The impact of fiscal incentive policies on the installed capacity of renewable energy was examined in thirteen Latin American countries, over the period of 1980 to 2014. The Autoregressive Distributed Lag (ARDL) methodology was used to decompose the total effect of fiscal incentive policies on installed capacity in its short- and long-run components. The results showed that the fiscal incentive policies in short-run do not cause any impact on the installed capacity of renewable energy, due to the possible inefficiency of these policies, while in long-run, the fiscal incentives stimulate the investments in renewable energy in 0.8977 %. The economic growth of Latin American countries and economic growth of China in the short-run have a positive impact of 3.1564 %, and 5.2724 % respectably, while in long-run exerts a positive influence of 2.4934 % and 1.0498 %. The results of this article point to the necessity to create more fiscal incentive policies in order to promote the investments in renewable energy sources, to foster the economy of countries or specific regions, as well as generate income, and also increases the consumption of alternative sources.