Bloomberg News

Latin America Clean Power Generation to Grow, BNEF Says

May 22, 2012

Latin America’s renewable-energy boom will drive up the use of solar and wind-power equipment, adding the equivalent of Germany’s annual demand by 2015, according to consulting firm Climate Strategy.

Solar-panel installations in the region will jump to 2,156 megawatts a year by 2015 from 75 megawatts last year, while new wind turbines will more than triple to 4,323 megawatts a year, Chief Executive Officer Peter Sweatman said today in Madrid.

Wind and solar developers are shifting focus to Latin America from the U.S. and Europe, where debt-saddled governments have reined in clean-power subsidies. Countries from Mexico to Brazil are adding renewable-energy projects as economic growth accelerates, financing curbs ease and equipment costs come down.

“The region is going through a very strong period where finance is easier to come by than it has been in the past,” Sweatman said at a conference. “The whole of Latin America is going to add more demand than Germany does in an average year.”

In Brazil, the price of wind power under the country’s auction system declined 75 percent by the end of 2011 from 2006, Sweatman said. Installing solar panels in Brazil, Mexico and Chile is cheaper than buying power from the grid, he said.

“In 2014 and 2015 there will be a substantial move toward non-subsidized grid-parity systems,” Sweatman said, referring to the point at which power generation from renewable sources costs the same or less than purchases from the transmission network. “In parts of Chile, large manufacturers will find it more economic to develop their own wind than to take grid power.”

Brazil’s use of wind auctions, rather than the above-market rates system adopted in Germany and Spain, has proved so competitive that half of all winning bids generate returns of less than 10 percent, according to Bloomberg New Energy Finance, the London-based partner of Climate Strategy.

“The cost of capital is already under extreme pressure,” Sweatman said. “The auction mechanism is most clearly getting the lowest cost.”

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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