Brazil leads with lots of talk and little action -- Latin America

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Brazil is by far the leading wind market in Latin America, but in 2002 it failed to leave the starting blocks. Not one project started construction, let alone operation. The installed wind capacity remains at 22 MW. Government enthusiasm, promising regulations, high power demand and excellent wind conditions explain the market promise, but the last mile of getting regulations fully ratified has proven to be the hurdle for the sector to take off.

The government's Proinfa renewables program -- under which federal power sector holding Eletrobrás and its subsidiaries guarantee to buy at least 1100 MW of wind capacity under 15-year contracts -- was finally ratified at the end of December. Critically, however, the price at which the power will be bought and exactly which projects will be part of Proinfa have not been decided.

Licences for far more than 1100 MW have been issued to would-be developers by power regulator Aneel. The most recent indications are that Eletrobrás will prioritise projects on a first-approved, first-built basis, depending on when each project received its environmental licence.

Sector players expect the price issue to be resolved this month and the criteria for selection of projects for Proinfa to be decided by June. But what the criteria will be is anyone's guess. While the uncertainty remains, investors and developers have chosen to wait before taking projects authorised by Aneel through to the construction stage.

Meantime, Aneel continues to issue permits. The latest went to Brazilian companies Ventos Energia e Tecnologia and Parque Eolico de Santa Catarina, as well as to Spain's Elecnor. Parque Eolico de Santa Catarina plans a 9 MW project at Agua Doce in Santa Catarina state, Ventos is planning 78 MW at Aracati, in Ceara, and Elecnor has approval for three 50 MW projects -- dos Índios, de Osório, and Sangradouro, all in Rio Grande do Sul state. Elecnor's projects all have their environmental permits. The Aneel approvals are in addition to permits it granted late last summer for 729 MW, spread over nine projects (Windpower Monthly, October 2002), and permits for nearly 4000 MW issued in 2001 (Windpower Monthly, January 2002).

This year Spanish wind developer Gamesa will ask for three more permits for a total of 150 MW in Rio Grande do Sul, Rio de Janeiro and Pernambuco states, Gamesa Energia Brasil's Pedro Cavalcanti says.

Rio Grande do Sul is taking shape as the main focus of wind attention in the south of the country. While its winds are not as good as those in the northeast, it has higher industrial and residential demand, as well as more developed infrastructure. The last point is of particular interest to Enerfin (a subsidiary of Spanish power company Elecnor) and Gamesa. Both intend to establish turbine manufacturing in the state and use high degrees of local content. Enerfin aims for 100% Brazilian content within three years, while Gamesa's target is an eventual 70-75%.

Project developers expect Brazil's new mines and energy minister, Dilma Rousseff, to show the same enthusiasm for wind power as she did while energy minister for Rio Grande do Sul until the end of 2001, when the state brought out its own wind atlas. With Rousseff's favourable credentials and the high confidence that markets have placed in the new administration of President Luiz Inacio Lula da Silva, the signs are that wind development will eventually take off from the second half of 2003.

Mexico's debate

Like Brazil, Mexico faces regulatory uncertainty, but unlike Brazil the debate in Mexico is on the role of the private sector in power supply as a whole and not on wind power specifically. Wind projects likely to start are lining up to slot into the power export and self-supply sectors presently open to private participation (Windpower Monthly, December 2002). Potential is particularly high for self-supply. Industrial clients need more reliable supplies than those available through the grid; many are also multi-nationals under increasing pressure to bring their green credentials up to international standards.

Legislation has lent a hand to wind developers with a transmission contract for renewable power sources that not only makes toll charges feasible but allows for state power company Comisión Federal de Electricidad (CFE) to provide power at times of no generation.

Another shared factor with Brazil is potential for wind generation in the thousands of megawatts. But although studies and demand abound, at the end of 2002 wind still represented less than 1% of installed capacity with no new wind plant installed during the year

Plans for an ambitious 3000 MW of wind by 2010 were announced for Argentina before the economic crash of January 2001. The nosedive put a hold on just about all development. Power co-operative Cosega, however, managed to bring one NEG Micon 900 kW turbine online at General Acha in La Pampa province in December. Indeed, it is power co-operatives that account for almost all of the country's 25.6 MW wind capacity at the end of 2002.

As to Chile, apart from a hybrid wind/diesel system used in rural electrification, Region XI utility Edelaysen has the country's only wind plant, a 2 MW facility of Vestas 660 kW turbines that makes up 15-20% of the demand in its isolated grid. Demand is growing, however, and Edelaysen wants to maintain the proportion of wind generation. Based on estimates, this entails installing three 660 kW turbines over the next seven years and three more every five years thereafter.

Edelaysen's parent, Saesa, will complete in early 2003 a 12 month study of wind characteristics at Quirido and Tirua in the Arauco gulf of Region VIII and on the western side of the island of Chiloe in Region X. If data shows that wind generation is feasible, Saesa will install the same 660 kW Vestas turbines that Edelaysen uses.

Colombia has no installed wind capacity, but utility Empresas Públicas de Medellín (EPM) could have a turbine supply contract in place by the end of the first semester for its 20 MW project at Jepírachi in the Guajira peninsula. After a public call for bids failed to provide a satisfactory supply solution, EPM is entering into direct talks with wind turbine manufacturers Nordex of Germany and Gamesa. The World Bank's Prototype Carbon Fund (PCF) has already signed contracts to buy credits for the first 800,000 tonnes of CO2 saved by the project, and EPM is considering financing alternatives for up to 80% of project costs. The fundamentals to go ahead with the 20 MW are in place: regulations, prices and the market. The only factor threatening the planned year-end start date is the delay in assigning the turbine supply contract.

Costa Rica has the region's largest installed wind capacity and in 2002 state utility Instituto Costariccense de Electricidad (ICE) brought the national total up to 66.4 MW after starting 12 MW at Tejona in January and a further 8 MW at the same site in July.

Looking ahead, ICE will start wind measurements by the end of the first quarter 2003 for two 20 MW projects due to start operations in 2008 and 2010, respectively. The projects will be in either the Tejona or Miravalles areas, where the company has installed infrastructure and the resources and space available are favourable. In the nearer future, ICE has had to put back plans for a 10 MW expansion to Tejona to July 2004 from December 2003. In August 2003, Belgian wind turbine supplier Turbowinds is scheduled to start first tests of its 8.4 MW Chorotega project.

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