The agreement reached by parties at the UN Cop 28 climate conference this week underscores that Latin America will continue to be a key region for renewable energy development despite uneven policies and financing challenges, US-based utility AES said.
"We see Latin America as a lab for deploying new technologies, but also to transition responsibly," US-based utility AES' president for energy infrastructure Juan Ignacio Rubiolo told Argus on the sidelines of the summit in Dubai.
Cop 28 discussions culminated on Wednesday in an agreement to transition away from fossil fuels, triple renewable energy capacity and increase renewables funding from developed countries to developing countries.
While there is capital available for renewable development in Latin America, higher interest rates for financing and issues around insurance for natural disasters worsened by climate change are among the "largest problems in the near future" in renewable development, he said.
About half of AES' revenues come from Latin America, where it owns power generation and storage operations or stakes in them in eight countries, including Chile, Argentina, Brazil, Colombia, and Mexico.
Globally, the company is moving to completely phase out its remaining 21pc of coal-fired generation capacity by 2025. Much of this is taking place in Chile in alignment with government policies.
Among other initiatives in Chile, AES is interested in participating in a planned $2bn power storage tender next year as part of an amended energy transition bill still making its way through congress.
The tender would be the first under the proposed legislation and Rubiolo said he has a "very bullish" outlook on its success.
The Chilean government is also working on new incentives for power storage by amending Decree 62, which determines how different technologies are paid for feeding or being available to feed electricity to the grid.
The company has weighed-in along with other stakeholders on the language.
"We are working with the government to create the right framework," he said. The tender in 2024 will be the first under the new regulation if passed and "we are very bullish on that."
Even if countries where policy framework is not aggressively supporting renewables, such as in Mexico, "the market has already decided," Rubiolo said. Mexico will require energy storage to support its increasing demand, some of which comes from international industrial users which must meet renewable energy use targets.
