Solar startups in Latin America gain more than $750 million in climate change initiatives

Latin American startups operating in the energy sector have attracted significant investment, securing over $750 million in 76 rounds of financing from 2021 to April 2024. This data comes from the EnergyTech Report 2024 prepared by Distrito, the leading platform for emerging technologies in the region. Brazil dominates the investment landscape, with a share of 80% and 61 operations raising $605.9 million.

The push for cleaner energy solutions, fueled by concerns about climate change, has spurred the emergence of many energy startups. Of the 347 energy technology companies located in Latin America, 55% are engaged in renewable energy solutions, such as solar panel installation and photovoltaic system loans. Then comes energy distribution, with 130 startups offering energy-saving and consumption-monitoring solutions.

“The Energytech segment is one of the most dynamic in the innovation ecosystem,” said Gustavo Gierun, CEO and co-founder of Distrito. He noted that the key drivers of the sector’s growth are regulatory changes, the development of the Free Energy Market, the growing importance of climate initiatives and corporate capital. Gierun expressed optimism that 2024 could be a banner year for the industry.

From January to April 2024, Energytech businesses in the region received $113 million across seven operations, representing more than half of the $213 million invested across 17 rounds in the previous year. The peak investment year was 2022, in which $294 million was collected across 28 investments.

Brazilian company Órigo, which operates solar parks in multiple states, stands out as the best-financed company in the region, having raised $346.9 million in three of the five largest investment rounds.

Investment breakdown and trends

Energy Distribution leads the investment category, with $417.3 million raised in 57 rounds. This reflects strong market demand for innovations that increase energy supply, support a free energy market and connect consumers with solar parks.

M&A in the energy technology sector was particularly active in 2022, recording five deals. There were three transactions recorded in the first four months of 2024, indicating a potential increase in activity later in the year.

Key trends driving the sector include electrification and electric mobility, driven by the expansion of the Chinese automotive industry in Latin America and growing interest in electric vehicles. Government initiatives such as Brazil’s Rota 2030 program aim to support technological development and competitiveness in the automotive sector, as well as tax cuts for electric vehicles.

Companies are also focusing on the development of long-lasting batteries necessary for storing renewable energy. Additionally, microgrids, local power generation networks with increased battery capacity are proving to be essential energy transition solutions, bringing particular benefits to remote and isolated communities.

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