Recent developments are encouraging. Last year, Latin America’s total installed capacity grew by 50%, and more than 2GW of wind power is now in operation across 13 countries in the region. With Brazil recently achieving the magical 1GW mark, and it seems that, with this, wind has reached a critical mass there. Several countries are not far behind.
Latin America comprises more than 20 countries that are diverse in terms of politics, culture and economic development. A few can be described as rich, industrialised countries, while a number of emerging economies have per capita incomes similar to some of the new Eastern European EU member states. By contrast, others are very poor.
It is Latin America’s largest economies — Brazil and Mexico — that have seen the first substantial developments. Both have tremendous wind power resources and both are in dire need of new electricity generation to fuel their growing economies. In addition, thanks to other sectors already operating in these countries, there is a solid industrial infrastructure already in place.
A world leader in renewable energy deployment for many decades, Brazil is a pioneer in running an effective bioethanol programme, and sourcing up to 80% of its power from hydro-electricity. The high flexibility that hydropower gives the country’s electricity system is an ideal basis for large-scale wind power development.
Wind energy got off the ground in Brazil in 2002 when the government introduced Proinfa, the programme of incentives for alternative electricity sources. After a slow start, the programme has been extended several times, now running until the end of 2011. It looks increasingly likely that Proinfa’s 1.4GW target will be largely met. The programme accounts for over 95% of all wind installations in Brazil.
Renewable energy auctions in December 2009 and August 2010 have led to contracts for around 3.8GW. An additional auction planned for this summer is expected to include a large number of wind power projects. According to Brazilian wind energy association ABEEólica, the projected pipeline of over 4GW to 2013 would take wind’s share of electricity generation up from the current 0.5% to 4%.
Several major international manufacturers have committed to building production facilities in Brazil in the past year, and the country is set to become a major manufacturing hub for the region.
Potential remains much greater, however. The 2001 Brazilian Wind Potential Atlas, based on measurements at hub heights of 40 to 50 metres, said 143GW could be installed. With hub heights of up to 100 metres today, the potential would be closer to 350GW.
Mexico has also seen significant activity in the past few years, despite a difficult regulatory environment. The country has an outstanding wind resource, especially in the Oaxaca region, but also in Baja California, Tamaulipas and elsewhere. The government estimates the country can achieve around 71GW if it uses 10% of the total potential area in 22 out of 32 states, and includes sites with capacity factors above 20%. Potential for sites with capacity factors over 30% is around 11GW.
Installed capacity has increased more than sixfold since the end of 2008, with 316MW added last year to reach a total of 519MW. However, the overwhelming majority of Mexico’s wind power remains self-supply generation, where large electricity consumers operate a wind farm and consume all its electricity, rather than integrating the production into the grid.
This recent growth was spurred by a more supportive legal and regulatory framework, the availability of new grid capacity in the Oaxaca region, turbine price reductions, and renewed access to financing, which had been extremely limited after the financial downturn.
In 2008, the government introduced a renewable energy law, which mandated various bodies to develop a renewable energy strategy and set a target to increase the share of non-hydro renewable generation from 3.9% to 6.6% by 2012. This year, the government amended the law, calling for further renewable energy targets, financial incentives for production and an assessment of third-party costs associated with different forms of electricity generation. It also set a goal of reducing fossil fuel generation to 65% by 2024 and 50% by 2050.
At the end of 2010, Chile had 172MW of wind power in operation. A large number of projects are under development and are desperately needed to help allay chronic gas shortages. Unlike many of its regional neighbours, Chile has limited indigenous fossil energy resources, and its dependence on imported fossil fuels has created periods of electricity shortage over the past decade. The country experienced droughts in 2007, 2008 and 2010 and, as a result, energy prices in Chile have nearly tripled in the past five years.
Chile has wind, solar and geothermal resources yet they supply less than 1% of the energy mix. Wind potential is estimated at around 40GW, but there is no specific policy to encourage its development — renewable energy projects must compete in the market with conventional power generation. Inadequate grid infrastructure is another limiting factor for wind power.
Despite these obstacles, the Chilean Energy Ministry says around 2GW of wind projects have been submitted to the environmental impact assessment system, with most expected to start operation between 2012 and 2014, assuming the technical and financial conditions are met.
Argentina’s wind resources are unrivalled in the region, and are estimated to be sufficient to supply Latin America’s entire electricity demand several times over. But, again, only a tiny amount — 60MW — of this potential has been developed.
New hope has arisen with the wind power tender under President Cristina Kirchner’s GENREN programme with its 2016 target of 8% renewable energy, and several new projects are under development. The tender was originally for 500MW of wind, but 754MW were awarded. Argentina already hosts a mature wind power industry, with manufacturers including Impsa, Invap and NRG Patagonia serving the market with their own technology and domestic production.
Costa Rica had 120MW of wind power at the end of last year, and a new 50MW project under auction. Peru has nearly 150MW under construction and a new auction planned, while Nicaragua has 63MW installed and Uruguay 43MW, with a target of 500MW by 2015. Venezuela has 100MW scheduled to come online in 2011 and Honduras has 102MW under construction. Finally, the island economies in the Caribbean mostly rely on imported fossil fuels, so wind could be key in putting their economies on a more sustainable footing.
Steve Sawyer is secretary general of the Global Wind Energy Council
READY TO GO JUST ADD A SUPPORTIVE POLICY FRAMEWORK
Latin America indeed seems on the verge of developing a substantial wind power industry to deliver clean, reliable and predictable power to complement the region’s rich hydro and biomass generation.
Most of these markets, however, suffer from a lack of a clear, long-term policy framework, which in turn undermines investor confidence and hampers private sector development.
Auctions not enough
Most projects have come into existence through tender and auction systems, putting wind power on a par with large hydropower or coal-power generation. In order to develop the region’s tremendous wind resource and enable the countries to benefit, not only from increased power generation, but also from the associated economic benefits of wind power, what is needed is a favourable regulatory and policy framework to encourage private-sector investment.
In most other mature wind power markets, it is precisely these policy frameworks that have fostered renewable-energy industries and markets, rather than auctions and tenders. Only then can wind power fulfil its extraordinary potential in this part of the world, contributing to a sustainable-energy future.