South America to add 160 GW of solar PV capacity by 2034

Wood Mackenzie's latest report on the South American solar PV market reveals that the region will add 160 GW_dc of solar capacity between 2025 and 2034, driven by diversification efforts, growing power demand, and favourable system economics.

The report "South America Solar PV Market Outlook 2025" provides a comprehensive analysis of the region's solar energy landscape, power sector dynamics, 10-year solar PV installation outlook, and policy impacts across key markets.

"South America's solar PV market is expected to slow down as mature markets stabilize, but growth is expected in emerging markets.” said Felix Delgado, Senior Analyst, Americas Power & Renewables at Wood Mackenzie. "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.”

Key findings from the report include:

• Mature markets Brazil and Chile will account for 78% of total regional installations.
• Small-scale projects (<5 MW_dc) will account for 48% of the total regional buildout, as distributed generation schemes remain attractive across the continent.
• Regional PV installations are expected to have peaked in 2024, as both small-scale and utility-scale solar additions slow down in Brazil.
• Lagging transmission and higher curtailment hinder growth in mature markets, driving project solar + storage hybridization, particularly in Brazil and Chile.
• Solar PV system economics will continue to improve, with a projected 42% reduction in regional LCOE for single-axis trackers and fixed-tilt solar PV by 2035.

Country-specific insights
Brazil, the region's largest market, is experiencing a deceleration in solar additions after recent renewable expansion fuelled by expiring incentives. Utility-scale solar faces an environment of oversupply of energy and lagging transmission infrastructure. Meanwhile, small-scale solar faces rising transmission tariffs, increased import taxes on solar modules, and distributor interconnection disputes. Nonetheless, capacity additions will continue to be driven by Power Purchase Agreements (PPAs) under the free-market environment and distributed generation installations.

Chile is facing similar challenges with curtailment and grid constraints, pushing the solar PV pipeline towards hybrid projects.

"The transition to solar-plus-storage projects in markets like Brazil and Chile is a critical development," Delgado added. "Chile is paving the way for storage adoption in the region and serves as a testing ground that highlights the challenges and solutions available for countries with already high penetration of renewable generation.”

The report also emphasizes the role of direct C&I off-takers in driving capacity growth. In Argentina, the corporate renewable PPA market is allowing off-takers to sign US$- Linked PPAs, acting as the main market scheme driving solar capacity additions. Furthermore, 99% of the current solar pipeline in Brazil is set to operate under the free market. Nonetheless, regulated auctions remain critical for emerging markets like Colombia and Peru.

In the long term, the report indicates that Brazil, Chile, and Colombia are well-positioned to capitalize on growing green hydrogen demand, further driving solar capacity additions and diversifying the region's energy landscape.