What is the current scale and outlook of the renewable energy market in Latin America?

Latin America already generates roughly 60–65% of its electricity from renewables, well above the global average. The region is on a strong growth trajectory: the IEA projects about 165 GW of new renewable capacity between 2023 and 2028, and longer-term forecasts cited in the article anticipate nearly 450 GW of total renewable capacity by 2030–2034, driven primarily by rapid solar and wind deployment.

Which countries lead renewable energy development in the region?

Brazil, Chile, Mexico, and Argentina lead the region’s renewable expansion. Brazil is the largest market by scale—with the highest installed base and strong wind and solar generation—while Chile and Mexico are notable for auction-driven growth and strong solar/wind resources. Argentina’s recent reforms have improved its investment appeal for larger projects.

Which technologies are expanding fastest in Latin America?

Wind and solar are the fastest-growing technologies across the region, with bioenergy (notably Brazil’s sugarcane ethanol and biodiesel industries) remaining an important base. Hybrid designs combining generation and battery storage are increasingly used to solve curtailment and grid-integration challenges.

How large are recent investment flows into the region’s clean energy sector?

Investment activity has accelerated: the article reports clean-energy investment reaching approximately US$70 billion in 2025 (a 25% gain versus 2015 benchmarks), and IJGlobal recorded US$12.6 billion of deals closed in FY2024 across 148 transactions—a roughly 50% increase from 2023, with Brazil accounting for a majority share of deal volume.

What financing channels are commonly used for projects in Latin America?

Financing mixes include commercial bank debt (domestic and international banks), development finance institutions (DFIs) and national development banks, green bonds and sustainability-linked instruments, and growing use of blended finance where concessional DFI capital or guarantees mobilize private lending. Local capital-market structures and innovative vehicles (yieldcos, CKDs in Mexico) are also used selectively.

Why is blended finance important in Latin America?

Blended finance helps bridge the region’s long-term financing gap by combining concessional or guarantee capital from DFIs and donors with commercial funds, lowering perceived risk for private investors. Multilaterals such as IDB, IFC and others deploy concessional tranches and guarantees that have been critical to mobilizing additional private investment.

What are the principal challenges developers face when financing renewable projects in the region?

Developers confront several persistent challenges: high capital costs and short loan tenors relative to project payback profiles, currency risk and limited local-currency long-term finance, regulatory and permitting delays (including grid-connection bottlenecks), and macroeconomic volatility that raises the cost of capital and depresses private investment flows.

What practical opportunities exist for mid-market projects (USD 5–100M)?

Opportunities include corporate PPAs and pooled offtake structures that reduce currency and offtake risk, hybrid solar/wind-plus-storage projects that address curtailment, distributed generation projects in high-demand industrial corridors, and structuring deals with concessional tranches or local strategic partners to improve bankability for transactions in the USD 5–100M range.

What financing structures and capital mixes are typical for projects in this size range?

A common capital structure blends 60–70% senior debt from commercial banks or DFIs with 30–40% equity supplied by sponsors, infrastructure funds, or strategic partners. Concessional capital and credit enhancements from multilaterals can improve terms for higher-risk markets or newer technologies.

How can developers mitigate project risks in Latin America?

Key mitigation tools include creditworthy offtake agreements (dollar-denominated where possible), blended finance and guarantees from DFIs, political and insurance products for currency and expropriation risk, thorough community engagement and benefit-sharing to secure social license, contingency planning for grid constraints, and conservative hedging strategies that balance cost and exposure.

How should developers select entry markets and partners in Latin America?

Market selection should align with a developer’s risk appetite and technical strengths: Brazil and Mexico offer scale and financing channels, Chile has auction experience and strong solar resources, Colombia presents growth with some longer lead times, and Argentina offers opportunities under its updated regime. Partnering with reputable local developers, utilities, or industrial offtakers improves permitting, grid access, and bankability.

How can Amimar International support developers pursuing projects in Latin America?

Amimar International offers tailored project finance advisory services including feasibility studies, lender-ready financial modelling, capital-stack structuring, DFI and blended-finance coordination, local market analysis, and documentation support to help close bankable renewable energy transactions across the USD 5–200M segment.

Latin America: A Leader in Renewable Energy Financing

MJ Furey
Oct 22
8 min read

Updated: Nov 4

renewable energy, renewable energy latin america, energy project financing — Photo by William Felipe Seccon on Unsplash

Latin America stands out as a global leader in renewable energy. Over 60% of its electricity comes from renewable sources, which is double the global average. The region's journey began with hydropower, which still accounts for about 45% of its energy. Countries like Costa Rica and Paraguay are remarkable examples, achieving nearly 100% renewable electricity. This solid foundation is now being leveraged to rapidly expand solar, wind, and bioenergy projects. Ambitious targets and net-zero commitments are driving this momentum, making Latin America an attractive market for renewable energy developers and investors.

Positive Market Outlook and Performance

Looking ahead, the outlook for Latin America's renewable energy market is very promising. The International Energy Agency (IEA) predicts that renewable capacity in the region will grow by approximately 165 GW between 2023 and 2028. This growth would nearly double the current installed capacity. By 2030, Latin America aims to reach around 450 GW of total renewable capacity, marking a 39% increase over 2022 levels. This growth would elevate renewables to about two-thirds of the region's power generation within this decade. In fact, the region has been installing new renewable capacity faster than necessary to meet its 2030 targets, averaging 26 GW of additions from 2022 to 2023. If this trend continues, Latin America is on track to exceed its clean energy goals and even surpass its climate commitments. However, achieving this potential hinges on continued investment and overcoming financing and structural challenges, which will be discussed later in this article.

Market Performance and Investment Trends

As the renewable sector in Latin America accelerates, Brazil, Mexico, Argentina, and Chile are at the forefront of clean power expansion. The region currently sources a high percentage of its electricity from renewables, approximately 60–65%, compared to about 30% globally. From 2023 to 2028, the IEA projects around 165 GW of new capacity, primarily from solar and wind, with approximately 90% of this growth occurring in Brazil (108 GW), Chile (25 GW), Mexico (10 GW), and Argentina (4 GW). Brazil leads the way with 175 GW installed and an impressive 85% share of renewables. Wind and solar are expanding the fastest; Brazilian wind ranks 4th globally, generating 96 TWh in 2023, while solar ranks 6th with 52 TWh. Bioenergy, particularly Brazil's sugarcane ethanol and biodiesel, remains significant.

Investment in the sector is also on the rise. Clean-energy investment is projected to reach US$70 billion by 2025, reflecting a 25% increase since 2015. Renewable project financing is robust, with IJGlobal reporting $12.6 billion in deals closed in FY2024, marking a 50% increase from 2023. Brazil accounted for 64% of these transactions, with major deals including Mexico's $6.26 billion acquisition of Iberdrola assets. Overall, the markets are maturing as clean energy builds peak.

Financing: Mainstream Banks, Alternative Funding, and Blended Finance

Financing renewable projects in Latin America involves traditional bank lending, capital markets, and multilateral support. Commercial banks, both international and domestic, are the primary lenders, collaborating with national development banks. For instance, Mexico's Iberdrola transaction received support from development banks such as Banobras, Nacional Financiera, and Bancomext, as well as major banks like Barclays, BBVA, Santander, and SMBC. Similarly, Brazil's BNDES and IDB Invest frequently provide loans or guarantees for projects. Additionally, green and sustainability-linked loans and bonds are becoming increasingly common, with pension funds and ESG-focused investors in Chile, Colombia, and Peru underwriting green project debt.

Beyond mainstream financing channels, alternative finance options are gaining prominence. Dedicated project bonds, credit facilities, and infrastructure funds often supplement bank debt. Some projects tap into local capital markets, such as Mexican CKD/Certificados structures, or utilize innovative financing vehicles like yieldcos and equity funds. Performance-based contracts or milestone certificates, backed by governments, are used to de-risk public-private partnerships (PPPs). However, many clean-energy projects in the $5–100 million range still primarily rely on bank loans. High interest rates and currency risk remain challenges, as the IEA notes that only about 5% of global private clean-energy investment flows to Latin America and the Caribbean, citing “high rates, lack of long-term finance, and rising debt costs.”

Blended finance has emerged as a crucial enabler, where development institutions such as IDB, IFC, and CAF contribute concessional capital and credit enhancements to mobilize private funding. For example, IDB Invest manages around $800 million in donor funds to blend with commercial loans. Globally, multilateral development banks provided a record US$137 billion in climate finance in 2024, mobilizing US$134 billion of private investment. In Latin America, this translates to structured deals with partial guarantees, concessional tranches, or co-lending that lower risk for commercial investors.

Opportunities in Funding Renewable Projects

Strong investment pipeline: Latin America is rich in wind and solar resources, coupled with ambitious clean-energy targets. Projections indicate around 125 major projects (66 GW) valued at approximately $66 billion. To meet net-zero objectives, annual clean-energy investment must nearly double to around $150 billion per year by 2030. Recent renewable financing has reached historic peaks, with $9.6 billion in 2019 and $45 billion closed between 2018 and 2023, highlighting the growing market momentum.
Diverse financing sources: A blend of public and private funding is emerging. Development banks and development finance institutions (DFIs) are highly active; Brazil's BNDES offers low-interest, 16-year loans covering up to 80% of project costs. DFIs accounted for an estimated 30% of all regional deal volume from 2018 to 2023. Blended finance vehicles and green bond programs are also on the rise, with donors and foundations using catalytic capital to de-risk projects and attract private investors.
Innovative structures and corporate demand: Corporate/off-taker models and market innovations are helping to mobilize capital. Large firms and industrial users are increasingly entering self-supply power purchase agreements (PPAs) or equity deals. For example, a $243 million financing for Brazil's Mendubim solar complex was arranged based on a dollar-denominated PPA. Pooling off-take contracts has enabled smaller players to access financing, as seen when seven municipalities jointly financed a 22.5 MW wind farm. These approaches reduce currency and off-take risks, attracting foreign lenders.

Challenges in Funding Renewable Projects

Renewable projects in Latin America face high capital costs and short loan tenors. These projects often require long payback periods, typically exceeding 7 years, while loans usually last only 5–6 years. This mismatch leads to higher equity stakes of around 40%, increasing financing costs. The average cost of capital, approximately 6.9%, is influenced by elevated country risk, making project investment more expensive.
Macroeconomic and fiscal volatility complicates investment further. Inflation and rising interest rates have shortened loan maturities and increased costs, limiting the region to only about 5% of global private clean-energy investment. High borrowing costs, limited long-term finance, and substantial public debt burdens in countries like Brazil and Mexico restrict both public and private actors' ability to fund new renewable projects.
Policy, grid, and permitting challenges undermine investor confidence. Inconsistent regulations and infrastructure bottlenecks add to project risk. Delayed grid connections and curtailments, as seen in Brazil, extend project paybacks. Land-use conflicts and local opposition can stall projects for years, as experienced in Oaxaca. Uncertainty around future support measures, such as subsidies, auctions, and market rules, makes financial institutions more hesitant to lend.
Gaps within local financial sectors exacerbate investment challenges. Few local banks offer tailored financing products for renewables, and long-term local-currency loans are scarce. Consequently, many projects depend on foreign capital, which generally comes at a higher cost and carries currency risk. Most countries also lack on-budget subsidies or domestic support funds, leading developers to face higher financing hurdles.

Despite these significant obstacles, active solutions are being implemented. Policy reforms, infrastructure upgrades, and risk-mitigation tools are being deployed to address regulatory, financial, and market challenges. Most importantly, the region's cost-competitive renewables and strong decarbonization imperative ensure a robust investment outlook, provided efforts remain focused and collaborative.

Strategic Considerations for Project Developers

Market Selection and Entry Strategy

Brazil offers a mature market with established financing channels but faces competition and regulatory complexity in distributed generation. Chile boasts excellent renewable resources and efficient auction processes but requires storage solutions to mitigate curtailment issues. Colombia presents high growth prospects and strong government support, although permitting and grid connection processes have longer lead times. Argentina's updated investment regime creates opportunities for large projects but necessitates careful risk evaluation. Mexico's vast market and proximity to North America are advantageous, yet developers must navigate state priorities and regulatory uncertainty. It is essential for developers to select markets that align with their risk appetite, technical strengths, and financing networks.

Technology and Revenue Optimization

Hybrid projects that combine solar or wind with battery storage are vital in markets experiencing curtailment. These setups allow for the monetization of excess generation during peak pricing periods. Diversifying revenue streams beyond PPAs—such as spot market participation, capacity payments, ancillary services, and carbon credits—can reduce volatility and enhance financial resilience. Corporate PPA strategies targeting high-credit off-takers in expanding sectors like data centres, green hydrogen, and mining can provide revenue stability and potentially improve financing terms. Successful developers will model multiple revenue scenarios and structure financing that accommodates spot market exposure within prudent risk parameters.

Financing Structure and Partner Selection

Optimal financing structures typically combine 60-70% senior debt from commercial banks or development finance institutions with 30-40% equity from developers, sponsors, or infrastructure funds. Concessional capital from multilateral sources like the GCF, CTF, and CAF can enhance project economics for new technologies or high-risk markets. Collaborating with local developers provides valuable market knowledge, stakeholder relationships, and regulatory assistance, thereby reducing development risk. Joint ventures with established utilities or industrial groups can offer offtake agreements and creditworthiness, enhancing bankability. Engaging professional financial advisors can help access appropriate capital sources and structure transactions that optimize risk allocation.

Risk Mitigation Frameworks

Multilateral agencies such as MIGA and OPIC offer political risk insurance to protect against expropriation, currency issues, and contract breaches. Development banks and credit enhancement facilities provide guarantee structures that reduce financing costs by absorbing initial losses. Given the region's vulnerability to climate events, comprehensive insurance programs covering construction, operations, and natural disasters are essential. Currency hedging should balance protection costs with revenue volatility, potentially utilizing natural hedges like dollar-denominated PPAs or export-oriented off-takers. Community benefit agreements and transparent stakeholder engagement can minimize social license risks and promote long-term project sustainability.

Conclusion: Amimar International’s Role in Latin America’s Renewable Energy Future

Latin America's renewable energy market presents compelling investment opportunities for project developers targeting transactions between USD 5-100 million. With projected growth from 300.8 GW in 2024 to 449.6 GW by 2034, the market supports sustained growth across solar, wind, biomass, and emerging waste-to-energy sectors. The region's renewable electricity generation share of 65-70% and ambitious targets of 70-80% by 2030 create a supportive policy environment. Transaction volumes reached USD 8 billion in 2024 and are projected to soar to USD 24 billion in 2025, indicating robust market activity.

However, successfully navigating this landscape requires a deep understanding of diverse financing mechanisms, regulatory environments, and infrastructure constraints, along with effective risk mitigation strategies. The region's annual investment requirement of USD 200 billion necessitates mobilizing capital from multilateral development banks, blended finance facilities, commercial lenders, and private equity sources, each with distinct requirements and risk appetites.

Amimar International is a leading provider of renewable project finance advisory and risk assessment services, with extensive experience in Latin America's dynamic market conditions. Our advisory services encompass feasibility assessments, lender engagement, market analysis, and documentation support, all aimed at optimizing the efficient financial close of energy projects with optimal terms. Amimar International partners with renewable energy developers seeking to capitalize on Latin America's growth, leveraging our specialized knowledge and industry relationships to transform project concepts into bankable realities. Contact us today to discuss how our expertise can support your Latin American development pipeline.