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Latin American wind sector set for wild ride to climate goals: panelists

09 November 2021 Keiron Greenhalgh

The Latin American wind generation sector's journey of the past decade is nowhere near as wild as what the coming decade promises if climate goals are to be met, panelists said 8 November at a side event at the COP26 meeting that is intended lay out the path to such targets.

In the 2010s, wind capacity increased from 2 GW to more than 31 GW, which was a "colossal effort," Ramon Fiestas, Global Wind Energy Council (GWEC) director for Latin America, said during an event held by the trade body during the key climate change meeting in Glasgow.

The COVID-19 pandemic didn't halt the installation of renewable power capacity in Latin America, Alfonso Blanco, executive secretary of regional renewables trade group OLADE, told attendees. Some 61% of regional power capacity added in 2020 was renewable, he said, with 5 GW installed, including 3 GW of wind.

At COP26's predecessor, COP25, held in Madrid in December 2019, a group of 10 Latin American and Caribbean nations unveiled a goal of sourcing 70% of their power needs by 2030, or 312 GW of generation capacity. At the time, according to OLADE, the countries that signed up to the pledge were sourcing 56% of their needs from renewable energy.

But Siemens Gamesa Global Head of Public Affairs Jon Lezamiz Cortazar said the Latin American renewable power sector must see a stronger political commitment to create the stable investment environment required to meet climate goals.

Reaching that 70% target will be impossible without offshore wind, Fiestas told the COP26 side event, and if the goal is to be met, public-private partnerships will be needed.

However, he said subsidies for renewable energy in Latin America are rare, largely because zero-emissions generation is already competitive in the region

Brazilian Ministry of Mines and Energy Special Advisor Agnes Da Costa told event attendees there would be no subsidies for renewable power in a country that ranks in the top 10 for emissions on a country-by-country basis, as the cost goes directly on the bills of customers, and bills are already expensive

The group setting the 70% target didn't include Brazil, the largest power producer and economy in the region, which relied on renewable sources for 85% of its 2020 electricity needs, according to US Energy Information Administration (EIA) data.

Some 66% of Brazil's power output in 2020 was hydro-electric, the EIA data show, a dependence that hurt the country when a historic drought choked flows at dams in 2021 to levels not seen since records began, forcing the government warn consumers to curb their electricity consumption in August and September.

Integrated market?

The impact of the drought could have been minimized by an integrated power market, OLADE's Blanco told event attendees. He said OLADE is working with the Inter-American Development on plans for a power market that would span five Southern Cone nations—Brazil, Argentina, Uruguay, Chile, and Paraguay.

While current bilateral power agreements are "very good," said Blanco, there is a need to move forward. If Latin America wants to improve on the business-as-usual scenario, then barriers to renewable energy must be removed, he said, and fiscal and regulatory frameworks need improving.

Wind generation is another way for Brazil to reduce its reliance on hydropower and is on the rise, according to the country's wind power trade group ABEEólica, hitting 19 GW in June. GWEC data show Brazil held seventh spot in the global rankings for installed capacity for the second year running in 2020, the trade group said. Brazil installed the third most capacity in 2020, according to the data.

Brazilian facilities' capacity factor (or how efficiently it captures the strength of the wind) has aided the sector's growth, ABBEólica said, noting that in 2020 it was 40.6%, compared with a world average of around 35%. By 2024, Brazil will have at least 30 GW of installed wind power capacity, it said

"We say 'at least', because this is the value considering only auctions already held and contracts signed in the free market. With new auctions, this number will be higher," ABEEólica Executive President Elbia Gannoum noted in June, adding that 2020 was challenging, least of all because Brazil held no auctions for wind leases.

It could be much more, Brazilian Mines and Energy Minister Bento Albuquerque said earlier in the COP26 meeting. Brazil has the potential for 700 GW of offshore wind capacity, he said, adding that offshore wind would make its debut in energy auctions in 2022.

Investors are also optimistic about the potential for Brazilian renewable generation. Brookfield Renewable Partners, which is building 1.8 GW of solar capacity in Brazil, sees a positive marketplace, with increasing power prices, the investment group said when releasing its third-quarter 2021 results on 5 November.

The unit of Canadian investment group Brookfield Asset Management is also in the process of acquiring a 270-MW wind development portfolio in Brazil alongside institutional partners that is expected to close in the fourth quarter of 2021.

Chile's plan

Investors are also keen on the investment horizon in Chile, where the government released a long-term energy strategy in late October, building on plans to become one of the largest producers and exporters of green hydrogen globally.

The roadmap—with targets for key years—would allow Chile to become carbon neutral and climate resilient by 2050 at the latest, the country's environment, energy, and science ministries said in a joint statement as the plan was laid out in anticipation of delegates heading to COP26

Juan Carlos Jobet, who has both the energy and key mining ministry briefs, said the "transformation of the energy sector is at the heart of the Long-Term Climate Strategy. We are going to clean up our power generation, eliminating coal-fired plants and developing renewable energies to produce electricity that can be used in different economic sectors like transport and industry, and in our homes."

By 2025, Chile aims to eliminate 65% of coal-fired power generation from its stack. By 2030, it aims to generate 80% of the country's electricity from renewable sources and to implement zero-emission fleets in large-scale mining (Chile is the world's largest copper producer and mining accounts for 50% of exports). By 2040, all of Chile's coal-fired plants will be shut or converted, green hydrogen will make up 20% of the country's fuel matrix, and 100% of buses and taxis will produce zero emissions.

The government is already greenlighting projects, including what Minister of National Assets Julio Isamit called the "largest tender of the last decade" for renewable energy. Projects accounting for up to 2.78 GW of renewable power won approval from the government, equivalent to 11% of Chile's overall power generation capacity. Of the capacity total, 1.746 GW was wind and 1.034 GW solar. The projects will cost a combined $3.1 billion to build.

Winning bidders included AES Gener, EDF Chile, Enel Green Power, Statkraft, and Grenergy Renovables Pacific.

Norway's Statkraft won the rights to develop more than 400 MW of wind and storage capacity from the Ministry of National Assets, the company said. Statkraft expects the project to cost about $500 million to develop, with the facility due online by 2030, a deadline the wind farm will beat by "several years." The company is already developing three wind farms in Litueche (southwest of the capital city Santiago) with a combined capacity in excess of 100 MW.

Colombian tender

Late October also saw a government renewables tender conclude in Colombia. On 26 October, the government awarded contracts to 796.3 MW of solar projects. The energy and mining ministry said the 11 projects must be online by January 2023. Winning bidders won 15-year contracts.

When the capacity is online, the share of non-conventional renewable energy will have risen from 0.2% in 2018 (when President Iván Duque Márquez was elected) to more than 15% in 2023. Currently, Colombia has 388 MW of cumulative operational solar capacity, the ministry said. Some 1.365 GW of solar and wind energy is under construction following a 2019 auction, it added.

Márquez told CERAWeek by IHS Markit conference attendees in March that when he became head of state, Colombia had just 35 MW of non-conventional renewable capacity. The country will hold auctions to build 4.8 GW of renewable generation capacity, which will be installed in the next five years, he told CERAWeek attendees.

Posted 09 November 2021 by Keiron Greenhalgh, Senior Editor

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