Background and Report Findings
In September 2025, a regional energy market report revealed that Latin America’s renewable energy index experienced a downturn, reflecting a temporary shift in the regional power mix. The dip was attributed primarily to increased reliance on natural gas and other fossil fuels, which surged to meet demand spikes and stabilize supply during periods of lower renewable output. While hydropower generation improved in some areas due to favorable rainfall, the broader index declined, raising concerns about the consistency of renewable deployment in the region.
Underlying Drivers and Market Dynamics
The fossil fuel rebound is being driven by multiple factors: delayed completion of renewable projects, volatile commodity prices influencing short-term fuel choices, and limited regional grid integration that restricts the ability to balance variable renewable supply. Countries with strong gas infrastructure, such as Brazil and Mexico, leaned more heavily on fossil fuels to meet demand, offsetting gains from solar and wind. Analysts stressed that the report reflects structural constraints rather than a loss of momentum, as renewables remain the most competitive long-term option in Latin America.
Implications for the Energy Transition
The dip in the index serves as a reminder of the challenges facing Latin America’s energy transition. While the region holds some of the world’s highest renewable potential, structural bottlenecks in transmission, storage, and investment continuity continue to slow progress. Policymakers are being urged to accelerate permitting processes, incentivize storage technologies, and deepen cross-border interconnections to reduce reliance on fossil backstops. In the long term, the fundamentals for renewables remain strong, but the September report highlights the need for greater resilience and planning to ensure progress is not undermined by temporary rebounds in fossil fuel generation.