THE race for renewables is now global, with bold targets set by a growing list of countries. Even generally resource-rich Latin America is embracing the revolution, including one of the world’s most successful deepwater oil&gas producers – Brazil.
Indeed, Brazil is leading the Latin American field, where the group ambition is 46GW (gigawatts) of total installed wind capacity by 2025 with a 12.6% compound annual growth rate of yearly installations, according to a new market study by IHS Emerging Energy Research.
Brazil will lead the region with 31.6GW installed by 2025, trailed by Mexico with 6.6GW. Chile will also add significant wind power, boosted by the country’s Renewable Portfolio Standard, according to the study.
Indeed, Brazil, Mexico and Chile have set the policy and industrial frameworks to sustain market growth.
IHS analyst Vincent Gautier says: “Brazil’s market scale and proactive renewable-energy policies are moving Latin America toward a key tipping point, from sporadic project activations to more steady wind-power market growth.
“Improving government
incentives, from tenders to financing conditions, are encouraging local developers such as Dobreve Energia, Renova Energia and CPFL to lead the market.”
Brazil’s market is expected to represent 69% of the total Latin American installed capacity in 2025.
It is noted, too, that demand and local-content requirements are encouraging operation equipment manufacturers to invest primarily in Brazil-based manufacturing of turbines of 1.5MW and larger.
This is in line with the country’s policy regarding oilfield goods and services, and in marked contrast to the laissez-faire UK approach, where there is little indigenous-relevant manufacturing capability.
According to the study, beyond turbine assembly, an even larger opportunity is opening up to develop Brazil’s wind-turbine component supply chain, with annual demand for more than 300 turbine units expected by 2011.
That said, Gautier says European wind players are likely to dominate wind-power development and ownership in Latin America in the near term, leveraging their experience and financial resources.
Iberdrola Renovables was the first player to develop a significant presence regionally with operational projects in Brazil and Mexico. Other international developers such as Acciona Energia are now following suit.
IMPSA Wind is currently the only Latin American developer with regional ambition, but local industrial players and independent power producers are moving to challenge these foreign entrants by the latter half of the decade, according to the study.
Gautier reckons that tail-end Mexico has the potential to challenge Brazil’s market leadership. Nonetheless, reduced political support suggests the overall market will stagnate until 2020.
“Mexico’s tenders, requiring established development and operational track records from developers, as well as significant financial requirements, makes the market attractive to larger players,” says Gautier.
As for Chile, its output is expected to peak at 280MW installed in 2024, before dropping 55% due to the achievement of its 10% renewable portfolio standard target.