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Brazil and Mexico drag on LatAm wind but 2018 revival beckons

ANALYSIS | Policy factors ensured an unspectacular 2016 for the LatAm region's wind sector but things should start firing again by the end of next year, says Alexandre Spatuzza

New wind power installations in Latin America and the Caribbean declined 22% in 2016 amid policy changes but should recover by 2018, new global figures suggest.

According to the latest data from the Global Wind Energy Council (GWEC) the region added a total of 3.6GW of new wind in 2016, down from 4.5GW installed in 2015.

Despite the decline, GWEC’s long-term outlook for the region remains positive and by 2020 it should surpass the 20GW mark as policies are consolidated, large markets such as Argentina and Brazil regain momentum, and Colombia finalises its renewable energy regulations.

Behind the decline was a slowdown in Brazil, which accounts for 56% of the total 18.9GW installed capacity in place in the region – which includes Mexico. Brazilian wind companies installed a total of 2GW in 2016, down from 2.75GW added in 2015.

Mexico, the second-largest market in the region, which ended 2016 with 3.57GW of wind capacity, also faced a slowdown in new installations. In 2015 Mexico had installed 715MW but added just 454MW in the whole of 2016.

“Investors in Mexico were waiting for the implementation of new policies that arose from the energy reforms, while in Brazil, which is facing a deep political crisis, the new wind installed had been contracted in earlier years,” GWEC’s Latin American director Ramón Fiestas told Recharge.

While Argentina only started getting its new policies underway and remained at 279MW, markets that stood out in 2016 were Chile and Uruguay, which continued growing rapidly as policies implemented in earlier years took effect.

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“Chile saw the new tender process start to take off,” said Fiestas. The Andean country added a whopping 56% more new wind, surpassing for the first time the 1GW mark to top 1.4GW in 2016.

Uruguay’s wind capacity, which accounts for more than 20% of an almost 100% renewable power supply, grew 43%, also topping 1GW with 1.2GW in place at the end of 2016.

Elsewhere in Latin America, Peru also grew as its policies for renewables started to take off.

In Central America, unlike the more sturdy South American countries that have well-thought-out tender policies for renewables, 2016 was bust year after a boom in 2015.

“These are markets of opportunities, they are small and their policies are dependent on other factors such as thermolelectric power supply and grid constraints,” said Fiestas.

Fiestas expects 2017 to be a slow year in the region, with Brazil likely to add some 2.3GW, and Mexico and Argentina starting to develop projects tendered in 2016.

Chile could also continue growing, but its contribution is small. According to government data, 208MW of wind is under construction in Chile. Uruguay has reached a plateau and just another 240MW of wind is being built.

But by 2018, the region could return to adding between 3.5GW and 4.5GW a year, led by fast growth in Argentina and Mexico (each expected to be a 1GW a year market) and with Brazil – currently building another 7GW – ticking over at 2GW until new tenders are confirmed.

By then Colombia – with 2GW of wind projects ready to be built – and Peru should also have consolidated policies in place, said Fiestas.

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