The global wind industry added 36,134 MW in 2013,
the first time in eight years that the wind power
industry has installed less in a given year than the
year before. The size of the annual market declined
20 percent year on year in 2013, compared to market
growth of 18.6 percent in 2012. The market decline
was not unexpected. Negative conditions in several
key countries, particularly the U.S. and Spain, were
a drag on market growth. The U.S. will recover
through the 2014-2015 cycle with over 12 GW
expected, but Spain, once a pillar of the global
wind market, will languish following a collapse of
its renewables policies.
This backdrop highlights the importance of a
diversified global wind energy market, and Latin
America, in particular, has provided an important
alternative growth market for the wind energy
industry. As a whole, Latin America represents a
mere 10 percent of the 77.1 GW of installed capacity
in North and South America combined. The U.S. alone
represents 60.2 GW. However, in 2013, Latin America
represented just over 2 GW or 43.3 percent of the
4.7 GW installed last year, driven primarily by
Brazil and Mexico.
Brazil's power contract auctions are continuing to
drive the country's wind market. In 2013, Brazil
brought 948 MW of new wind plants online, just down
from the 1,077 MW installed in 2012. Cumulative
capacity reached 3,869 MW by the end of the year, a
growth rate of 32.4 percent from the 2,921 MW total
capacity online at the end of 2012. The country's
wind growth is fueled by its power contract
auctions. Since 2009, there have been 11 auction
rounds, with over 13.2 GW of wind power contracts
awarded.
The power contracts are a double-edge sword. Average
price across all auction rounds is BRL120.5/MWh
($49.5/MWh), which enables wind to compete with
fossil fuel plants. However, these low contract
rates force slim profit margins for wind developers
and wind turbine OEMs. Most wind plant in Brazil
secure low interest CAPEX financing from the
country's development bank, BNDES. This, too, is
double-edged since to qualify for BNDES funding,
wind plants have to meet specific local content
mandates requiring wind turbine components and
materials to be manufactured in Brazil. This
challenge is aggravated by high number of OEMs
competing and limited sub-component manufacturers.
The top three turbine suppliers in Brazil in 2013
were GE (25 percent), Gamesa (20 percent), and
Vestas (19 percent). This is the first year GE
topped other OEMs in Brazil, and a clear example of
the U.S. company using Brazil to offset what was
otherwise a bleak year in the U.S. Gamesa has
traditionally been well represented in Latin
America, but the collapse of the wind market in the
OEM's home market of Spain underlines the importance
for Gamesa to increase business in Latin America.
Mexico installed 476 MW of new wind capacity in
2013, a 22.3 percent increase on the 389 MW
installed in 2012. Cumulative capacity reached 1,988
MW by the end of the year, representing a growth
rate of 31.4 percent. A number of factors, including
strong wind resources, high electricity prices, and
robust energy demand drive Mexico's market. A few
key policies tailored to large industrial users are
also proving effective. This includes a 100 percent
first-year accelerated depreciation tax policy and
the so-called self-supply (autobastemiento) scheme.
This allows large industrial end-users of
electricity to partner with wind developers to build
wind plants to offset a company's energy usage. Wind
plants do not have to be located near the end user's
facilities but simply have to connect to the Mexican
grid. Under NAFTA, companies exporting to Mexico
from the U.S. or Canada avoid a 15percent import
duty-providing a relief valve or secondary market
for wind manufacturing facilities in North America.
New energy policy reforms announced in late 2013 are
set to end state-owned monopoly rule of the
electricity sector. This is a wild card for the wind
market. Details of how this will be structured are
being drafted this year and will ultimately
determine if the strong momentum in Mexico's wind
sector continues. If a truly competitive electricity
market open to private investment results in
slashing energy prices, wind plants may be at a new
cost disadvantage with few financial incentives to
lean on. Gamesa was by far the leading turbine
supplier in Mexico last year, accounting for 73.5
percent of the market, followed by Vestas (22
percent) and GE (4.5 percent).
While Brazil and Mexico are the twin pillars of the
Latin American market, others cannot be ignored. In
2013, Argentina installed 76 MW of wind plants,
thanks to support from its GENREN program. Chile
added 200 MW, nearly doubling its cumulative
installed wind capacity to 413 MW. There are few
government subsidy incentives in Chile, but high
electricity prices and high energy demand is driving
growth. In Peru, 30 MW of new wind capacity was
installed, while the rights to develop a further 232
MW were awarded via two government tenders. Despite
political upheaval, Venezuela installed 149 MW in
2013. Uruguay installed just 11 MW last year, but a
series of government-sponsored power contract
auctions mean it is poised to reach triple-digit
growth rates, potentially installing over 1 GW
between 2015 and 2017.
Overall, by 2015, Latin America should begin to
install over 3 GW wind on an annual basis,
eventually reaching 4.3 GW annually by 2022. The
total amount of wind power capacity projected to be
installed from 2014 to 2022 is almost 31.5 GW.
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http://www.energybiz.com/article/14/09/latin-america-wind-energy-market-overview