Wind Energy in Latin America

Realizing the Potential

By Carlos Rufín

Wind energy in Marcona, Peru. Photo by David Huamani B./Ojos Propios.

Wind energy has enormous potential in Latin America.  With its relatively low population density, vast distances and energy needs in remote places, Latin America offers an ideal setting to harness wind energy.  

Energy needs in windy, but isolated or remote places, such as the Caribbean islands, the mountains and plateaus of the Andes and the Mesoamerican ranges, as well as the region’s vast savannahs (llanos, cerrado, Chaco and pampas), can be met more efficiently by wind turbines than any other alternative.  Wind energy is more easily adapted to scale than solar energy: compared to solar panels or solar concentrators, wind turbines generate more electricity relative to the area that they take up, and this difference is growing as wind turbines increase in size and efficiency. Thus, wind energy can be a more appropriate technology in isolated areas with significant energy needs.  If planned with care, wind turbine facilities have little adverse effect on ecosystems, and in the region’s vast uninhabited spaces, they can have few or no aesthetic and sound impacts either.  Wind energy complements very well the region’s hydro-dominated electricity grids, because hydroelectric generation can easily respond to the intermittence of winds, in contrast to thermal generation, which is far less flexible in general; and, at least in some parts of the region, the winds are strongest during the dry season, precisely when hydroelectric generation is most limited.  Lastly, the relatively accessible nature of wind power technology means that it can be manufactured in the region, unlike other types of energy technologies. Brazil, for example, is requiring local raw materials and manufacturing in wind power installations, and one of the region’s key players is an Argentine company, IMPSA.

Several areas in the region are increasingly using wind power. The Caribbean, in fact, has a long history of use of wind energy; many sugarcane mills in the islands were powered by windmills before the advent of highly efficient steam engines burning bagasse (sugarcane fiber). But with the Caribbean sugar industry being displaced in recent decades by highly competitive producers in Brazil and elsewhere, the area confronts high costs of energy as the islands (with the exception of Trinidad) lack traditional energy resources.  Not surprisingly, exploiting the powerful and constant trade winds has become once again a highly attractive proposition for the islands, with strong growth in Jamaica, the Dominican Republic and Aruba.

Mexico is, after Brazil (discussed at length elsewhere in this issue of ReVista), the second largest market for wind energy in Latin America, particularly in the southern part of the country, where wind conditions are most favorable.  Costa Rica, with a strong commitment to renewable energy, has installed the largest number of wind power turbines in Central America, followed closely by Honduras.  In the Southern Cone, Chile and Argentina are aggressively investing in wind power, and both countries are expected to overtake Mexico in terms of total installed capacity over the next ten years.  Lastly, new projects are also taking shape in Peru and Uruguay.

Discharge side of a hydroelectric plant, Péligre Dam in Haiti: in the background, the dam with the spillways for discharging excess water; in the foreground, the powerhouse, where the turbines and generators are located. 

Nevertheless, wind energy is still a relatively underexploited resource across the region, particularly in relation to its vast potential.  For this potential to be realized, energy policy needs to overcome the mindset that has dominated the sector throughout its history in Latin America and the Caribbean: the obsession with hydroelectric generation.  Despite the increasing costs of building large dams in more and more distant locations, more protests by indigenous communities affected by dam construction, and growing awareness of the environmental costs of such facilities, many governments in the region remain convinced that tapping the remaining hydroelectric potential is the best way forward, and are spending vast sums of money on projects like the Madeira River complex in Brazil.  The old mindset also permeates the operation of the region’s national grids, accustomed to the predictability of generation based on dams with large reservoirs of water, as opposed to the greater short-term intermittence of individual wind power installations—despite the reality of climate change, which is altering hydrological patterns and making hydro generation less predictable too.

Many Latin American countries, having restructured their electricity sectors to give a more prominent role to private ownership of generation facilities, also face the challenges of attracting private investment in wind power.  Wind energy facilities face a different kind of risk than those of technologies with a longer track record.  Instead of hydrological risks or the volatility of fuel prices, wind power depends on a resource—wind—that is less well known throughout the region, and that follows its own patterns.  Such uncertainty deters private investors. Innovative policies, perhaps modeled on those successfully employed in Europe, offering a fixed price for every unit of energy generated, must be put in place to overcome investors’ reticence.

Although environmental and social impacts are less severe than those for large dams, the best locations for wind farms may be in indigenous lands; transmission lines may need to cross such lands or other environmentally sensitive areas. Wind projects in Mexico and elsewhere have already experienced setbacks due to local opposition. These projects are no different from other kinds of resource extraction, and as such they require consultation and prior consent of affected communities, which in turn may entail sharing some of the benefits with these communities. Policy makers, private developers and lenders must be aware of this broader context and develop appropriate protocols and standards to engage these stakeholders to everyone’s satisfaction.

To sum up, wind power can and should play a major role in the future of energy in Latin America.  It is up to policy makers and the private sector for the potential to be realized.

Carlos Rufín is Associate Professor of International Business at the Suffolk University’s Sawyer Business School, and a consultant on energy matters to the World Bank and the Inter-American Development Bank.

See also: Energy