Latin America is expected to reach 34GW of offshore wind capacity by 2050, driven by the growth of off-grid green hydrogen projects and led by regional pacesetters Brazil and Colombia, Wood Mackenzie forecast.

Once first projects come online – which is expected in 2032 – wind at sea activity is likely to grow at a 15.4% compound annual growth rate, the research group said.

“We have seen significant regulatory movement in support of offshore wind developments, with Brazil and Colombia providing official roadmaps and guidelines for future activity,” Wood Mackenzie power and renewables analyst Kárys Prado said.

“Both countries have an increasing number of planned projects, and this year’s announced pipeline growth in Latin America already represents a 34% share of global new project announcements, as of Q3 2022.”

Brazil’s environmental protection agency Ibama in August listed a staggering 169GW in proposed offshore wind projects seeking approval off the country’s almost 8,000km of coast, with Japan’s Shizen Energy the latest company to seek environmental permits, joining sector heavyweights such as the Engie-EDPR joint venture Ocean Winds, Iberdrola, Macquarie's Corio Generation, and oil & gas majors Equinor, Shell and TotalEnergies.

Brazil’s federal government in January laid down first regulations for offshore wind in a decree, assigning planning and permitting competencies to a total of nine different government bodies in South America's largest economy.

The industry is, however, still awaiting more detailed regulation to avoid having to address multiple jurisdictions within the government and administration, making Ibama’s list of proposed offshore wind arrays still relatively theoretical at this point.

Renewable H2 crucial

Wood Mackenzie reckons the value for offshore wind capacity in Latin America will be to support green hydrogen projects, both for domestic energy use and exports. The analyst forecasts that Brazil will capture close to 6% of the world’s total green hydrogen supply through 2050, with the market gaining scale after 2030, and estimates that only 20% of renewable H2 installations in the country will be grid-connected.

“The majority of these projects will be off-grid and part of it will be supported by offshore wind, alongside other renewables,” Prado said.

“This will play a key role in the country’s future economy and long-term position as a global energy exporter. However, there is still much work to be done on the regulatory front and many challenges remain to make this a reality.”

Limited energy demand, transmission infrastructure constraints, competition from other sources, project bankability and supply chain issues are among challenges faced by developers in the region, WoodMac added.