La Venta wind farm enters second stage development

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Hopes that serious wind development in Mexico may at last materialise have been renewed. The Oxaca state government has revealed that next month state-owned power company Comision Federal de Electricidad (CFE) is to seek bids from developers to build the long planned 100 MW second stage development of La Venta wind farm. The existing wind plant, using Vestas turbines, is just over 1.5 MW. According to Fernando Mimiaga of the state government's small and medium sized companies department, the turnkey contract for La Venta 2 should be awarded by September. Construction work is due to begin in November with the project scheduled to come online by mid-2005. CFE will operate the wind farm, feeding the output directly into its own network. With Oxaca's high wind speeds, the return on investment could be anywhere between 14-24% a year, Mimiaga says. European or Japanese development banks are expected to finance around 85% of the project, he suggests, offering interest rates of around 4% and 2%, respectively. The remaining 15% equity is expected to come from local sources who would seek a return of 10-12%. The federal government has set aside $200 million to cover the cost of the project, including civil engineering, roads and transmission lines, although the actual cost should be closer to the market norm of $1 million a megawatt, Mimiaga adds. Other large scale wind power projects in Mexico have long been planned but so far failed to materialise due to previous political opposition to private sector development. A 51 MW proposal by Fuerza Eolica and GE Wind (ten years on hold) is expected to get under construction later this year. It will supply power to cement plants in Cruz Azul in Oxaca. Similarly, Mexican engineering company Deproe and French partner SIIF Energies are working on an $80 million wind farm which will start with 67.5 MW but could ramp up to 180 MW if new customers can be attracted as offtakers. In addition, another 103 MW, $100 million project is planned by Parques Ecologicos, which is 60% owned by Spain's PSI Ecuacion de Onda, with Mexican firms making up the balance. Spain's export bank Expansion Exterior is leading the search for funding.

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