The expansion of the free market is expected to be a major driving force behind the growth of onshore wind energy in South America over the next decade, according to a recent analysis by Wood Mackenzie.

The analysis predicts that the total onshore wind market in the region will add approximately 41.2 GW of projects by 2032. This substantial activity is projected to result in a cumulative capacity of 75 GW by 2032, a significant increase of 122% from the 34 GW recorded at the end of 2022.

The report, titled “South America Onshore Power Outlook” from Wood Mackenzie, indicates that Brazil will lead the way in this timeframe, accounting for 23 GW and 56% of the overall growth, with Chile following closely behind.

“In the past, the growth of onshore wind energy in South America has primarily relied on regulated processes through auctions. However, there has been a shift towards a new wave of free market activity,” stated Kárys Prado, Senior Research Analyst for Power & Renewables at Wood Mackenzie.

Wood Mackenzie’s analysis anticipates a significant transition where major consumers in the commercial and industrial (C&I) sectors will move away from auctions and seek favorable power purchase agreements in the unregulated (or free) market.

This shift will drive considerable expansion in South America, particularly in Argentina, Brazil, Chile, and Peru. However, less developed markets like Colombia and Ecuador will continue to rely on the regulated market.

Green hydrogen is also expected to play a crucial role in the industry’s long-term growth. Brazil and Chile, in particular, are projected to add 1.5 GW of capacity by 2032 to support green hydrogen initiatives.

While several announcements have been made regarding multi-gigawatt projects, their development is still in the early stages, with significant scaling anticipated after 2030.

Kárys Prado from Wood Mackenzie emphasized the challenges posed by grid limitations in wind-rich regions like Colombia’s La Guajira, as well as the growing competition from solar energy, which may impede capacity expansions.

Prado noted that although wind energy has enjoyed historical advantages, its dominance is expected to diminish over time as solar projects become more cost-effective and can be deployed over a wider geographic range.

Brazil’s wind power sector has recently witnessed remarkable progress despite these challenges. According to a recent analysis by Wood Mackenzie, Brazil reached a record-high order intake for wind turbines in the first quarter of 2023, driven by increasing demand.

According to data released by the country’s National Electric Energy Agency (ANEEL), renewable sources accounted for 83.64% of the 193.9 GW of power generated in Brazil between January and June this year.

Many companies across Brazil have also started taking up renewable projects with higher capacities.

In April this year, ArcelorMittal Brazil, a steel manufacturer, and Casa dos Ventos, a developer of renewable energy projects in Brazil, joined forces to create a joint venture partnership (JV) to build a 554 MW wind power project worth $800 million.