Toward a 4x Nuclear Expansion by 2050: Latin America’s Path to Strategic Energy Security
Latin America faces a critical challenge in meeting its growing energy demands driven by urbanization, economic development, and global decarbonization commitments. Hydropower, which constitutes a significant portion of the region’s electricity generation, is increasingly vulnerable to droughts and social opposition, while reliance on fossil fuels conflicts with international climate agreements. Although solar and wind energy are expanding, their intermittent nature limits their ability to fully address future energy needs. Nuclear energy, particularly through Small Modular Reactors (SMRs), presents a viable solution for Peru, Ecuador, Bolivia, Chile, Colombia, and El Salvador. For these countries, nuclear power offers a strategic opportunity to enhance energy security, support economic growth, and achieve sustainability goals. This article outlines why stakeholders in Latin America should prioritize investment in nuclear energy.
Energy Challenges in Latin America
Latin America’s electricity demand is rising due to population growth and industrial expansion. Hydropower, accounting for 54% of the region’s electricity, faces constraints from climate variability and opposition to large dams due to environmental and social impacts. In Colombia, where hydropower generates 68% of electricity, El Niño events disrupt supply and increase prices. Fossil fuels remain a significant energy source but are unsustainable amid global efforts to reduce carbon emissions. Renewable sources, such as solar and wind, are growing but cannot independently meet demand due to intermittency and storage limitations. The International Energy Agency indicates that without complementary energy sources, the region risks long-term energy deficits, which could hinder economic development.
Nuclear energy addresses these challenges by providing reliable, low-carbon baseload power. It complements renewables, ensuring a stable electricity supply, and supports the region’s climate objectives. Nuclear power contributes only 2% of Latin America’s electricity in 2023, but projections suggest its capacity could quadruple by 2050, significantly strengthening energy security and sustainability.
Small Modular Reactors: A Solution for the Region
Traditional large-scale nuclear plants may pose financial challenges for Latin American economies, but SMRs offer a practical alternative. These reactors, with capacities up to 300 MW(e), are designed for cost-effectiveness, flexibility, and faster deployment. Their modular, factory-based construction reduces capital costs and construction timelines, making them suitable for countries with smaller grids or limited financial resources. SMRs also incorporate passive safety features, which enhance public confidence in their deployment.
The economic feasibility of SMRs is demonstrated by their Levelized Cost of Electricity (LCOE), as analysed by Barrera Giraldo et al. (2025) in their study, Economic and Policy Assessment on Nuclear Energy for Latin America’s Energy Transition. This research evaluates the potential of nuclear energy to complement renewable sources in Peru, Ecuador, Bolivia, Chile, Colombia, and El Salvador, focusing on economic and policy conditions for SMR development. The study finds that LCOE for SMR ranges from 70.88 USD/MWh to 158.57 USD/MWh across these six countries, depending on financing and local economic conditions. At 80% leverage, a standard financing structure for infrastructure projects, the LCOE narrows to 71.14–84.14 USD/MWh, competitive with other energy sources. Chile and Peru, with country risk premiums of 1.03% and 1.95%, respectively, achieve the lowest LCOEs, making nuclear energy economically attractive. In Bolivia and Ecuador, where higher country risk premiums (12.22%) increase costs, targeted financing strategies can improve project viability.
Colombia provides a model for implementation. Under Law 1715 of 2014, tax incentives, including income tax deductions, VAT exemptions, and accelerated depreciation, reduce the financial leverage required for nuclear projects from 65% to 30%. Additionally, Colombia’s reliability charge, a payment for available power, ensures profitability even without tax incentives, with stochastic analyses indicating positive margins in most scenarios. This combination of fiscal and market mechanisms offers a framework that other countries, such as Peru and Ecuador, could adopt to facilitate nuclear energy development.
Why Latin America Should Bet on Nuclear
Nuclear energy isn’t just about power—it’s about empowering Latin America’s people, businesses, and aspirations. Here’s why it resonates with the region’s context:
Economic Resilience for Local Communities: Nuclear projects create jobs, from construction in rural Bolivia to high-tech roles in Santiago. SMRs’ modular production can spark manufacturing hubs, like in Colombia’s industrial heartland, boosting local economies and reducing reliance on imported tech.
Affordable Energy for Growing Cities: In sprawling metros like Lima or San Salvador, nuclear’s stable pricing shields consumers from the price swings tied to El Niño or global oil markets. This stability fuels small businesses and industries, from Peruvian textiles to Ecuadorian agriculture.
Climate Pride and Global Leadership: Latin Americans take pride in their natural heritage, from the Andes to the Amazon. Nuclear’s low-carbon profile supports regional climate goals, letting countries like Chile and Colombia shine at global forums like COP. It’s a chance to lead, not follow, in the clean energy race.
Energy Independence: For nations like El Salvador, reliant on imported fuels, nuclear reduces exposure to global price shocks. It’s a step toward sovereignty, ensuring local industries thrive without foreign dependency.
Tailored Technology: SMRs align with Latin America’s diverse needs—small enough for Bolivia’s grid, robust enough for Chile’s mining sector. Their safety features address local seismic risks, resonating with communities wary of environmental impacts.
Overcoming Challenges: A Latin American Approach
Nuclear energy development faces obstacles, including high initial capital costs, public concerns about safety, and regulatory gaps. Colombia’s fiscal incentives demonstrate how policy can mitigate financial barriers, making projects more accessible. Public apprehension, driven by historical safety concerns, can be addressed through transparent communication about SMRs’ advanced safety features and minimal waste, as evidenced by successful renewable energy initiatives in Colombia.
Regulatory frameworks require strengthening, particularly in countries like Ecuador and Bolivia. Regional cooperation, such as through the ARCAL agreement, can align standards with International Atomic Energy Agency guidelines, streamlining licensing and oversight. Financing challenges, especially in high-risk countries like Ecuador and Bolivia (12.22% country risk premium), can be addressed through concessional loans from multilateral institutions, such as the Inter-American Development Bank, and public-private partnerships that distribute risks and leverage private-sector expertise.
The study identifies overnight capital costs and capacity factors as primary drivers of LCOE. Developing regional supply chains for SMR components can lower costs and support local economies. Grid modernization is also necessary to integrate nuclear baseload power, building on existing infrastructure to ensure reliability.
A Strategic Opportunity for Latin America
Latin America has a history of pursuing ambitious energy and infrastructure projects. Nuclear energy, enabled by SMRs, represents a significant opportunity for Peru, Ecuador, Bolivia, Chile, Colombia, and El Salvador to meet growing energy demands, strengthen economies, and achieve environmental objectives. With LCOEs as low as 71.14 USD/MWh in Chile and demonstrated profitability in Colombia, the economic case is robust.
Businesses are encouraged to invest in nuclear energy, which offers reliable returns supported by competitive LCOEs and access to green financing. Governments should implement policies, such as Colombia’s tax incentives and reliability payments, and foster regional regulatory alignment to enable nuclear projects. Communities stand to benefit from employment opportunities, stable energy prices, and a cleaner environment. Nuclear energy can enhance Latin America’s energy security, support sustainable development, and position the region as a leader in global decarbonization efforts. The opportunity to advance nuclear energy is immediate and should be prioritized by all stakeholders.
