The report “Regional energy transition outlook: South America” published by IRENA highlights that South America’s power sector is already undergoing a decisive shift towards renewables. Under the PES, these account for over 90% of the region’s power generation by 2050, while under the DES, the figure is even greater, at 98%. This builds on the fact that South America is one of the richest regions in the world in terms of diversified, competitive and abundant renewable resources, such as hydropower, solar and wind. Indeed, while South America has had a long-standing reliance on hydropower, there has recently been a clear diversification in the generation mix, with solar and wind progressively displacing fossil fuels and covering growth in electricity demand.
Going forward, South America’s electricity consumption is expected to grow as the region develops and its population expands. In meeting this growing demand, the region’s transition to an almost completely decarbonised power sector is not being shaped by expansion of renewable generation alone. It is also being supported by the removal of fossil fuels in end-use services and sectors, in addition to the energy sector. This further promotes electrification or green hydrogen utilisation. Together, these drivers are likely to raise the region’s electricity needs, roughly two-thirds of the rise in electricity demand between 2030 and 2050 would also be driven by further electrification and hydrogen uptake.
South America’s energy transition requires substantial investments in storage, back-up capacity and new grid infrastructure to manage variability and maintain reliability. Hydropower has traditionally provided the flexibility necessary to balance the system, but long-term uncertainty around water resources and the heightened risk of droughts due to climate change mean that complementary sources of back-up will be essential.
Access the report here