Lesser developed countries with fast growing economies and a rapidly expanding technology base hold some of the greatest potential for the wind industry. Nowhere is this more so than in the swathe of countries known as Latin America. Over past years a myriad of small initiatives has been drawing the attention of Latin America to its most technically accessible renewable resource. Here we take a look at this potentially huge market, with particular reference to the efforts of a variety of US agencies to encourage its development
As the "'cold war" between the US and European wind industries continues to chill relations across the Atlantic, more distant parts of the world are becoming increasingly vital for the prosperity of the wind business as companies vie to break out of their limited domestic markets. And one of the most intriguing -- and untried -- battlefields remaining for wind energy, as the millennium approaches, is Latin America.
Much attention will be on the Americas in the next few months. On December 4-6, the first in a series of Latin American renewables training conferences will be held in Buenos Aires, Argentina. Organisers, who include the Renewable Energy and Efficiency Training Institute of Washington, are hoping to draw 150 people to this first "Clean Energy for the Americas Symposium." The focus is on project finance, with a goal of teaching modest-sized developers and non-government groups to create "bankable" small to medium-sized projects of about $20 million or less.
Upcoming next year is REIA '97 or Renewable Energy in the Americas, from July 8-11 in Rio de Janeiro in Brazil. That event, co-sponsored by the US Export Council for Renewable Energy, will cater to groups from all the Americas, including the United States and Canada, who are either developing or using renewables. It has already been dubbed the most important renewables conference on the continent since REIA '94 in Puerto Rico.
And last month, about 75 people travelled to Quito, Ecuador for the first in a global series of training conferences for women in renewables and sustainable development. The event, "Women in Energy and Sustainable Development Training Conference Series and Exhibition," drew participants from Colombia, Cuba, Costa Rica, Guatemala, Honduras and Bolivia. It was organised by the Organisation of Latin American Energy Ministries, which is based in Quito.
Why the focus on Central and South America and the Caribbean? As much as 1740 MW of wind is projected to be developed in Brazil, Argentina and Mexico by the year 2005, according to the American Wind Energy Association (AWEA). Of that, 400 MW will be in Argentina; 940 MW in Brazil; and 400 MW in Mexico, says Kevin Rackstraw, who heads the international programme at AWEA and who notes that the scenario is optimistic. Already one wind company has set up a manufacturing base in the region: Enercon of Germany now has a blade vendor near Sao Paulo in Brazil and a turbine manufacturing facility due to start commercial operation in mid 1997.
AWEA's predictions for the big three countries alone would bring Latin America to third place in the world in terms of capacity installed in nine years' time -- after the United States, India and Europe but well ahead of China. Modest wind development is also anticipated in other smaller Latin countries. Even so, not that much development is expected in the region for several years even in the big three, Brazil, Argentina and Mexico. "It's not going to break loose before 2000É there's a lot of uncertainty," concedes AWEA's Rackstraw.
Stupendous but complicated
The region is highly complicated. With about 460 million citizens, Latin America and the Caribbean is not much less populous than Europe. It is also about twice as vast. There are dozens of countries, each with its own market structure, decision-making, and indigenous interests. The wind resources in parts are stupendous; and some countries such as Brazil, the world's fifth most populated and one of the fastest growing, are already hungry for electricity.
Yet the potential in the short term alone is as complex and fragmented as the geography, politics and economics of the region. Immediate wind opportunities in Argentina, once described as a "wind developers' dream," have been muted by a market so deregulated it is now dominated by cheap conventional power on the Buenos Aires spot market. In Mexico, with its centralised decision-making, progress has been slow even though the 1.5 MW pilot project of Vestas turbines installed near Oaxaca is deemed highly successful.
The projected wind growth of 1740 MW over nine years would also be on top of a relatively small base; little in the way of sizeable wind plants has been installed in the region. The 20 MW Kenetech plant in Costa Rica, started up this summer, is by far the largest commercial wind farm in Latin America. More recently, in September, Ecowind '96 in Brazil focused attention on that country's nascent industry. A new $2 million installation of Tacke 300 kW turbines, showcased at the conference (Windpower Monthly, November 1996), brought Brazil's installed grid connected capacity up to a modest 3.2 MW, which includes two projects, a 1.2 MW plant and a 1 MW.
Of the 4 MW in the Caribbean, 3.3 MW consists of the Dutch NEWECS 25 units, on the island of Curaçao and the remainder is made up of groups of small turbines from European and American specialists in tiny units for remote markets. In Argentina, some 2 MW of wind turbines are grid connected, while wind power systems for schools are currently being procured; one turbine of 250 kW has been installed in Peru; more than 15 hybrids are already installed in Mexico and several more are planned, on top of the 1.5 MW grid-connected Vestas project; and in Chile there are three 1-10 kW pilot projects for village electrification. Smaller projects have also been installed in Bolivia, Guatemala and Honduras.
Solicitations in the wings
Additional wind activity in the region is under way too. Brazil will solicit 60 MW probably early next year, and another 90 MW of wind projects are now being proposed in addition. In Argentina several small projects for rural electrification are in the works, although none seem likely to see closure this year as had been hoped as recently as this summer. Mexico will quite soon solicit a developer for 27 MW in Phase II of the "La Venta" project near Oaxaca.
The regional outlook is relatively optimistic. The World Bank, which has previously loaned little in Latin America for renewables development, will under its Solar Initiative start to fund wind and solar for rural electrification in Brazil as well as solar-thermal projects in Mexico. Representatives from the World Bank and the Inter-Development Bank (IDB) will be at this month's renewables symposium in Buenos Aires, says Fernando Banchon, Latin American Director at REETI. Other participants will be the Argentinean energy and finance ministries, the Bank of Galicia from Spain, the Bank of France, a utility from Uruguay, and representatives from Chile, Brazil, Colombia and Bolivia.
Among the most pressing problems in Latin America is unfamiliarity with the technology, says Banchon. Renewables were already relatively established in, for example, India when commercial scale wind started to enter the market. But in some Latin countries such as Ecuador -- where there are only two projects, both in the feasibility stage -- virtually nothing exists. There are also virtually no indigenous manufacturers. With so little knowledge, the initial cost of developing renewables is higher. Transmission capabilities are not always there, nor is political support, especially in oil dependent countries like Venezuela.
Brazil -- best hope
Most potential is clearly in Brazil, the only part of Latin America where renewables have really taken off. The market is huge -- as much as 20% of the rural population lives beyond the national grid -- which has attracted the interest of foreign agencies such as the US Agency for International Development (USAID) and Germany's Eldorado programme, which funded 70% of the recent $2 million Tacke installation at Fortaleza in the arid Ceara region.
Kevin Rackstraw of AWEA agrees that Brazil has great potential, although he says he might now be a little more cautious in his outlook than when he issued the 940 MW figure at AWEA's annual conference in June. He also believes that most of the country's development will occur after the year 2000, which will be the case for most of Latin America.
He points to several proposals that indicate growing interest. A short-list of consultants for the project design of two 30 MW wind farms, initially proposed by the Japanese trading giant Tomen without an international tender, has just been issued by COELCE, the regional distribution utility also in Ceara in north-eastern Brazil. The six short-listed companies are Portuguese, US-Japanese, Dutch, Danish, American and Canadian. An international tender will be issued probably early next year for the projects, which could become one 60 MW project sited in Paracaru. It is not clear, however, how the projects, which could supply as much as 8% of the region's power, would be funded.
Two additional projects -- totalling 90 MW -- are also emerging in Brazil, adding to the likelihood that the country might reach the 940 MW projection by 2005. The federal government's department of water and natural resources, known as DNAEE, has approved the concept of a 30 MW wind plant in the town of Barreirinhas in Maranahao developed by Clean Energy do Brasil. In addition, a proposal for 60 MW of wind in Fortalesa by the same developer has also been approved by DNAEE.
There is potential for small systems too. Bergey Windpower Co just shipped three systems to CEPEL, the Centro de Pesquisas de Energia de Electrica, the country's equivalent of the Electric Power Research Institute, with the help of the National Renewable Energy Laboratory (NREL). The turbines will be used for ice making, water-pumping and desalination, says Mike Bergey, who last month had just returned from installing a 10 kW turbine at an eco-tourism site in southern Mexico. Bergey already has 20-30 systems in Brazil, out of about 200 in Latin America.
The most pressing need in Brazil, says AWEA's Rackstraw, is for some sort of incentive for renewables. Several possibilities are currently being discussed by the legislature in the federal government, although it may be two years before the outcome is clear. Brazil's regulatory statutes are also becoming somewhat liberalised to allow more independent power generation. And a resolution was issued earlier this year for a federal programme to encourage a market for renewables.
Despite these signs, electricity prices remain relatively low, and sometimes it is unclear how deals should be constructed, says Mark Lambrides, Latin American director at US/ECRE. "There can be a lack of clarity about the rules of the game... for example, who has the authority," he says. Still, he is optimistic. "There is, however, a tremendous need, and a tremendous need to diversify their energy portfolio."
Argentina reality check
Also of interest is Argentina, which is projected to see 400 MW by 2005 and which is the location of this month's renewables symposium. So far, some 3 MW has been installed, mostly clusters of one to three turbines, including a project of Danish Micon turbines. All the same, the future seems so mixed, Fernando Banchon of REETI says of this month's symposium, "The event's going to tell us a little more what's real and what's not."
There is a fantastic wind resource, especially in the south. But energy demand has remained relatively stable in this more conservative society. The market is relatively dispersed, and grid-connected power is cheap because of natural gas. "There's some uncertainty... right now it's not very attractive at all," concedes Rackstraw.
In fact, privatisation has led to a wholesale market dominated by spot prices in Buenos Aires of $0.03/kWh. Without a power purchase mandate obliging utilities to buy renewable power, or some sort of mechanism that values renewables, wind can barely compete, says Mark Lambrides of US/ECRE. Cheap thermal projects may also be coming on line in the near future, pushing down the price of electricity still farther. "The guessing game is when will that [electricity price] start to increase and at what rate," says Rackstraw. He gauges that the price structure will start to change in five years or so.
One project, a joint venture at a ski resort between Dallas-based International Wind Corp (IWC) and local co-operative of 6-8 MW, has been in negotiations for some months in Rio Negro province. IWC is negotiating with one US and one European finalist, who are trying to finance their bids. A major stumbling block is that even at this remote resort, electricity is cheap. Other projects in the works, which face similar hurdles, include a feasibility study funded last year for a 10 MW project in the province of Chubut, where the city of Comodoro Rivadavia is located, says Sergio Castedo, an international specialist at AWEA.
On the bright side, there is significant short term potential for wind and hybrids for rural electrification. Argentina hopes to electrify all of its rural population by the year 2000 -- which means that within four years about three million people, often in remote areas, are to be reached. Some 1.4 million of those are to be brought electricity through the country's Concessions programme, which is supplying power through a privatised energy delivery infrastructure that will reach 6000 schools, police stations and water supplies.
In addition, in Buenos Aires province there is a programme to electrify another 60 schools every six months, about one-third of which are being supplied with wind. That programme, for which NREL has also provided technical assistance along with AWEA, would then be replicated for 5000 schools in other provinces. Retrofitting of diesel mini grids is also under way in Chubut Province, assisted by NREL.
Mexico -- economic deterrent
Huge potential has been cited in Mexico, especially in the "La Venta" region in Oaxaca province. In fact the state utility, CFE or Comision Federal de Electricidad, is preparing a bid for 27 MW for Phase II of the project, which will replace a steam combustion plant that uses fossil fuel. The solicitation, approved by the Mexican government, had been expected to be issued by about now. But at this point, it appears it may be out for another three to six months. The turbines are to be in a one line array and are expected to produce power for no more than $0.04/kWh. "CFE's experience with the pilot project has been convincing, very convincing I thinkÉ" according to Roberto Cadenas of the utility. In the medium-term two private projects of 20 to 25 MW are also in the works for individual buyers of electricity, industrial users or municipalities.
Still, a major deterrent has been the Mexican economy, says AWEA's Rackstraw, who also says he remains reasonably optimistic about his "400 MW by 2005" projection for the country. Inertia appears to be a problem in Mexico. There is simply not the will to take a risk with what the country sees as a relatively new technology, says Lambrides of US/ECRE. Indeed it is well nigh impossible to get business with CFE, the state utility, he says.
Central America -- steady activity
In Costa Rica, where there is a 20 MW Kenetech plant and 47 MW approved for construction by the national utility, which would buy the power if the plants were built. That would bring the country's wind total up to 6% of its installed capacity, which it says will be the maximum until it better understands the technology. Of the 47 MW, there are two 20 MW proposals. One, originally by New World Power, has been taken over by Energy Works, also of the US, which has quietly solicited bids from five or six companies. A 7 MW plant of Vestas units is in the works too.
In Honduras, a 20-25 MW proposal by an American developer has virtually all of the necessary approvals in place. The size of the project and financing are under consideration and the plant might well be built within two years.
Investors are also being sought for a number of projects in Guatemala. The US National Rural Electric Co-operative Association (NRECA) has completed monitoring with AWEA for Project Huit, a proposal for 60 MW on municipal land. A contract was awarded to New World, which then pulled out, says Hugo Arriaza of NRECA in Guatemala. Monitoring is also continuing at Llano de Piedras for a proposed 3.2 MW for Guatemala's Regional Association of Farmers, which is backing the scheme as its members need power for irrigation. The national utility INDE has written a letter of intent to buy the electricity. Another site being monitored is at Potrero Largo, which has a potential of 20 MW. But only one project so far has been awarded: Vestas beat its fellow Dane Micon to supply a 900 kW project at El Rodeo, owned by the municipality of San Marcos, says Arriaza. The country's new government is keen to promote renewables for commercial-scale projects and rural electrification. A new law was approved just in October to promote private participation in energy, especially in electricity.
In Nicaragua, there is interest in renewables and the resource is strong, but the political outlook has been uncertain. The new conservative government, elected in October, might well encourage more private sector development. Investors are being sought for a 10 MW plant. And in Panama, a request for proposals for resource assessment had apparently been issued some six months ago.
And the rest
Peru stands out in Latin America as having an especially strong interest in renewables. The government, through the Ministry of Energy, wants a feasibility study conducted for a 20 MW wind plant, says AWEA's Rackstraw. And about one month ago the ministry, along with the United Nations, issued a bid for a single 600 kW machine. Moreover, there are high energy prices in Peru where good wind resource exists, he says, and a rapidly improving investment environment. There are excellent opportunities for remote applications too, but current rural programmes are focused mostly on grid extension. Perhaps 15-20 MW will have been developed within the next two years, estimates AWEA.
In Bolivia, the Electricity Co of Santa Cruz has been very interested in trying to develop a 15-20 MW wind project, although electricity prices are generally low because of natural gas. NRECA has anemometers operating in various locations, but as yet the wind regime is not well known. Wind water-pumping systems and a hybrid wind-PV system have been installed, says Pete Smith of NRECA in Bolivia. Indeed, Mike Bergey recalls a crate containing a Bergey system being hauled up a mountain side by dozens of Bolivians in traditional dress, complete with bowler hats. It is now installed at 14,000 feet elevation to power a drinking fountain.
Chile has an excellent resource in both the north and south. The potential is especially bright in the south where the solar resource is poor, although there is also a great deal of hydro in that region. In the north, mining companies are exhibiting a keen interest for 20-30 MW plants because their energy costs are higher. Still, one of the main problems is how to pay for electricity. The market has been deregulated, but current electricity law requires that firm power is offered. Some wind companies have even considered a separate inter-connection system to supply mining companies, although little has come of years of discussion about projects.
Colombia is another country with excellent resources for wind farms, particularly in the north, and various discussions are under way. Some small wind projects have already been installed with no foreign assistance. In Ecuador, a pre-feasibility study for a 32 MW plant in Paramo Grande has started, funded by the Trade Development Agency and conducted by Marketec.
Caribbean -- too small
There is significant interest in the Caribbean, but the individual island-nations are so small that foreign companies have been somewhat reluctant to become interested.
On the island of Curaçao, a 3 MW project of Dutch wind turbines, installed in 1994, has, however, been highly encouraging for the region. Far to the northwest on Jamaica, a 225 kW Vestas turbine has been installed at Munro College, again bringing awareness of wind energy to the Caribbean. And substantial resource assessments are being conducted on various islands, including Aruba, Barbados, Tobago, Jamaica, Haiti, Dominican Republic, Puerto Rico, and the US Virgin islands.
Cuba's potential is already being exploited. The first wind farm, of Spanish technology, is currently being installed at the eastern end of the island (see story page 32) . Even so, the Caribbean nation only sees wind as having a limited potential, although Cuba has suffered from an energy crisis for the last six years with black-outs that severely hamper industry.