Steady growth behind the scenes

Spain's third ranking utility,Unión Fenosa may appear to have been a quiet player in the wind industry. But its renewables arm has existed since 1995 -- and Unión Fenosa Energías Especiales SA (UFEESA)is involved in 18 operational wind plant totalling just over 360 MW. Its aim is to install 1500 MW in renewables and cogeneration by 2005 and 3000 MW by 2010. UFEESA's objective includes an international expansion plan, which earmarks 40% of its business in foreign markets.

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A quiet yet major player in the Spanish wind project development business is UFEESA, the renewable energy arm of the country's third largest utility, Unión Fenosa. It has a stake in 360 MW of operating wind plant in Spain, controls 19% of the Spanish renewables market and has serious designs on expansion in Latin America

A casual observer of Spain's renewables scene might be forgiven for mistakenly believing that the country's third ranking utility, Unión Fenosa, has only recently opted for a major commitment to wind development. But the utility's renewables and cogeneration arm has existed since 1995 -- and Unión Fenosa Energías Especiales SA (UFEESA, also known as UFEE) is involved in no less than 18 operational wind plant totalling just over 360 MW. Eight of these -- 56 MW -- came on-line in 2000 alone.

UFEESA's director general, Rosario Arroyo Brotones, admits that Unión Fenosa's name does not resound throughout the wind industry to the same degree as Spain's other three utilities -- Endesa, Iberdrola and Hidorcantabrico. "But this is more a problem of communication than anything else," says Arroyo. "We entered the wind market relatively late and have focused a lot of our efforts on catching up," she explains. "Now we need to concentrate a little more on communicating what we have done and what we plan to do."

As a result, UFEESA has hit the Spanish business press, repeatedly declaring its aims to install 1500 MW in renewables and cogeneration by 2005 and 3000 MW by 2010. UFEESA's objective includes its recently launched international expansion plan, which earmarks 40% of its business in foreign markets. Arroyo says that wind is increasingly leading the way, already accounting for 50% of UFEESA's domestic developments.

Spreading the risk

"We have opted essentially for a culture of pacts," says Arroyo. Of the 18 wind plant on-line, only two belong entirely to UFEESA. Its ownership of the remainder varies from 10% to 82%. In all, UFEESA's shares in operating wind plant give it effective control over 140 MW. Its participation in a further six advanced projects totalling almost 158 MW are expected to bring it control over another 68 MW during 2001.

The shared ownership strategy, which also covers other forms of generation, might not put UFEESA in the limelight, but its objective of creating a strong foothold in the market has worked. UFEESA now controls 19% of Spain's special electricity regime (Régimen Especial) for cogeneration and renewables with part ownership of more than 40 generation plant overall, or about 450 MW, including 15 cogeneration and six biomass plant. Parent company Unión Fenosa controls no more than about 12% of Spain's total power generation capacity, making its 19% stake of the renewables market look impressive. Arroyo adds that a further 550 MW under the Régimen Especial is currently being processed.

With a majority share of only three of its on-line joint ventures and complete control over just two operational plant, UFEESA has a low public profile. Furthermore, as Arroyo points out, the six wind plant making up the 91 MW Altos de Voltoya development -- 56 MW of which came on-line in Castile and León region last year -- are generally attributed to developer Sinae, the renewables arm of Spain's fourth ranking utility, Hidrocantabrico. It owns 36%. Despite its own 30% share, UFEESA's name is rarely brought up in association with the development.

More striking examples of this imbalance in attribution appear in the region of Galicia, Unión Fenosa's home base and where the vast bulk of UFEESA's installed capacity has gone up. Here, as part of its own 384 MW strategic wind plan for the region -- approved by the regional government in 1995 -- UFEESA has only put up two plant totalling 34.5 MW. But it participates to varying degrees in at least five out of a total of 15 strategic plans approved in other companies' names (table). Apart from Altos de Voltoya, UFEESA's only other on-line participation outside Galicia is the 30 MW Enderrocada plant in Catalonia (Windpower Monthly, January 2000).

Shopping around

According to Arroyo, UFEESA's strength within the wind industry lies not just in its relationships with some of Spain's most important developers but also with the country's main turbine suppliers. Unlike utilities Endesa and Iberdrola, with their vested interests in turbine manufacturers MADE and Gamesa Eólica, respectively, Unión Fenosa has no stakes in wind power hardware. Arroyo says this gives UFEESA great freedom of choice and a wide knowledge of turbine performance.

So far UFEESA has developed wind plant using technology from MADE, Gamesa, Ecotècnia, NEG Micon and Abengoa. Spain's own Izar-Bonus (previously known as Bazán-Bonus) could be next, as it is the chosen supplier in UFEESA's bid to develop 200 MW in Morocco. UFEESA also installed an AWEC-60/1200 kW machine in 1990, part of a European Union research effort to develop megawatt scale wind turbines.

Despite having a finger in so many pies, Arroyo claims that UFEESA is never a mere financial partner. It always contributes know-how and business scope as a utility affiliate to any project it is involved in. An example of this lies in the "business unions," or UTEs (Unión Temporal de Empresas) between UFEESA and the involved wind turbine suppliers to jointly control the turnkey contracts for four plant in Galicia -- Castelo, Os Corvos, Careón and Coucepenido (table). UFEESA brought in Unión Fenosa's own engineering services and consulting firm, Soluciona Ingeniería, to do the job.

Arroyo claims that UFEESA's ownership by a utility holding company brings it no special grid connection advantages, despite the fact that Unión Fenosa controls much of Galicia's distribution network. It is perhaps a wise move by Unión Fenosa not to give UFEESA special treatment. The renewables company has a series of wind development plans for regions where electrical infrastructure is largely controlled by other companies.

Arroyo says that UFEESA's main target regions are Castile La Mancha, Castile and Leon and Valencia. It also has plans for Catalonia, Cantabria and Murcia, all long since pending the final stamp to regional wind regulation. As with the 384 MW plan for Galicia, UFEESA's 191 MW strategy for Castile La Mancha has also been approved. However, in both cases the installed capacity total is a rough estimate and individual plant permits still depend on viability and environmental impact studies.

"During the year [2000], strategic plans have been made for both Valencia and Cantabria for an installed capacity of 575 MW," states UFEESA's annual report for 2000. In Valencia, UFEESA has hooked up with construction giant ACS and Spain's largest electricity co-operative, Crevillente, to develop around 300 MW -- according to regional press reports -- under Valencia's recently enforced wind regulation plan. ACS is already a major partner in Galicia via its renewables development arm, Eyra, which owns 77.6% of EASA.

On the international front, Arroyo says the company is ready to draw on the global reach of its mother company. The main areas targeted are Latin America, North Africa and Eastern Europe, though the company is also researching sites in Portugal, Greece, France, Syria and Jordan. Arroyo says that one of UFEESA's longer term ambitions is to get a foothold in the Australian wind market.

Arroyo pinpoints the Dominican Republic as a front runner in its international plans. "Unión Fenosa has a good share of distribution here and there is a lot of wind." Furthermore, the Dominican industry secretary Angel Lockward is increasingly concerned about the power cuts that have plagued the country for over a decade. He recently declared that renewables could substitute 50% of imported fossil fuels and he is also studying a report which estimates 360 MW of wind capacity to be viable within the next ten years. The drawback in the Dominican Republic, however, is that the payback and tax exemption frameworks for wind are still being debated, says Arroyo.

With the exception of Brazil, the same is also true for the other Latin American countries targeted by UFEESA, especially Honduras, Panama and Mexico. Arroyo says that the best winds in Latin America are largely in the most inhospitable places, which means they are also barely populated and thus lack electrical infrastructure.

At the same time, the problems facing wind in Latin America also mean there is potential for growth. Arroyo explains that the legal and economic frameworks for small hydro and cogeneration -- the two other main areas of UFEESA's business -- have already been established, meaning that the pace of growth in these sectors is unlikely to bring surprises. But if new legislation can boost wind to the same degree as it has in Spain, Arroyo considers that wind, which currently accounts for just 30% of UFEESA's development plans outside Spain, could boom.

Teaching the children

Arroyo joins the rank and file of wind developers in her concern about grid saturation and administrative bottlenecks, which could see development shift to a dangerously slow pace if action is not taken. She adds, however, that these complex problems tend to overshadow the greater threat of mounting opposition from the not-in-my-back-yard groups (NIMBYs) and local conservationists. "If we fail to act now to convince the public about the advantages of wind we could end up in the same situation as small hydro, which nobody is developing anymore," she warns.

One answer from UFEESA is to capture the hearts and minds of children between the ages of six and 12 via its own comic magazine, Viravento. Viravento is introduced as a 700 kW wind turbine capable of turning wind into electricity. He lives with 24 other turbines on the Castelo wind farm in Galicia and together they can provide electricity to 12,000 families. UFEESA will be meeting with school teachers after the summer holidays to present the comic, together with its accompanying video games and web site.

To what extent Viravento will help UFEESA reach its 3000 MW wind power goal for 2010 -- when the oldest target group will be 22 years old -- will be difficult to judge. But Arroyo insists that such public information campaigns are vital to the health of wind industry in Spain. And few have as much to lose as UFEESA if it slows down.

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