While the world is going through a turning point in which solar is consolidating itself as the fastest growing technology and renewables are surpassing coal for the first time in global electricity generation, Latin America and the Caribbean show their own paradox: they have one of the most renewable energy mixes on the planet, but wind and solar together still generate less electricity than natural gas.
This is according to the latest OLACDE monthly electricity generation report, corresponding to January 2026, which shows that the region produced 171 TWh of electricity and reached a renewability index of 66%. However, within that mix, the share of variable renewables still remains below that of the main backup fossil fuel.
According to the report, wind power accounted for 11.7% of regional electricity generation and solar power for 5.3%. Together, these two technologies reached 17% of the total. Natural gas, on the other hand, accounted for 23.8%, consolidating its position as the second largest source of electricity generation in Latin America and the Caribbean, second only to hydroelectricity.
This data is especially relevant in the global context. According to Ember's Global Electricity Review 2026, solar power experienced its highest annual growth ever in 2025, with an increase of 636 TWh, equivalent to 75% of the net increase in global electricity demand. Combined with wind power, these two technologies covered 99% of the growth in global demand.
This progress meant that global fossil fuel generation did not increase for the first time since 2020, and renewables surpassed coal in the global electricity mix for the first time in the modern era. Globally, renewables reached 33.8% of generation, compared to 33% for coal.
But Latin America operates under a different logic. The region's main structural problem is not coal. In fact, coal accounted for only 2.7% of regional electricity generation in January 2026, according to OLACDE. The true core of the system lies in the combination of hydroelectricity, natural gas, and variable renewables.
Hydropower remains the backbone of the regional energy mix, accounting for 44.5% of total generation. This significant share explains much of Latin America and the Caribbean's high rate of renewable energy, but it also reveals a historical dependence on water resources, which are vulnerable to droughts, seasonal variations, reservoir availability, and dispatch decisions.
In this context, natural gas maintains a central role. Not only because of its generation volume, but also because of its operational function: it provides flexibility, load tracking, reserve, and backup in the face of the variability of renewable generation and hydroelectricity itself.
The OLACDE report indicates that, even in a month with greater water availability, fossil fuel-based thermal power plants maintained a significant share of 31.3% in total generation, led by natural gas. The organization emphasizes that this technology is consolidating its position as a flexibility resource for the regional electricity system.
The monthly comparison also highlights the current limitations of variable renewable integration. Compared to the previous month, solar generation fell by 30% and wind generation by 11%, while hydroelectric generation increased and reorganized the system's dispatch. Year-on-year, solar generation decreased by 11.2 TWh, while hydroelectric generation increased by 10.8 TWh.
This contrast opens a key discussion for the region: Latin America already has a relatively clean electricity mix compared to other economic blocs, but the next leap in the transition will not depend solely on installing more solar and wind farms. It will also require grids, storage, operational flexibility, ancillary services, and regulatory frameworks capable of rewarding the firmness and stability of the system.
The global trend shows where the market is headed. Ember highlights that batteries are beginning to convert daytime solar energy into available power at other times of day, enabling a new phase of renewable growth. By 2025, global battery deployment grew by 46% to approximately 250 GWh, while costs fell by 45%, following a 20% reduction in 2024.
This point is especially relevant for Latin America. Countries like Chile are already among the leading markets in grid-scale storage, with enough capacity to shift more than 50% of the new solar generation from 2025 to other times of the day, according to Ember.
The region, therefore, starts with an advantage: low dependence on coal, abundant renewable resources, and a power mix heavily reliant on hydroelectricity. But OLACDE data shows that this advantage has not yet translated into a complete replacement of gas with solar and wind power.
In January 2026, the Latin American electricity transition painted a clear picture: the region is renewable, but not yet solar-wind. And as long as gas continues to generate more electricity than both technologies combined, the debate on storage, transmission, and flexibility will remain as important as that on new renewable capacity.