Latin American & Caribbean Energy Transition - 2026

Despite already having one of the world's lowest-carbon power sectors, LAC is accelerating renewable deployment to diversify beyond hydropower, strengthen energy security, and support rising electricity demand.

Brazil and Chile continue to lead the region's energy transition, with Brazil dominating renewable fuels and emerging CCUS activity, while Chile stands out in energy storage and low-carbon hydrogen deployment.

While LAC possesses significant renewable energy potential, infrastructure constraints, including grid bottlenecks, transmission limitations, storage requirements, and project financing challenges, remain key barriers to large-scale deployment.

Despite already having one of the world's cleanest power mixes, LAC's renewable power capacity is forecast to rise from 70% in 2025 to 78% by 2035, driven by rapid solar PV and wind deployment. However, hydropower remains integral to the region's electricity system, while gas-fired generation continues to expand to support rising electricity demand.

Energy storage deployment in LAC is accelerating, but remains heavily concentrated in Chile, which hosts the vast majority of the region's active and upcoming projects. Falling battery costs, rising solar PV penetration, and supportive reforms, such as Chile's energy storage and electromobility legislation, are driving growth, although most large-scale projects remain in the pipeline and are yet to start operations.

xEV (i.e., BEVs and hybrids) adoption in LAC remains at an earlier stage than in China, Europe, and North America, but growth is accelerating, particularly in Brazil and Argentina, where xEV sales are forecast to surpass ICE vehicle sales by 2031. In these two countries, hybrids are currently outperforming BEVs due to limited charging infrastructure and the popularity of flex-fuel hybrid models, while growing Chinese investment is improving affordability and local manufacturing capacity.

Brazil continues to dominate LAC's renewable fuels market, accounting for over 90% of ethanol production capacity and leading both renewable diesel and SAF development. Supportive policies such as RenovaBio and the "Fuel of the Future" program are underpinning investment, while SAF capacity is forecast to expand rapidly as airlines and developers target decarbonization opportunities within aviation.

CCUS deployment in LAC remains nascent, with fewer than 10 active and upcoming projects, concentrated primarily in Brazil. While the region possesses significant geological CO2 storage potential in depleted oil and gas reservoirs and offshore basins, captured CO2 could also support emerging synthetic fuel production, with the region's first pilot e-fuel project starting operations in 2022.

Latin America's abundant renewable energy resources position low-carbon hydrogen as a potential low-hanging fruit for decarbonization and export growth. While domestic demand is expected to emerge in sectors such as fertilizers, heavy transport, and mining, several leading markets - such as Chile and Brazil - are pursuing export-oriented strategies targeting Europe and Asia through green ammonia, methanol and other hydrogen derivatives.

Key Highlights

• Despite already having one of the world's cleanest power mixes, LAC's renewable power capacity is forecast to rise from 70% in 2025 to 78% by 2035, driven by rapid solar PV and wind deployment.
• Energy storage deployment in LAC is accelerating, but remains heavily concentrated in Chile, which hosts the vast majority of the region's active and upcoming projects.
• xEV (i.e., BEVs and hybrids) adoption in LAC remains at an earlier stage than in China, Europe, and North America, but growth is accelerating, particularly in Brazil and Argentina, where xEV sales are forecast to surpass ICE vehicle sales by 2031.
• Brazil continues to dominate LAC's renewable fuels market, accounting for over 90% of ethanol production capacity and leading both renewable diesel and SAF development.
• CCUS deployment in LAC remains nascent, with fewer than 10 active and upcoming projects, concentrated primarily in Brazil.
• Globally, South America ranks sixth for active and upcoming low-carbon hydrogen capacity, with a total pipeline of approximately 6.9mtpa. However, less than 0.25% of this capacity is currently operational, highlighting that the region's hydrogen market remains largely pre-commercial.

Scope

• Latin American climate targets, CO2 emissions, renewable energy potential, leaders in renewable energy, renewable energy policies, power consumption and demand, renewable power capacity and generation, decommissioning of thermal power, energy storage capacity, electric vehicle and hybrid vehicle sales, upcoming renewable refineries, biodiesel, ethanol, RD, SAFs, CCUS outlook, upcoming CCS projects, hydrogen policies, upcoming hydrogen capacity by stage, type and end use.

Reasons to Buy

• Assess how the region is increasing its solar and wind capacity, so as to reduce its reliance on hydropower, which is becoming a more variable source of renewable power due to droughts, which have been exacerbated by climate change.
• Identify who the key players are in a range of energy transition technologies, in terms of owners, as well as equipment manufacturers and EPC providers.
• Identify the development stage and legislative framework the following energy transition technologies are currently in: renewables, energy storage, EVs and hybrids, renewable fuels, CCUS, and hydrogen.