The South America thermal power market is expected to grow at a CAGR of more than 1% during the forecast period of 2020-2025. Factors such as increasing population and power consumption are resulting in the growth of the thermal power market. With growing power demand, upcoming thermal power projects are expected to further drive the market significantly. On the other hand, the phasing out of oil and coal-based power plants in few countries in the region and increasing competition from renewable energy sources are expected to restrain the market growth of thermal power during the forecast period.
Key Highlights
- With the largest share in electricity generation, natural gas is leading the market. Due to the advantages of natural gas over other thermal energy sources, the source is expected to continue its dominance during the forecast period
- According to IRENA, total primary energy supply is expected to reach 46 EJ by 2050 from 27 EJ in 2017. The anticipated increase in energy supply is likely to create ample opportunities for thermal energy in the future.
- Brazil is anticipated to dominate the market in the upcoming period. With future projects and with the highest energy demand in the region, the nation is driving the market.
Key Market Trends
Natural Gas Power Plants to Dominate the Market
- With the decreasing interest in coal and oil for energy production and the negligible presence of nuclear power, natural gas is expected to increase its share during the forecast period.
- In August 2019, Siemens AG shipped 14 industrial gas turbines to Bolivia to expand the capacity of the Entre Rios combined-cycle plant. With this significant growth in thermal energy is expected.
- In 2020, Wartsila Group won a project for a 200 MW power plant in the Northern Andes region. The plant will be powered by 11 Wärtsilä 50SG engines running on natural gas and is expected to be operational by the end of 2021. The South American region witnessed growth in electricity generation from natural gas. In 2019, the area generated 245 TWh of electricity from natural gas.
- Although natural gas projects are facing competition from renewables but with increased production of natural gas as well as the development of regasification infrastructure, the segment is expected to dominate the market.
Brazil to Dominate the Market
- Brazil has two operating nuclear power plants. The nuclear power amounted to 3% of the total electricity generation in the country in 2019. As of June 2020, nuclear power operable capacity of Brazil is around 1.88 GWe.
- In 2018, MHPS and Shell formed a consortium to build 565-MW Marlim Azul plant that will be powered by MHPS gas turbines and is expected to go into operation at the beginning of 2023.
- GNA Port of Açu III is a 1.6GW LNG-fired thermopower plant which is still awaiting a decision on construction. The start of operations at the plant is scheduled for January 2023, and its operating permit is expected to be valid for 35 years.
- With total electricity generation 625 TWh in 2019, Brazil holds the largest share in the regional market. With upcoming projects, the nation is expected to continue its dominance during the forecast period as well.
Competitive Landscape
The South America thermal power market is moderately fragmented. Some of the major companies include Colbún S.A, Pampa Energía SA, AES Corporation, Enel S.p.A, and Centrais Eletricas Brasileiras SA.
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