The regional power production market proyected a healthy growth for years to come

Leer en Español: Industria de generación de energía en Suramérica

The region produces a considerable amount of power through hydroelectric dams generating a change in the industry’s development. In Argentina, the power production industry has been growing in value at an accelerating rate. Even though consumption has been growing slowly, price inflation has been fast. Since February 2017, the government has announced future rises in prices between 61% and 148%, according to Marketline, as part of austerity policies.

In general, South America’s power production industry is expected to close this year with total revenues of $62.7 bn (USD), representing a Compound Annual Growth Rate (CAGR) of 8.7% since 2013. By comparison, the industries in Argentina and Chile will present rates of 28% and 3.3% , as stated by Marketline, respectively over the same period. Reaching values of $8.1 bn and 16.7 bn.

A growing need for the increase in the power production capacity in Brazil will be responsible for a highly superior growth compared with the United States or Canada. With a hydroelectric capacity on the fall, in comparison with previous years, there is a strong necessity for diversification of energy sources, not only in Brazil but all over the region.

This need is becoming a powerful driver for investment. For example, SEPCO a Power China subsidiary, is currently aiding Brazil’s Ouro Negro Energia to finance their new coal-based plant in Pedras Altas. This type of foreign investment is what the industry needs to ensure a sustainable growth in the long term.

Industry’s value is projected to reach a value of $86.1 bn by 2022, which represents a 36.2% increase in the total value, and a CAGR of 6.4% between 2017 and 2022. Although is a very healthy growth rate, it represents a fall against the 8.7%  rate between 2013 and 2017.

What’s going to be the industry’s driver?

The renewable energies segment will be the most lucrative this year, with a total production of 545.1 TWh, representing a 57.6% of the total industry’s production. Meanwhile, the conventional segment, fossil fuels, will represent a 40%.

A healthy growth in the industry will depend heavily on the investment in renewable energies. Its costs are falling rapidly. In Chile, for example, Enel established a new world record for low solar energy prices, $21.48/MWh, causing a drop in the consumption prices all over the country and so, motivating consumption.

This is part of the Exponential Technologies’ dynamic, which according to several experts is rapidly becoming the driver for development and growth in the world.

Latin American Post | Juan Sebastián Rojas

Copy edited by Susana Cicchetto