That hot, high, flat desert

Why Chile has emerged as a big solar market

It might surprise you to learn that Latin America — including Mexico, South America, Central America, and the Caribbean — was the region that showed the fastest growth in history for solar panel projects last year, according to a recent report from GTM Research. While the area’s 625 MW worth of solar panels installed in 2014 might look small compared to the estimated 6.5 GW installed in the U.S. during the same time (1000 MW = 1 GW), the annual growth rate for Latin America was a staggering 370 percent between 2013 and 2014, while the U.S. was just 36 percent.

Why did that happen? Well, more than three quarters of that growth in Latin America came from the quick emergence of solar panel projects being installed in Chile — in particular, in the high, hot, flat, barren desert lands of Northern Chile. The Atacama Desert has some of the world’s most intense sunlight and an area of 40,000 square miles.

For example, just two weeks ago a 70 MW solar panel farm — one of the largest in the world built to sell power on the wholesale market — was completed by SunPower in El Salvador in the Atacama Desert. The site uses 160,000 solar panels on single-axis trackers built on 328 acres leased from the Chilean government. The solar system can provide the equivalent electricity for 70,000 Chilean homes.

First Solar is building what could be the largest solar project in Latin America, a 141 MW solar panel farm called the Luz del Norte Solar Power Plant, north of the city of Copiapó, Chile. That site is expected to be finished by the end of 2015, will use 1.7 million of First Solar’s solar modules, and will produce enough electricity for over 173,962 homes.

The Topaz solar panel farm, that uses First Solar panels in CA.
The Topaz solar panel farm that uses First Solar panels.

Because of the unique geography of northern Chile, it’s one of the most productive solar regions in the world. And there’s also a growing desire for power in the area, from mining and other industries that are ready to buy up as much solar power as the local utilities and power markets are willing to generate.

All of this means that Chile has emerged as one of the areas in the world where solar panels are truly competitive economically, even without subsidies. In the U.S., the federal investment tax credit and loan guarantee programs, as well as state mandates like California’s renewable portfolio standard, have largely pushed the solar market. While Chile does have some solar incentives, the economics are good before they kick in.

In Chile, financial institutions are eager to back projects and new business models around solar projects have emerged. The U.S. government’s development finance institution, the Overseas Private Investment Corporation (OPIC), financed 70 percent of the $200 million El Salvador project through long-term non-recourse project debt.

Despite the fast growth rate, it will take several more years for the Chilean solar market to grow to muliple gigawatts. Chile is expected to have another solar boom in 2015.

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