South America Automotive Manufacturing Equipment Market Outlook, 2031

Market Drivers

• Electric Shower Displacement: The conventional electric shower is the single most powerful driver of residential solar thermal adoption across South America, particularly in Brazil where it operates between 5,500 and 7,500 watts and accounts for 30 to 45 percent of residential electricity consumption in homes with three occupants. A standard solar thermal system reduces residential consumption by 80 to 120 kWh per month, translating to monthly savings of R$70 to R$105 at May 2026 rates, while also alleviating the national peak demand between 5 PM and 9 PM that is driven by simultaneous shower use. Brazil's 26.7 million square metres of installed collectors already avoid 6.2 million tonnes of CO2 annually, with ABRASOL projecting this could reach 60 million tonnes if industrial adoption matched its potential.
• Industrial Process Heat Economics: South America's industrial sector requires substantial thermal energy for processes between 30°C and 400°C, with food and beverage, mining, and chemical sectors representing the most addressable segments. The Pampa Elvira Solar plant at Codelco's Gabriela Mistral Division in Chile has operated since 2013, supplying 50 percent of the heat required for copper electro-winning through 2,928 solar panels and 4,600 cubic metres of thermal storage, reducing 12,000 tonnes of CO2 annually. Chile's first Fresnel solar steam pilot plant at Laguna Carén, developed by Fraunhofer Chile with German government funding, operates between 100°C and 200°C to validate concentrated solar thermal for mining, agroindustry, and water treatment applications, with approximately 75 percent of industrial energy globally used for heat or steam production.

Market Challenges

• Financing Constraints and Economic Uncertainty: Despite the compelling economics of solar thermal, the South American market faces persistent financing challenges that constrain growth, particularly in the residential segment. ABRASOL has confirmed that economic uncertainty and the lack of financing continued to affect the supply chain in 2024, despite domestic production of solar water heaters increasing 11 percent. Argentina's solar water heater manufacturing sector, which had 23 domestic companies in 2015, was reduced to just 6 active manufacturers by 2019, with 27,500 of the 30,000 units sold that year being imported from China, reflecting the difficulty of maintaining domestic production amid currency volatility and import competition. The Ministry of Productive Development's programme to strengthen national manufacturing aims to reverse this trend through guaranteed demand from 120,000 Casa Propia housing units, but broader market recovery depends on stable macroeconomic conditions and access to affordable consumer financing.
• Competition from Photovoltaic and Heat Pump Systems: The South American solar thermal market faces intensifying competition from photovoltaic systems paired with heat pumps, which benefit from rapidly declining module costs and broader consumer familiarity with solar electricity generation. Brazil's distributed solar generation has grown from less than 1 GW in 2018 to 40 GW by mid-2025, with solar photovoltaic representing 99 percent of the country's total distributed generation capacity, creating a powerful competitive dynamic that draws consumer attention and investment away from thermal applications. In Chile, the Ministry of Energy's new price study explicitly includes a parallel analysis of heat pump pricing alongside solar thermal, reflecting the government's recognition that these technologies compete directly for the same thermal load. The challenge is most acute in the residential segment, where consumers prioritise the simplicity and brand familiarity of photovoltaic systems over solar thermal, even when thermal offers superior energy yield for water heating applications.

Market Trends

• Concentrating Solar Thermal for Industrial Decarbonisation: The most significant technological trend across South America is the emergence of concentrating solar thermal technologies for industrial process heat applications, with Chile positioning itself at the forefront through the inauguration of the country's first Fresnel solar steam pilot plant at Laguna Carén in February 2026. The facility, developed by Fraunhofer Chile with the University of Chile and funded by the German Federal Ministry of Education and Research with 400 million Chilean pesos (approximately USD 444,000), operates between 100°C and 200°C to generate steam for industrial processes including cooking, pasteurisation, sterilisation, and drying in agroindustry, as well as concentration, assisted evaporation, and water recovery in non-metallic mining including lithium. The plant uses technology from Spanish company Solatom and operates autonomously through an associated 12.8 kW photovoltaic plant with energy storage, demonstrating the integration of renewable thermal and electrical generation in a single industrial facility.
• Hybrid PVT and Multi-Energy Integration: The convergence of photovoltaic and thermal technologies in hybrid modules is gaining commercial traction across South America, particularly for residential and commercial applications where roof space is limited and both electricity and hot water are required. BTE Solar has introduced hybrid PVT panels ranging from 450W to 580W that combine photovoltaic electricity generation with solar thermal water heating in a single unit, specifically designed for rural Brazil, Peru, and the Caribbean where both electricity and hot water access can be limited. The technology reduces installation area by more than 30 percent compared to separate PV and thermal systems, making it particularly attractive for rooftops with limited space or projects with strict energy efficiency targets. This trend toward hybridisation reflects a broader recognition that solar thermal and photovoltaic technologies are complementary rather than competing, with integrated systems offering superior overall energy yield per square metre of installed area.