Latin america's electric power market

16.02.2015 By: BN americas

Mexico is now Latin America's most attractive electric power market thanks to reforms to the sector that allow for private investment, according to the BNamericas' 2015 Electric Power Survey. A total 23% of respondents to the survey earmarked Mexico as the most attractive market, compared with 10% of respondents to the 2014 survey.

As a result of energy reforms, Mexico's state utility CFE has relinquished its monopoly over the national power grid, allowing for private firms to generate electricity and directly compete with the CFE. Private firms can also partner with the utility to finance, build and operate transmission and distribution infrastructure.

Chile is Latin America's second most attractive market, according to 19% of respondents, after having been knocked off the top spot by Mexico. Although some large hydroelectric and coal-powered projects have run into obstacles, Chile is increasingly becoming a haven for renewable energy, particularly wind and solar.

Investors are also interested in Brazil, Colombia, Peru and Central America, which tied as the third-most attractive markets by respondents to the survey, with 13% each. Neither Bolivia, Ecuador, Paraguay or Venezuela featured in the survey as preferences for investment.
As with the 2014 survey, 83% of respondents said the availability of energy sources was one of the main competitive advantages for electricity projects in Latin America.
The region comprises 31% of the world's fresh water, making hydroelectricity a cheap and abundant energy source that provides as much of 80% of the electricity consumed in Colombia and Brazil, making Latin America one of world's cleanest power generators.

Respondents identified Mexico (56%), Peru (56%), Colombia (50%), Brazil (41%) and Chile (35%) as the countries where they most expected to see electric power demand increase significantly over the next five years.

Mexico's energy ministry (Sener) announced earlier this month that the country's generation capacity will grow by 66GW by 2030, with investments of US$90bn expected in renewable energy. However, in comparison to the 2014 survey, respondents expressed lower expectations for new project development in the region, with 54% expecting an increase in new projects in 2015 but 41% anticipating a decrease, compared with 77% and 15% respectively in 2014.

To get a sense of the general sentiments in and around Latin America's power sector, BNamericas turned to its network of experts for the 2015 edition of its annual survey. A total of 80 people participated this year, including CEOs and other c-level executives, project managers, engineers, analysts and marketing strategists.