Latin America is poised to be the next region of the world to embrace clean energy in a significant way with major new investment to flow there in the next several years, according to new research.

Political stability and economic growth coupled with growing concerns over energy security and climate change have created the right conditions for an influx of investment and surge in development, Bloomberg’s Latin America Clean Energy Market Outlook H1 2010 report suggested.

Investment in Latin America’s clean energy swelled to $18.1bn in 2008 since 2005 when it stood at $2.9bn. The region saw a pull-back in 2009 to $16bn due to the recession but is now poised to get back on track, the study found.

Wind, particularly, is emerging as a main sector in Latin American renewable energy. Last year was a record for wind installations in the region with 736MW added and cumulative capacity reaching 1.4GW. Exceptional natural resources, stable governments and supportive policies in the region are predicted to boost the wind market.

Biofuels represent the largest clean energy sub-sector in the region, whereas Brazil and Argentina have systems in place and nascent biofuels industries exist in Colombia and Peru.

The report suggested that 2010 will be a record for investment led by activity in the wind and biofuels sectors, citing that the first quarter of the year was the strongest quarter in terms of overall clean energy investment the region.

Opportunity for biomass development also remains strong in Latin America in countries where land and other resources are abundant, said Bloomberg, predicting that cumulative wind capacity in Argentina, Brazil and Chile alone will reach just under 8GW by 2015.

The report also predicted that environmental and social concerns will act as barriers to large-scale hydro growth but that the growing desire to diversify energy sources will benefit the mature and competitive small hydro sector in the region.

With new policies supporting renewables and biofuels on the books or on the way in Argentina, Brazil, Chile, Colombia, Peru, and in other nations, investment is likely to follow, it said.

While economies slowed during the recession, there remains a fundamental under-supply of electricity capacity that needs to be met and most countries are looking to become less reliant on foreign oil and natural gas from countries such as Venezuela or Bolivia.

The report highlighted unprecedented commitment to the sector across Latin America in the form of state-run auctions for new power generation and other state mandates, which is expected to result in higher investment levels in coming years.

It also noted that political stability and recent economic growth have combined to create an unprecedented demand for energy across the region.

‘Latin America is ready for take-off,’ said Bloomberg’s Camila Ramos.

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