South America Thermal Power Market: Market Size & Forecast 2026

Thermal power in South America fills a vital gap in a region whose generation mix is historically anchored in large-scale hydropower. Drought-induced hydrological stress has elevated the strategic importance of thermal plants, running on natural gas, coal, fuel oil, and increasingly on biomass and bagasse, as grid reliability assets. The broader Latin America power generation market reached $66.76 billion in 2025 (5.63% of the global total) and is projected to rise to $72.23 billion in 2026, with the thermal sub-segment representing an expanding slice of that landscape at 10.89% annual growth.

• •Regional power generation market valued at $66.76B in 2025, forecast at $72.23B in 2026
• •Hydropower dependency makes thermal dispatchable capacity critical during low-rainfall cycles
• •IEA World Energy Outlook 2025 highlights the South America trilemma of energy security, affordability, and sustainability

Data-center buildout is emerging as a potent demand catalyst, with the South America data-center power market already at $588.32 million in 2025 and projected near $987 million by 2030, requiring continuous, reliable power that renewables alone cannot always guarantee. Complementary demand comes from the transformer and distribution infrastructure markets, the LATAM transformer market alone is valued at $1.5 billion and growing at 5.9% CAGR, underscoring the capital investment cycle supporting thermal and grid upgrade projects. IRENA's regional energy transition work through FOREPLEN and the Latin American Green Hydrogen Platform signals an expanding role for thermal-compatible fuels, including hydrogen blending, in the medium-term transition roadmap.

• •Data-center power market at $588.32M (2025), forecast ~$987M by 2030, driving firm-capacity demand
• •LATAM transformer market at $1.5B (2024), projected $2.7B by 2034 at 5.9% CAGR, supporting grid-integration investment
• •IRENA regional platform advancing green hydrogen, creating a pathway for thermal plant fuel diversification

The market splits primarily by technology route: open-cycle gas turbines (OCGT) serving peak-load and backup roles, combined-cycle gas turbines (CCGT) for mid-merit operation, coal-fired baseload plants (notably in Colombia and parts of the Southern Cone), and biomass/bagasse cogeneration concentrated in Brazil's sugar-ethanol belt. Geographically, Brazil commands the largest thermal capacity footprint, while Argentina, Chile, and Colombia maintain significant gas-and coal-fired fleets. Thermal Energy Storage (TES), valued at $5.37 billion globally in 2025 and projected to exceed $12.95 billion by 2035, is beginning to intersect with thermal power operations as grid operators seek hybrid flexibility solutions.

• •Technology split: OCGT peakers, CCGT mid-merit, coal baseload, biomass/bagasse cogeneration
• •Brazil leads in biomass thermal capacity; Argentina and Colombia hold the largest fossil-fuel thermal fleets
• •Thermal Energy Storage at $5.37B (2025) globally, on track for $12.95B by 2035, increasingly integrated with thermal power assets

Who are the notable companies in the industry?

# Competitive Landscape The South America Thermal Power Market is moderately fragmented, anchored by a mix of vertically integrated national utilities, independent power producers (IPPs), and global equipment and energy suppliers. Among the leading participants are Centrais Eletricas Brasileiras SA, AES Corporation, Pampa Energía SA, Enel S.p.A, and Colbún S.A, operating alongside petroleum-side players such as YPF SA and Isagen S.A. ESP, and turbine technology providers including Siemens AG. Centrais Eletricas Brasileiras SA dominates baseload capacity allocation within Brazil's national interconnected grid, reinforcing Brazil's position as the regional demand center. Enel S.p.A competes through advanced combined-cycle technology leadership across Chile and Peru, while Pampa Energía SA and YPF SA anchor thermal generation in Argentina, where northern capacity clusters remain pronounced. AES Corporation contributes as a multinational IPP with a regional footprint across multiple Latin American grids, and Colbún S.A represents Chile's central-grid thermal operator. Colombia's participation is led by Isagen S.A. ESP, a vertically integrated national generator. On the supply side, Siemens AG supports project execution, including the 2019 shipment of 14 industrial gas turbines to Bolivia's Entre Rios combined-cycle plant. With natural gas-fired generation driving thermal expansion, this blend of utility operators and technology suppliers defines the competitive structure.

• •Mix of vertically integrated national utilities and independent power producers; no single dominant global player
• •Primary technology routes: CCGT for mid-merit, OCGT for peaking, coal for baseload, biomass/bagasse for localized cogeneration
• •Capacity concentrated in Brazil (southeast), Argentina (north/central), Chile (central), and Colombia (Caribbean/inter-Andean corridors)

What are the recent trends and outlook?

Thermal power's role in South America is shifting from baseload workhorse to flexible, reliability-guaranteeing capacity provider as wind and solar penetration accelerates. Regional policy frameworks coordinated through IRENA's FOREPLEN are beginning to embed thermal flexibility requirements, ramp rates, black-start capability, and potentially hydrogen-readiness, into planning standards. The 10.89% CAGR projected for the thermal power market suggests continued near-term investment in gas-fired capacity even as the long-term trajectory aligns with decarbonization, making this a transitional-market window for thermal assets through the early 2030s.

• •Thermal plants increasingly valued for grid flexibility and reliability services rather than pure energy supply
• •IRENA FOREPLEN and regional green-hydrogen platforms are shaping thermal plant retrofit and fuel-switching policy frameworks
• •IEA WEO 2025 underscores energy-security priority, sustaining near-term thermal investment despite long-term decarbonization goals