Power sector investment implications of climate impacts on renewable resources in Latin America and the Caribbean

Abstract

Climate change mitigation will require substantial investments in renewables. In addition, climate change will affect future renewable supply and hence, power sector investment requirements. We study the implications of climate impacts on renewables for power sector investments under deep decarbonization using a global integrated assessment model. We focus on Latin American and Caribbean, an under-studied region but of great interest due to its strong role in international climate mitigation and vulnerability to climate change. We find that accounting for climate impacts on renewables results in significant additional investments ($12–114 billion by 2100 across Latin American countries) for a region with weak financial infrastructure. We also demonstrate that accounting for climate impacts only on hydropower—a primary focus of previous studies—significantly underestimates cumulative investments, particularly in scenarios with high intermittent renewable deployment. Our study underscores the importance of comprehensive analyses of climate impacts on renewables for improved energy planning.