Closing Latin America and the Caribbean’s infrastructure gap will require a sustained increase in private investment, particularly in the energy sector. Despite the region’s abundant renewable resource endowments, investment has not scaled in line with potential. This report provides new evidence on the constraints underlying this investment gap by drawing on a structured survey of project sponsors—firms and associations directly involved in developing, financing, and executing renewable energy investments across the region. By capturing the perspectives of decision-makers, the analysis offers a micro-level view of the barriers that shape investment outcomes. The survey points to a consistent set of constraints. Regulatory and institutional factors emerge as the primary source of investment risk, particularly delays and uncertainty in permitting, inconsistent rule implementation and enforcement, and limited coordination across agencies. Investment decisions are driven predominantly by commercial considerations: market demand and expected profitability outweigh other factors, while environmental objectives alone are rarely sufficient to trigger investment. Financing constraints are also important, but they are less about the availability of capital per se than about its cost and maturity, with limited access to long-term financing instruments and underdeveloped capital markets constraining project scale.
This paper is co-published with the Inter-American Development Bank.
