Saturday, 7 December 2013

Latin America report: Gauging Mexico's wind energy market

The U.S. market for wind energy is something of a contradiction: it's one of the world's larger markets and fastest growing with its own supply chain, yet it's still heavily reliant upon a production tax credit, which was renewed at the last minute last December (yet late with enough uncertainty to chill many projects in the pipeline), and this time its renewal is even less certain.

To the south, though, is another country and market that's also displaying good growth in wind energy. Mexico has added an average of 300 MW annually for the past four years and should tally nearly 1.6 GW overall next year, representing three percent of the grid capacity, according to a presenter at last month's Renewable Energy World North America/Power-Gen International Conference in Orlando, Florida.
Mexico's wind energy is largely concentrated in the Oaxaca state with "very good class 6 and class 7 winds," meaning areas with wind energy density of 600-1600+ W/m2 at 50 meters, though good winds can be found in Baja California and Tamauilipas, said Agustin Valdivia of MPR Associates. Gamesa and Acciona dominate the market though GE is seeking to expand there. The nation's wind energy development pipeline was around 2.5 GW at the end of last year, he noted.
Among the challenges to wind energy expansion in Mexico is the lack of grid information made available by state-owned utility Comisión Federal de Electricidad (CFE). CFE controls interconnection substations, though, and wants to get those right, Valdiva noted. Also a lack of meteorological stations near potential wind sites can hamper early planning, and land availability is complicated due to loosely defined municipal boundaries. Theft of copper components also is a problem.
On the plus side there are wind incentives in the form of accelerated equipment depreciation and an "energy bank," he noted. CFE's high tariffs range from $97-$245/MWh, self-supply deals can be created including through consortiums of independent power producers and offtakers, and 15-20 year power-purchase agreements (PPA) are similar to those in the U.S.


IN THE NEWS

Geothermal Project Funding for Costa Rica: Costa Rica has secured two significant funding sources for development and deployment of geothermal energy. The Japan International Cooperation Agency (JICA) has pledged a ¥56 million (roughly U.S. $560 million) to continue backing geothermal development projects for state-owned Instituto Costarricense de Electricidad (ICE) in San José. ICE itself claims it has received another $70 million from the European Investment Bank.
The first project to be funded will be the 55-MW Pailas II geothermal plant at the Rincon de la Vieja volcano in the northwestern province of Guanacaste, with estimated cost of $333 million. Also tapping into the funding will be two similar-size (~55-MW) geothermal plants in the area, Borinquen I and II. JICA previously extended a loan to Costa Rica nearly 30 years ago for the country's first geothermal project, the Miravalles Geothermal Power Project, and a year ago they signed a memorandum of understanding to continue cooperating to promote geothermal development. Costa Rica is one of eight nations that are now or nearly 100 percent using renewable energy, with most of its ~2.7 GW of power generation capacity coming from hydropower.
Enel Gets Busy in Chile: Enel Green Power says it is planning three new power plants totaling 161 MW capacity in Chile's Central Region Transmission Network (SIC). The two solar PV plants and one wind farm will be built and come online by the first half of 2015, at an estimated total investment of $320 million. Power from the three plants, plus an unidentified fourth project already in operation, will be sold at a rate of $128/MWh. The company also has begun construction of what it claims is Chile's largest solar PV plant, the 36-MW Diego de Almagro in the Atacama region roughly 950 km north of Santiago. The $60 million plant will use about 225,000 "mostly thin-film" modules from 3Sun, the joint venture between Enel, Sharp, and STMicroelectronics. The plant has a 15-year PPA with the SIC. Enel Green Power already was completing construction at its second Chilean wind farm, the 90-MW Valle de los Vientos site, less than a year after opening its 90-MW Talinay farm in central Chile. A third farm sized at 99-MW near Taltal is under construction.
GE Wins Big Wind Business in Brazil: Brazil's recent A-3 auction which saw 867 MW of wind energy sold for than $7 billion sold was a boon for GE, which won 545 MW of orders for wind turbines spanning 26 wind farms, according to the company. The company already has 1 GW of installed wind capacity in Brazil and is installing another 400 MW now.
U.S. Ex-Im Bank's First Costa Rican Wind Deal: The U.S. Export-Import Bank has approved a $61.1 million direct loan to a subsidiary of Central American wind developer Globeleq Mesoamerica Energy to purchase Gamesa wind turbine generators, Ex-Im Bank's first wind transaction in Costa Rica. Gamesa's tech is chosen for the 50-MW Orosi wind farm project in Guanacaste.
Ecopower Makes Chile Move: Ecopower SAC says it is filing for permits to develop a 100-MW, $250 million wind farm in Los Lagos, dubbed the Chiloé wind farm, which would begin operations in January 2016. The company had temporarily withdrawn its Environmental Impact Assessment of the Chiloé project earlier this summer to take a closer look at studies of tourism and community impacts.
Honda Carmaker Building Brazilian Wind Farm: Honda Energy do Brasil, a subsidiary of the Japanese carmaker, plans to build a 27-MW nine-turbine wind farm in Rio Grande do Sul by next fall. The ~100 million reais plant would generate 95,000 MWh/year, which would equal the company's electricity needs for auto production in the country.
Tecnova, Sky Solar Deal for Uruguayan Solar Farm: Tecnova Renovables and China's Sky Solar Group, through their local joint venture Radition, have committed to build a $20 million 8-MW solar PV plant on 17 acres in an industrial park in the municipality of Paysandú. Tecnova recently opened a 155-kW PV site in Dolores and is currently working on a 2-MW project in Constancia.
Ocean Wave Power in Brazil: Furnas, Coppe/UFRJ (Federal University of Rio de Janeiro) and startup Seahorse Wave Energy reportedly want to launch a prototype wave energy system off Rasa Island, across from Ipanema beach, sometime in 2015. Details are scarce, but the project is said to entirely use Brazilian-developed technology, and apparently displace a diesel generator on Rasa Island used by the Navy to power a lighthouse and some houses.


A DEEPER LOOK

Central America's Renewables Push: The Thomson Reuters Foundation takes a closer look at renewable energy penetration in Central America, where it accounts for nearly two-thirds of utility-supplied electricity. Smaller-scale efforts are emphasized, including a gravity-powered micro-hydropower plant on the El Salvador/Honduras border.


ON THE HORIZON

Solar Auction Proposed for Brazil's Pernambuco State: Brazil's Pernambuco state plans to auction 180 MW of solar farm output on December 20, reportedly the nation's first solar-only auction. Bids will start at a ceiling of 250 Brazilian reais/MWh (about U.S. $109/MWh), about twice the average pricing (124.43 reais/MWh) for wind energy in Brazil's recent A-3 auction — a pricing that was easily low enough to price solar out of the bids — though rebates will knock those solar auction prices down to about 165 reais/MWh. The Department of Water Resources and Energy will coordinate the auction, which is part of the state government's PE Sustentável (Sustainable PE) program to support the local solar industry. The deadline to register for the solar auction is December 13.


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