In-depth Analysis Of Peru's Photovoltaic Policy In 2025

The Peruvian government, based on the Nationally Determined Contribution and the 2030-2050 Zero Emission Energy Transformation Roadmap, has clearly stated that by 2030, the proportion of renewable energy power generation will increase to 81%, of which photovoltaic and wind power will contribute 35%. 2025 is a key node, and the policy focuses on the following directions:

Tax incentive extension: The bill submitted in January 2025 intends to extend the tax incentives for renewable energy projects to 2035, covering corporate income tax exemptions, value-added tax incentives, etc., aiming to reduce the cost of the project throughout its life cycle.

Transmission infrastructure upgrade: The State Grid Coordinating Agency (COES) released the 2025-2034 transmission plan, planning to invest approximately US$430 million to expand high-voltage lines and smart grids, focusing on solving the grid connection bottlenecks in the southern solar energy-rich areas (such as Arequipa and Moquegua).

Large-scale projects are accelerating: The government promotes integrated "wind, solar and storage" projects through the power purchase agreement (PPA) mechanism. For example, the Huayla photovoltaic project (238MWdc) signed by China Power Construction in March adopts the "wind and solar complementarity" model and is expected to meet the electricity needs of 160,000 households after it is put into operation in 2026.

Installed capacity has increased: Peru's photovoltaic installed capacity will increase by 61.7% year-on-year in 2024, and 1.24GW of grid-connected capacity is expected to be added in 2025. The planned projects will reach 1.8GW, mainly concentrated in the southern solar resource belt (annual radiation exceeds 3000kWh/m²).

International capital inflow: Inkia Energy has obtained environmental approval to expand its Sunny solar power station to 338MW, and plans to build a 1GW-level "solar center" in the fourth quarter of 2025, with financial support from I Squared Capital. Colombia's Celepsa and Spain's Zelestra signed a 450GWh/year PPA agreement to promote the implementation of a 238MWdc photovoltaic project.

Deep participation of Chinese companies: China Power Construction, China Southern Power Grid and other companies have led multiple EPC projects. For example, after China Southern Power Grid acquired X Peru, it focused on promoting distributed photovoltaic and energy storage systems and planned to deploy 500 smart microgrids in Lima by 2025.

Grid bottleneck: Although COES has upgraded its transmission plan, the current grid can only absorb about 8GW of electricity, while the installed capacity of renewable energy projects has reached 13.6GW. The power restriction problem may continue to affect investment returns.

Policy implementation risks: Peru once failed to implement some provisions of the 2008 Renewable Energy Investment Promotion Act due to bureaucratic inefficiency. Whether the 2025 tax incentive bill can be successfully passed by Congress remains uncertain.

Technology dependence: 80% of photovoltaic modules are imported. In January 2025, the United States launched a 337 investigation on Chinese photovoltaic cables, which may indirectly affect the supply chain of Peruvian projects.

Short-term impact: Tax incentives and PPA mechanisms will stimulate photovoltaic investment growth of about 20% in 2025, and it is expected to attract US$1.5 billion in foreign investment and create 5,000 new jobs.

Long-term potential: If the policy continues to be implemented, photovoltaic installed capacity is expected to exceed 8GW by 2030, and the cost of power generation can be reduced to US$0.04/kWh, becoming one of the most competitive photovoltaic markets in Latin America.

Energy storage support: It is necessary to speed up the introduction of energy storage subsidy policies, refer to Chile's "photovoltaic + energy storage" model, and improve the stability of the power grid.

Localized production: Learn from Brazil's experience, provide tariff reductions for local photovoltaic module production, and reduce import dependence.

Regional coordination: Promote cross-border transmission projects with Chile and Bolivia to achieve energy resource complementarity.

The Peruvian photovoltaic policy has promoted the expansion of market scale and the inflow of international capital through tax incentives, transmission upgrades and market mechanism reforms, while accelerating technological innovation and socio-economic effects.

However, grid bottlenecks, insufficient energy storage and policy implementation risks remain major challenges.

In the future, if energy storage subsidies can be further improved, localized production can be promoted, and environmental and community coordination can be strengthened, Peru is expected to become one of the most competitive photovoltaic markets in Latin America.