renewable energy resources in the regional electricity matrix will combine both an increase in supply flexibility and security, and the decarbonization of the grid. One of the main barriers for increasing the participation of clean energy resources in Latin America’s electricity systems is the availability and access to capital required to build new clean energy infrastructure.
Additionally, non-financial barriers are still present to adequately supply equity and debt into the renewable energy sector. Throughout the study, “New Financial Mechanisms For Clean Energy Investments In Latin America” by United Nations Environment Programme several mechanisms and opportunities with high implementation potential have been detected such as Aggregation and standardisation of projects, Innovative guarantee structures,Pipeline and project preparation facilities.
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