Why Latin America is a Hotbed For Solar Growth

If you're a company looking to grow in the solar industry you have to have an eye on Latin America. It's sunny, energy prices are high, and countries are desperate for investment in new energy infrastructure.

That's a perfect combination of factors for the solar industry and it's why some of the industry's largest players see Latin America as a key to the industry's future. Interestingly, solar energy's growth won't be dampened by low oil or coal prices because those energy sources supplied just 14% and 6% of electricity according to a 2010 report from The World Bank. Instead, it's hydro power that supplies most of the region's energy and it's under pressure from environmental groups because of its impact on Latin America's ecosystem. As a result, countries are turning to solar energy for new electricity production and the boom is just getting started.

SunEdison's Chile power plant, which was once the largest merchant solar plant in the world. Image source: SunEdison.

Where Latin American Solar stands today

GTM Research expects 2014 to see 805 megawatts installed in Latin America, more than 500% growth from a year ago. That's not a lot compared to 6.5 gigawatts, or eight times as much, installed in the U.S., but Latin America is a very nascent market that's growing quickly.

Next year, Latin America is expected to grow to 2.3 gigawatts and be over 3.6 gigawatts by 2018. Companies are just beginning to learn where and how solar energy will be economical and allowed into the grid, and as they do the opportunity grows. The amazing thing is that most of this growth is happening simply based on market forces.

Who said solar is too expensive?

Here's the amazing thing about solar in Latin America: It's growing without subsidies.

SunPower is also one of the largest utility scale solar plant builders in the world. Image source: SunPower.

Merchant power plants, which sell power to the electric grid at spot prices, are competitive in the market today. In Chile, SunEdison built the 50 megawatt Maria Elena Project that was the largest merchant solar power plant until earlier this year whenSunPower completed its 70 megawatt Salvador Project.

With the cost of solar energy only coming down, the potential in Latin America is incredible. Residential and commercial markets have yet to be developed and as they are the opportunity to save consumers money by going solar is incredible. Just imagine how many millions of lives would be improved by installing solar panels and energy storage in the region, giving consumers full control of their power.

Who is winning in Latin America?

The next question for investors is who is winning in this potentially lucrative market? For now, the winners are some of the biggest solar developers in the U.S.

I mentioned SunEdison and SunPower as major players already and First Solar is in the mix as well. It has a 141 megawatt plant in Chile and a growing pipeline in the region. For now, SunEdison is the market leader and it could use the region as a hub for an emerging markets yieldco it has planned.

I'd look for Latin America, particularly Mexico and Chile, to be a boon for these three companies in the future and SunPower in particular will move into the distributed market as well. This is just another growth opportunity for solar companies, presenting a very bright opportunity for investors.

The article Why Latin America is a Hotbed For Solar Growth originally appeared on Fool.com.

Travis Hoiumis long SunPower. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.