As Latin America and the Caribbean accelerate their energy transitions, the regulatory foundations underpinning their electricity markets are coming under unprecedented scrutiny. Across the region, governments are managing the combined pressures of rising electricity demand, the need to expand access and improve system reliability, and the accelerating energy transition. While most countries have undertaken significant reforms over past decades, the region remains characterised by a wide diversity of electricity market structures, ranging from competitive wholesale markets to more vertically integrated or partially liberalised systems.
A new technical study, The Estudio de Regulación para los Futuros Mercados Eléctricos en América Latina y el Caribe (“Regulatory Study for Future Electricity Markets in Latin America and the Caribbean”), takes stock of where the region stands, and how it must act in the future to keep affordable and clean energy flowing in the region. Prepared by GET.transform, authored by Grupo Mercados Energéticos (GME), and in close collaboration with the Ibero-American Association of Energy Regulation Entities, ARIAE, and the Latin American and Caribbean Energy Organization, OLACDE, the report maps the spectrum of regulatory models operating in the region, from vertically-integrated state monopolies to competitive wholesale markets. It classifies 14 countries, including Brazil, Chile, Colombia, Argentina, and Peru, as having relatively organised electricity markets, while a further 13, including Venezuela, Uruguay, Ecuador, and Costa Rica, remain under predominantly state-controlled structures.
Rather than treating the region as a single market, the study starts from the reality that electricity systems in Latin America and the Caribbean are at different stages of institutional and market development. It highlights the co-existence of cost-based and price-based (free-offer) market models, with Colombia identified as a regional example of the latter. The analysis notes that while cost-based approaches suit markets with limited competition or price transparency, they may impose significant constraints on the integration of new technologies, particularly battery storage, where regulatory frameworks may not fully reflect opportunity costs.
To inform this perspective, the report draws on a comparative benchmarking exercise of three mature electricity markets: Spain, Italy, and Texas (ERCOT)/USA. In Spain, OMIE operates a liberalised day-ahead and intraday market, supported by a regulatory framework that targets a high penetration of renewables under the National Energy and Climate Plan. In Italy, Gestore Mercati Energitici manages competitive wholesale markets under the oversight of the independent regulator ARERA. In Texas, ERCOT operates an energy-only market without capacity payments, relying on scarcity pricing mechanisms such as the Operating Reserve Demand Curve to signal investment needs.
Across these reference cases, the study focuses on core elements of market design, including wholesale and balancing markets, capacity mechanisms, transmission planning approaches, and the role of price signals in driving investment. The objective is not to replicate a single model, but to identify practical lessons that can inform more effective regulatory frameworks in Latin America and the Caribbean.
