Visit windpowermonthlyevents.com for the latest on our upcoming conferences and webcasts

Mexico

Mexico

What chance Latin America?

Despite much talk on wind in Latin America, the fact is that countries as economically important as Brazil and Mexico have only 22 MW installed capacity between them. Things are changing though. Argentina showed the first indications when Spanish utilities Endesa and Elecnor teamed up to announce plans for 3000 MW over ten years. Those plans have been shelved until perspectives pick up, but wind does have industrial scale potential in the region. Brazil, too, has created the Proeolica support mechanism, pledging to bring 1050 MW on-line. But Latin America's wind sector needs to take more control of its own destiny before recent developments tempt the wind industry to rush to the region.

Despite much talk and some progress on wind in Latin America, the fact is that countries as populous and economically important as Brazil and Mexico have only 22 MW installed capacity between them, and with all due respect to Costa Rica -- the only country that has got to grips with regulations and developing significant scale wind development -- its small economy means that a wind industry will never develop there. Things are changing though. Argentina showed the first indications in December 2000 when Spanish utilities Endesa and Elecnor teamed up to announce plans for 3000 MW over ten years. Five presidents and an economic crash later, those plans have been quietly shelved until perspectives pick up, but the message was clear -- wind does have industrial scale potential in the region and in the case of Argentina at least, regulations are satisfactory to attract serious companies with serious budgets.

Brazil, too, has picked up the wind baton, creating the Proeolica support mechanism in July 2001, pledging to bring 1050 MW on-line, with the government acting as guarantor for 15 year power purchase agreements. Designed to help Brazil out of a generation crisis that saw rationing from June 2001 to February 2002, Proeolica is nonetheless only a temporary three-year measure. Even if it meets all its goals, wind in the 2001-2004 period will account for only 3.7% of all new capacity.

Last month, however, the Brazilian parliament approved the Proinfa measure (page 20) as part of the new MP14 power sector legislation, now awaiting presidential ratification. Proinfa builds on Proeolica's foundation and provides an indefinite commitment to wind and other renewables, seeking to install 3300 MW by 2006 and assuring that renewables account for at least 10% of national demand within a 20 year timeframe, and that they meet 15% of the year-on-year increase in power demand. Not only are the goals and scale a quantum leap forward but so are the details: the regulation clearly sets legally established responsibilities, criteria and timeframes that mean that wind has been given the chance to establish its potent future in an expanding and power hungry market.

Mexico, too, appears to have cleared a hurdle this year, with a company not only announcing plans for a respectably sized 30 MW project and a further 60 MW in phase two, but also applying for authorisation for a total of 425 MW (page 21). It is apparently confident of being able to generate, transport and sell that power. Like Brazil, Mexico is a huge economy that needs secure power sources to grow. Also like Brazil, it is facing a large generation deficit with a correspondingly large estimate of necessary investment.

But Latin America's wind sector perhaps needs to take more control of its own destiny before recent developments tempt the wind industry to dust off its atlases and rush to the region. Although wind is now being considered as a first-team player it is still one that seldom touches the political ball -- its progress owes more to what happens elsewhere on the pitch. In Brazil, 2002 is an election year. The MP14, a presidential decree that needed parliamentary approval to become law, was a political hot potato whose passage through Congress was far from certain and in the end owed more to political allegiances than to its actual merits. Moreover, wind was but a minor part of MP14, whose main aim was to establish compensation amounts and mechanisms for those companies hit by the 2001 rationing.

The tale in Mexico is similar. The key legislation enabling renewables to use the transmission facilities of state power company CFE has been in place for some years and the announcement of the first commercial wind project is seen by observers as simply a new outlook from a new government. As power is a hot political topic, with sector reform due to go to Congress soon, what the government says and thinks is inevitably conditioned by political convenience. And even once the reform hurdle is overcome, good intentions can come to nothing, as demonstrated last month when a supreme court ruling overturned a 2001 presidential decree allowing private sector generators to sell output over a previously established 20 MW limit to CFE. Perversely, wind, other renewables, and cogeneration may benefit on the rebound of the ruling, but the situation again shows how wind's fate is decided by a host of players except wind itself.

In need of indigenous generation

But even as a minor player in the big game of Latin American power development, wind has its chances. In Mexico there are those who expect that legislators will lay political differences to one side and approve wind power legislation in a brief truce before getting on with the real business of disagreeing vehemently over sector reform. And in Brazil, the power market is expected to need at least $18.3 billion in the 2001-2004 period, with wind and other renewables pencilled in to contribute $2.7 billion.

It could be far more. As Brazilian power demand keeps on rising, hydro power remains at the mercy of the heavens and thermoelectric expansion at the mercy of a gas supply from Argentina and Bolivia looking ever more shaky. Brazil needs to develop its indigenous generation sources. Among the renewables wind has perhaps the greatest potential for industrial scale use. But first it needs to turn projects into plants and to prove itself in Latin America beyond the rural role it has played to date. Until then, wind will continue to run in the power development slipstream of a turbulent region.

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus
[DAYS_LEFT] days Subscribe Now

Left of your Windpower Monthly free trial

Your free trial Subscribe Now

to Windpower Monthly has expired

Windpower Monthly Events

Search more than 4,500 companies in the Windpower Directory

Latest Jobs