Latin American market set to take off this year -- Brazil and Mexico lead

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Wind power across Latin America last year was more about laying the groundwork for new projects expected online in 2009 than about getting wind farms built in 2008. A modest 112 MW went up in the entire region, most of it in Brazil and with two in Uruguay, bringing the Latin American total to 670 MW (table). But the big story is that Latin America is taking off this year with well over a gigawatt of new wind expected online.

The bright spot will continue to be Brazil, where the momentum built up during last year will spill into 2009, with project completions expected to reach over 700 MW. Other projects coming online in Mexico, Chile, Costa Rica and Nicaragua could together top 600 MW.

Progress on installing wind farms in Brazil was "painfully slow in 2008, despite a number of promising developments," says Dana Younger, renewable energy specialist at the International Finance Corporation (IFC). The problems suffered by Brazil are typical for the whole of Latin America, with the potential for major wind development stifled by inappropriate regulatory frameworks and monopoly practices on transmission line access.

Higher prices for wind turbines and the tight credit markets globally are not helping. Some project developers may choose to wait for better times. Mark Argar at Pacific Hydro Energia do Brasil, says projects in the late stages of development or construction that have financing in place should not be affected by the credit crisis. But new projects in earlier development will be judged against harsher criteria when seeking finance, he says.

Brazil overtook Mexico in 2008 as the most dynamic Latin American market, bringing 93.85 MW online in five projects (table), mostly along its windy north-west coastline, to bring the Brazilian total to 336 MW. All the projects are selling their output through contracts signed under Brazil's national wind energy law, the Programa de Incentivo às Fontes Alternativas de Energia Elétrica, or Proinfa. Although projects had to be complete by the end of 2008 to qualify for Proinfa, the rule was relaxed towards the end of the year in recognition of the global shortage of wind turbines to meet demand. Deadlines for completion were extended on a case-by-case basis if developers could show permitting approved, equipment purchased, financing secured and all paperwork in place. "This was definitely an important milestone for the industry," says Lauro Neto from local developer Servtec, which brought a 16.5 MW project online last year. The firm is currently constructing three further wind plant totalling 138.5 MW.

Brazil booming

Among the turbines going up this year will be the first deployment in Brazil of technology from Argentina's Impsa, owned by the Pescarmona Group. It has shaken up the Brazilian market by opening a factory in Pernambuco state, where it is assembling wind turbines through a technology licence agreement with German manufacturer Vensys. It eventually expects to build some of its own design (Windpower Monthly, November 2007). The factory will supply turbines to three wind plants owned by the Pescarmona Group and expected to come online this year in Ceará state. Early last month, local energy utility Companhia Energética de Minas Gerais injected BRL 213 million ($94 million) into the project for a 49% stake. Two other projects with a combined capacity of 276 MW are close behind. Although the Proinfa program had a shaky start, says Emilio Guiñazu, general manager of Impsa, "Now wind power can really develop."

Impsa joins Wobben Windpower, an offshoot of German Enercon, as the only producers of wind turbines in Brazil. Wobben machines went online last year in two Econergy projects totalling 43.45 MW and Australia's Pacific Hydro erected a number of Wobben 800 kW turbines, although these projects are not expected fully online until this year. Pacific Hydro's Vale dos Ventos project in Paraíba state is split into ten 4.8 MW projects and is located next to its 10.2 MW Millennium wind plant that went online in 2007.

Suzlon carried the balance of Brazil's new wind capacity, installing 50.4 MW in three projects (table). Pedro Perrelli of the Associação Brasileira de Energia Eólica says the total 94 MW of wind online by the end of 2008 brought Brazil's total to about 341 MW. This year will be the one to watch, he adds, with the cumulative total reaching as much as a gigawatt. "We have reached the inflection point in the curve and now we hope the pace will pick up further," he says. Gustavo Rodrigues Silva, an engineer at consultancy firm Braselco, agrees that between 450 MW and 600 MW should start operation in 2009.

Brazil's windy ride may have its stopping point, however, if the government does not approve a subsequent round of support for wind projects. A second round of Proinfa is considered unlikely. Instead, the wind industry's hopes rest on a system of power contract auctions for wind that may be held sometime in 2009. Perrelli says Brazil's energy minister, Edson Lobão, is committed to the auctions of wind power purchase contracts, although an official release date and specifics have not been finalised. Even if enacted this year, an auction is not likely to affect 2009 installations.

Mexico moving

Mexico brought nothing new online last year to add to its total of 88 MW, after being the most active Latin American region in 2007, but like Brazil, 2009 will be big. Leading the Mexican charge is Spain's Acciona, which broke ground in January on its $550 million Eurus wind project near Oaxaca. A fleet of 167 of Acciona's 1.5 MW turbines will provide Mexican state cement company Cemex SA with 25% of its energy needs nationwide.

Another Spanish firm, Iberdrola, has been constructing its $170 million 79.9 MW La Ventosa wind plant in the municipality of Juchitan de Zaragoza in Oaxaca state, not far from the Acciona site. The project of 94 Gamesa 850 kW turbines qualifies for carbon emission credits under the UN's Clean Development Mechanism (CDM), a global program that allows richer countries to invest in clean power projects in the developing world to meet emission reduction targets at home.

The same region in Oaxaca will see the first 22 MW slug of capacity from Eoliatec's Bii Stinu project that will eventually reach 164 MW when complete in 2011. It is also a CDM project. Eoliatec is part of growing Spanish developer Eolia Renovables, which has about 800 MW of wind plant on its books or building (Windpower Monthly, December 2008). All three wind farms are on the Isthmus of Tehuantepec, the windy mountainous region that narrowly divides the Gulf of Mexico from the Pacific Ocean.

Other confirmed front runners for new 2009 capacity in Mexico include wind plants from EDF/Eléctrica del Valle de México, a local division of French national utility EDF, using American Clipper turbines and Cisa Gamesa (table). From the Mexican wind energy association, Asociación Mexicana de Energía Eólica, Cesar Fuentes says that up to 450 MW is scheduled for commissioning during 2009.

Mexico's real potential may be seen in 2010, when as many as 2 GW of projects could come online, says Pablo Gottfried, project manager of Fuerza Eólica, a Mexican wind developer. These projects have signed agreements and letters of credit with Mexico's Comisión Federal de Electricidad (CFE), which will construct 400 kilometres of transmission lines and new substations. "This takes us beyond one of the key lobbying stages," says Gottfried. But he notes the cards are stacked against private-sector energy companies, with CFE largely calling the shots in pricing. Overall, wind experts complain that development has been dogged by a lack of access to transmission lines and a lack of clarity over land rights, as well as many projects that never took off because they were run by speculators. One warns that the CFE is the "eight-hundred pound gorilla" that dominates the energy sector and is showing "classic monopolist" behaviour. Several claim that CFE has been an impediment, limiting access to transmission lines and changing the rules to reduce the viability of wind development.

Central America

Central America saw no wind power come online last year, but will bring on about 90 MW by the end of 2009. In Costa Rica, the 49.5 MW Guanacaste wind park, using Enercon 900 kW turbines, should be online in the spring, says Jorge Dengo Garrón from GDF Suez Energy Central America. Last summer, GDF Suez bought Econergy International, which had originally developed the project. Energy from the $110 million plant will be sold to national power utility Instituto Costarricense de Electricidad.

In neighbouring Nicaragua, the 39.9 MW Amayo wind park developed by Consorcio Eólico Amayo SA is expected online this month along the shores of Cocibolca lake. The project will be country's first wind plant. Just to the north, the Honduran government and MesoAmerica Energy last year signed a $260 million agreement for the construction of the 100 MW Cerro de Hula wind projectto go online in 2010.

Garrón says a lack of well developed projects and difficult financing conditions remain a challenge, along with a weak transmission system making dispatch centres nervous about adding more capacity. But transmission quality should improve as the Central American Interconnection grid, SIEPAC, is fully completed later this year. It is a $320 million, 1800-kilometre, 230 kV transmission line connecting 37 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador and Guatemala.

Chile getting hot

Chile, too, put little wind in the ground last year but expects a strong 2009. The country's parliament approved a new renewable energy law in 2008 that requires utilities to increase their use of renewables. Already, Chile is dotted with wind measurement masts from hopeful developers.

The bulk of the country's 20 MW capacity comes from the 18 MW Canela I project that came online in 2007. Endesa's second phase of that project (table) is set to bring another 60 MW of Acciona turbines online by year's end. The 64 MW Totoral wind project by Norway's SN Power, using Vestas turbines 300 kilometres north of the capital of Santiago, is also set to begin operations this year after receiving a $61.5 million loan from the IFC. In the same region, GDF Suez's $120 million Monte Redondo wind farm is also under construction and expected online this fall.

Ireland's Mainstream Renewable Power, founded by former Airtricity owner Eddie O'Connor, and local company Andes Energy hope to build the 35 MW Laguana Verde wind project in 2009. Other smaller projects that may come online this year are from Seawind, Handels und Finanz and mining company Barrick.

Uruguay and Peru

Other than Brazil, the only other significant wind power coming online in 2008 was in the small country of Uruguay. Spanish consortium Eduinter erected its 10 MW Sierra de los Caracoles project last year to bring the national total to 18 MW. While another 8 MW came online at the Nuevo Manantial project using Nedwind 500 kW and 1 MW machines, an old Dutch design. The units came from MainWind, a wind turbine maintenance company in the Netherlands specialising in the overhaul of old machines.

Argentina, while having some of the best wind potential in Latin America, failed to deliver in 2008. While its domestic firm Impsa is focusing its efforts in Brazil in 2009, the company plans to provide turbines for the 25.2 MW Parque Eólico de Arauco in La Rioja province at home, which may start building this year, with completion in 2010.

Peru's national energy and mines ministry expects some 300 MW of wind energy to come online by 2010. The government has already awarded almost 60 temporary concessions to develop 9.42 GW of wind projects to companies such as Germany's Sowitec, Generalima, owned by Spanish and Italian utilities, and Iberoperuana, part of Spain's Iberdrola.

Cuba plans to add six 750 kW turbines this year at the Gibara II project in Holguín to bring the island's total to 11.7 MW. Chinese manufacturer Goldwind is reportedly supplying the turbines.

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