Wind Power Development Stalled in Venezuela

His comments come on the heels of recent reports stating the South American country has the potential to host as much as 20,000 MW of wind power generation capacity, which he categorizes as "exaggerated." Other estimates pinning that threshold at 10,000 MW are also overambitious, he adds.

"Those numbers are definitely too big," he points out. "If you consider that 45,000 MW will be installed in the whole North Sea by 2050, how can nearly half of that be put to work in Venezuela."

The source notes the left-wing government of Hugo Chavez is keen to promote wind power in the oil-producing country but that some of the statistics floated around are unreliable. Moreover, he criticized the administration for lack of transparency and the fact that there is too much bureaucracy to set up a wind-power map or finish pivotal sea-depth measurements required to fully assess the sector's potential.

"They say they have a wind map and exact [potential] numbers but every time we ask for them they don't provide it," the source claims.

Francisco Gonzalez-Longatt, vice president of Venezuelan Wind Energy Association (AVeol), says it's too early to provide an accurate forecast for the country's wind potential but notes Venezuela's 2,718Km northern coastal strip has strong wind speeds blowing an annual average of 8.9 meters per second.

"We could fill up the whole coast with offshore platforms because the wind speed there is very good," he notes. However, he adds reliable and sufficient ocean-depth studies are missing to make such a task feasible.

Three Projects?  

So far, the only project that's really on the drawing board is a 100-MW wind park in the Paraguana peninsula in the northern state of Falcon due to come online in late 2011 or early 2012. Two other initiatives – a 25- to 75-MW park in the Margarita Island and a 100-MW project in the semi-desert region of La Guajira – are in planning stages, according to Gonzalez-Longatt.

The Paraguana wind farm is being financed by state-owned oil company PVDSA, with the state's coffers. The anonymous industry source said the government is unlikely to launch any private tenders to finance future wind projects. However, other market participants disagree, saying it will have to open the field to foreign currency if it wants the sector to have any competitive weight in Latin America where a plethora of projects are planned.

"They will eventually pave the road for this and provide new guarantees to ensure foreign investors are comfortable committing funds to the sector," says Fernando Tejeda, President of the Latin American Wind Power Association (LAWEA).

Despite Chavez's tarnished reputation with international investors and corporates – many of which have abandoned Venezuela in fear of expropriation – Tejeda expects Chavez will issue fresh guarantees for wind investments. This is because the state is keen to pump more of its oil for international export rather than for the domestic market and wind and other renewable technologies would allow it to do this.

Tejeda adds Venezuela will also need to establish a regulatory framework and feed-in tariff for the sector to attract the proper investment.

So far, the government's exact plans are shrouded in mystery. Gonzalez-Longatt says it has "an initiative" to develop wind but like other sources, agrees that nothing is clear at the moment.

"Some things can move very slowly in Venezuela," adds the industry source, noting that the Paraguana initiative was scheduled to be ready two years ago. "It was a never ending story of bureaucracy."

The government needs to stop sitting on its hands and get more serious about developing the wind sector if it wants to reap any benefits from it.

"Colombia has a much more refined map and even Bolivia has hired a consultancy to do a proper assessment of its potential but nothing like that has been done here," he concludes.