Wind power is poised to play a greater role in meeting Latin America's growing demand for electricity. Brazil, Chile and Mexico are expected to have added more than 3.7 GW of wind power from 2010 through the end of 2012, according to a study from IHS Emerging Energy Research (EER). Brazil comprises 70 percent of the Latin America wind market, but has tapped just a fraction of its wind power potential.

Demand for diversity of supply is expected to grow wind generation in Latin America, as is a decline in costs through local manufacturing. Renewable energy developments in North America are largely driven by climate change concerns, which are not of primary concern in Latin America. Instead, Latin American developers and governments are turning to wind energy because of the proven technology and its potential to grow local industrial activity.

While the economic crisis softened electricity demand in many portions of the world, Latin America was relatively unaffected by the recession. Instead, power demand has continued to rise at an astonishing rate. Brazil experienced a 4.5 percent power demand growth rate between 2003 to 2008, while Mexico saw a 3.8 percent growth rate from 2003 to 2007. Chile was also unaffected by the recession. Pablo Faúndez, general manager and co-founder of Ecoingerios, said that demand for electricity in Chile grew 6 percent per year during the economic crisis. "The recession was virtually inexistent here."

In 2010 alone, the installed generating capacity in Latin America grew 50 percent, adding 703 MW of wind power, according to BNamericas. As of February, Brazil has approximately 1.6 GW of installed wind capacity, Mexico's installed wind generation capacity has surpassed 1 GW, and Chile has about 300 MW.

Challenges to Growth

In order for the Latin American wind market to continue to expand, a few hurdles must be crossed. In some parts of Latin America, like Chile, obtaining secure financing for projects can be difficult. Due to the lack of a support system with fixed prices, banks are hesitant to take risks on renewable energy.

A larger infrastructure for access to materials also needs to be built, said Steve Sawyer, secretary general of the Global Wind Energy Council. "More long load trucks for cranes and staging facilities to unload blades are needed."

Logistical concerns are an ongoing challenge for the growing wind energy market, said Marcos Costa, vice president of renewable power and thermal power for Alstom. "The region has to receive investments in railroads to transport the equipment in a fast and safe way."

Other concerns, Costa said, include obtaining licenses for permitting and building interconnection in countries where expansive electrical networks are inexistent.

The role of other forms of emerging generation could also suppress the growth of the wind industry. In recent years, shale gas exploration has mushroomed not only in the U.S., but also in Mexico. Miguel Ángel Alonso, managing director of Acciona Energy Mexico, said the greatest obstacle that wind developers are currently facing is the low price of natural gas and the entry of shale gas into the market. In order for wind and other renewable resources to remain competitive in Latin America, local governments will need to offer tax grants and other subsidies to build an industry that can be cost-heavy upfront.

Brazil

Brazil is predicted to house 69 percent of the total Latin American installed wind capacity in 2025, positioning the country as a leader for development, turbine manufacturing and wind turbine component supply chain assembly. Despite its current and forecasted leadership in wind energy, it is predicted that wind penetration will reach just 8.5 percent of Brazil's generation mix by 2025.

Part of Brazil's growth in the wind industry is expected to be spurred by international manufacturers opening wind turbine facilities in the nation. General Electric (GE) has already announced plans to build a $35 million plant to assemble wind turbines in the northeastern state of Bahia. The plant is expected to be completed by March 2013.

In total, Brazil is home to 11 manufacturing facilities, including a new facility built by Alstom. In November 2011, the French company opened its first wind facility in Latin America, a turbine plant in Camaçari, state of Bahia.

The decision to construct the turbine plant in Bahia was a strategic move, said Costa. "The industrial complex of Camaçari is well located in terms of logistics, especially for exportation and the offer of specialized labor found in the region."

Prior to the start of its manufacturing operations in Brazil, Alstom had already won two contracts for wind farms. In July 2010, Alstom signed a contract with Desenvix, a subsidiary of the Engevix group, for the contruction of a 90-MW wind compex, also in the state of Bahia. The Brotas Complex will be composed of three wind farms equipped with 57-1.67 MW Alstom ECO 86 wind turbines.

In 2011, Alstom signed a $130 million contract with Brasventos S.A. for the construction and maintenance of three wind farms that will be installed in the state of Rio Grande do Norte. Recently, Alstom was awarded a contract by Odebrecht Energia for the supply of four wind farms in southern Brazil. The projects, Corredor do Senandes II, III and IV, and Vento Aragano I, located in the state of Rio Grande do Sul, will reach a total capacity of 108 MW.

Impsa has also staked a claim in the Brazilian wind development sector. In 2011, the company completed the last of 10 wind farms that compose the Santa Catarina wind project, which totals 222 MW of capacity. The wind farms are powered by 77-1.5 MW IV wind turbines, provided by WPE, an Impsa subsidiary. The project created more than 7,000 indirect jobs for the low-income families living in Santa Catarina, according to Impsa.

Acciona Windpower continues to grow its development base in Brazil through a contract for 40 of its 3 MW turbines with CPFL Renovaveis. The turbines will be installed at the 120 MW wind farm in Rio Grande do Sul state. Acciona also plans to add a manufacturing plant in Brazil.

Sawyer said that Brazilian wind developments are poised for financial success due to funding for infrastructure projects from the Brazilian Development Bank (BNDES). "Wind is outperforming all other forms of power generation at auctions in Brazil."

Total investment in Brazil's wind power sector totaled $2.86 billion in 2011. These projects received a total of $1.85 billion in BNDES funding, which was divided among 38 wind farms. The lender also announced in March that it has approved a $211 million-real loan for five wind projects in the northeastern states of Rio Grande do Norte and Bahia, according to BNamericas. The parks are expected to have an installed capacity of 138 MW and are operated by Iberdrola Renováveis do Brasil and Neoenergia.