Latin America - a sleeping giant begins to stir

LATIN AMERICA: For many years Latin America has been considered prime territory for the development of the wind industry: growing economies with increasing electricity demand, a broad if not universal commitment to environmental protection and some of the best wind resources in the world. Yet, despite some promising starts, the region has barely scratched the surface of that potential, with less than 1.3GW of installed capacity at the end of last year.

The 25MW Paracuru wind farm in Ceara went online in 2008
The 25MW Paracuru wind farm in Ceara went online in 2008

Fortunately, there are signs that it is on the verge of developing a substantial wind power industry to complement the region’s rich hydro and biomass resources.

Of course, referring to more than 40 independent countries and a dozen or more overseas territories in North, Central and South America and the Caribbean as one region masks a wide divergence of political systems and cultures — not to mention vastly different stages of economic development. While only Mexico has actually joined the Organisation for Economic Co-operation and Development (OECD), which brings governments together to discuss key issues, there are emerging economies in the region whose per-capita income equals or exceeds that of some new Eastern EU member states. Yet parts of the region are still plagued with extreme poverty and under-development.

Not surprisingly, the first stirrings of major wind markets have been in Brazil and Mexico, the region’s two largest economies — each with tremendous potential for wind energy, growing electricity demand and a solid industrial infrastructure. Brazil has been a leader in renewable energy for many decades. It responded to the oil shocks of the 1970s with its groundbreaking Pro-Alcohol programme, manufacturing ethanol from sugar cane and making the country self-sufficient in liquid fuels for transport. It is also a world leader in hydropower, until recently producing up to 80% of its electricity needs. A complementary wind and hydro generation system would form an ideal basis for large-scale wind power development.

Growth

After some tentative steps in the past decade with its Proinfa wind energy support programme, Brazil’s industry seems to be taking off in earnest. At the end of last year, just over 600MW was in operation. Another 186MW has been added since then and nearly 300MW more is under construction, taking the country’s expected installed capacity by year end to more than 900MW. Last December, the government auctioned an additional 1.8GW and is holding a second auction in August, with the probability of more to follow. In addition to Wobben Windpower, an offshoot of Germany’s Enercon that has been established in Brazil for some years, this has attracted investment in local manufacturing from Argentina’s Impsa, India’s Suzlon, US firm GE and France’s Alstom. Other players are reportedly considering investing in the market.

Mexico has also seen significant activity in the past couple of years and, despite a difficult regulatory environment, had installed just over 200MW by the end of 2009. This year looks good, with 300MW already added. As host of the United Nations’ climate change conference this winter, Mexico has a further incentive to put its best green foot forward. Currently, the overwhelming majority of Mexico’s wind power remains own-generation, where large electricity consumers operate a wind farm and consume all its electricity, rather than integrating the production into the national grid. The government is struggling to come up with a regulatory framework that could really open up the substantial resources in the country.

Great hopes

And then there’s Argentina. Back in the 1990s, when former President Néstor Kirchner was a governor in Patagonia, there was great excitement that Argentina’s massive wind resources — which some say could supply Latin America’s electricity demand seven times over — would finally be developed. Indeed, the only currently operating wind farms in the country were developed during this period. But after he became president, Kirchner forgot about wind and the country’s markets have languished ever since. New hope has now arisen with the tender of 500MW of wind power under his wife President Cristina Kirchner’s Genren programme, with a target of 8% renewable electricity and several new projects under development.

Chile is another market to watch. It had nearly 170MW in operation at the end of last year, with a number of large wind power projects under development — which are desperately needed to help allay the effect of chronic gas shortages. Costa Rica, with about 120MW at the end of last year, has a new 50MW project coming online this year. Peru has nearly 150MW under construction, Uruguay has a target of 300MW by 2015 and Venezuela has 100MW under construction, scheduled to come on line in 2011.

Finally, although small, the island economies in the Caribbean mostly rely on imported fossil fuels, so wind could play a significant role in helping to grow their economies on a more sustainable basis.

All these early markets, however, suffer from the lack of a clear, long-term policy framework with which to demonstrate to the private sector and the finance community a commitment to develop renewable energy in general and wind power in particular. Such frameworks have been central to the majority of the world’s most dynamic wind power markets.

Enabling policy

Most of the projects have been instigated under a tender or auction system, treating wind power as if it were just another large hydro project or a coal plant. An enabling regulatory and policy framework would, instead, allow the private sector to rapidly develop wind power, fostering economic development and investment, and creating the green jobs that have been the object of government policy in many other parts of the world.

While it is perhaps not impossible to develop the industry under the tender/auction model, this approach flies in the face of the most successful experience with creating renewable energy industries elsewhere — and risks consigning the Latin American wind power market permanently to the category of "Lots of potential, but…".

GWEC and its regional partners will be working to make sure that this does not happen and that wind power begins to fulfil its extraordinary potential in this part of the world, contributing to a sustainable energy future.  


Shaping policy to support wind power success through committee

To help to open the Latin American markets to large-scale wind developments, in 2007 the Global Wind Energy Council (GWEC) established a dedicated Latin American Committee to combine the work of companies and associations in the region, as well as international and local investors.

The committee is helping to shape the policy environment for wind power in the region through support mechanisms and financing instruments that encourage technology transfer to the region and within domestic markets. It aims to educate policy makers about the economic, energy security and environmental benefits of wind power.

The committee has been notably active in Brazil, Mexico and Chile, one result of which has been the wind power auctions in Brazil. The first international wind industry conference and exhibition, Brazil Windpower 2010, is being held in August in Rio de Janeiro. 

In Mexico, GWEC is taking steps to identify the barriers to wind power growth and to establish a strong relationship with the national foreign investments institution, ProMexico. In Chile, an energy market report was commissioned to assess potential wind power deployment, regulatory drivers and policies to be adopted. Across the region, GWEC is working with the national associations to build wind power capacity.

Steve Sawyer is secretary general of the Global Wind Energy Council

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