Bright Outlook for Wind
Power in Latin America
Steve Sawyer 8.21.18
Having just concluded the 9th edition of Brazil Windpower
in Rio de Janeiro (7-9 August) and on the eve of the 1st
edition of Argentina Windpower (6-7 September in Buenos
Aires), it seems a good time to have a look at the Latin
American (including Mexico) market as a whole, to see how
far itʼs come in the last ten years, but also what the growth
potential is for the future.
Ten years ago, the market didnʼt really exist. Total
installations during 2007 in the region amounted to 30 MW,
to bring total installed capacity up to 537 MW, about half of
which was in Brazil. The rest was scattered about in mostly
single projects in half a dozen countries. At the end of 2017,
total installed capacity was just about 22,000 MW, still
dominated by Brazil with nearly 13,000 MW, but with
substantial markets in Mexico, Chile and Uruguay, and a
major market developing in Argentina. Peru, Costa Rica,
Honduras, Nicaragua and Panama have small but
interesting markets, and there are indications that Colombia
could develop a prominent wind market in the coming
years.
After a number of attempts to stimulate the market after the
‘energy crisisʼ in Brazil at the turn of the millennium, the
Brazilian market finally took off at the end of 2009 with the
first reverse auction for wind power, which contracted more
than 1,800 MW, and set the stage for the remarkable
growth of the Brazilian industry over the next several years.
The controversial rules for local content set by the BNDES
(Brazilian National Bank for Sustainable Development)
meant that many major OEMs opened factories in the
country, at a time when the international market was
stagnating due to the international financial crisis.
Currently at just over 13,000 MW installed, the sector now
faces a new challenge, as the combined political and
economic crises of the past few years meant that no new
power was contracted between late 2015 and late 2017. So,
while installations will maintain a healthy level (close to the
2 GW per year deemed necessary to keep the local supply
chain in business) for 2018, 2019 and 2020 will be a
struggle, as the results of auctions in 2017 (and the
expected positive result of the auction scheduled for
August 31, 2018 – for which more than 900 wind projects
amounting to more than 27 GW(!) are registered) will not
begin to bear fruit until 2021. It is hoped that the ‘free
market will make up for some of thatʼ, and current
government expectations are for about 15 GW of new wind
power over the next 8 years, bringing the 2026 year-end
total to over 28 GW.
Private sector initiatives began to unlock Mexicoʼs wind
potential just over ten years ago, and for the next several
years all installations were located in the windy southern
state of Oaxaca. With Mexicoʼs major energy reform in
2013/14, increased privatization in the power sector and
the introduction of competitive auctions in 2016, Mexico is
set to have its first annual market with more than 1000 MW
in 2018. With a 2017 year-end total of just over 4,000 MW,
a rapid rise in installation rates is expected in order for the
sector and the country to meet the clean power goals of 35
percent of electricity by 2024, with 12-14,000 MW of wind
by 2022.
Uruguay has quietly gone about becoming the first country
in South America to have a close to 100 percent renewable
energy power sector. A remarkable wind power market has
been established over the past five or six years. Wind
power provided 30 percent of Uruguayʼs electricity in 2017,
complementing its large existing hydro resources. With a
2017 year-end total of just over 1,500 MW, and one more
project (54MW) coming on line in early 2018, Uruguay is
set to get about 40 percent of its power from wind in 2018
and for the foreseeable future, second in the world only to
Denmark.
Chileʼs wind power market has struggled to establish itself
over the past ten years, but has now installed 1,500 MW,
with another 375 MW under construction, and more than 7
GW approved. Development of the Chilean RE market has
been hampered by transmission issues and the
unnecessary complexity of the tendering system.
Argentina is the most exciting new market in the region.
With the goal established to supply 20 percent of the
countryʼs power with renewable energy by 2025, the
implementation of the countryʼs first renewable energy
auctions in 2016 and 2017 resulted in more than 2,400
MW of wind power being contracted, with private and
legacy projects adding another 500+ MW, creating a solid
pipeline of nearly 3 GW. New auctions are anticipated for
2018 (although it may be delayed due to transmission
bottlenecks) and there is growing interest in the private
market for large consumers. While the country and the
market remain ‘high-riskʼ, the rewards are great, and many
major international players have jumped into the market.
Colombia has always been a tough market, as incumbent
generators have generally been able to squash government
initiatives to open up the market to other sources such as
wind and solar. However, during the past 18 months the
outgoing government was able to establish the parameters
for a procurement system which would give wind and other
RE technologies a fighting chance. Originally planned to be
implemented during 2018, it appears now that it will in fact
be implemented by the new government in early 2019.
Watch this space!
This brief snapshot of the Latin America wind power market
gives a sense of the potential of the region. While annual
installations have declined slightly over the past two years,
primarily due to the economic difficulties in Brazil and
transition issues in Mexico, the overall outlook past 2020 is
very bright. Back in 2009 we looked at the regional market
in the context of our Global Wind Energy Outlook model,
and projected 2020 cumulative installations of about 30
GW for the region in to the Moderate Scenario, and 36 GW
under the Advanced Scenario. Given what we know now,
we will reach the 30 GW target with ease – 36 GW is
something of a stretch, but with solid performance in
Mexico, Argentina and Chile, we just might make it.
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