The South America wind power market is expected to register a CAGR of less than 7.9% during the forecast period. Major factors attributing to the growth include the favorable government policies, the increasing investment in wind power projects, and the reduced cost of wind energy, which led to an increased adoption of wind energy, thereby positively contributing to the demand for wind energy. Moreover, as countries are becoming increasingly concerned about climate change and the role of renewable energy in curtailing it, wind power is expected to increase its share in the South American market. The increasing adoption of alternate energy sources, such as gas-based power and solar power, is likely to hinder the market growth.
• The onshore segment is expected to be the largest market during the forecast period in South America, owing to increased onshore wind capacity additions, supported by reducing the cost of electricity generation from onshore wind projects.
• The technological advancements in efficiency and decrease in the production cost of offshore wind turbines are expected to create ample opportunity for the market players in South America.
• In South America, Brazil had the highest installed capacity in 2019 and is further expected to be the largest market during the forecast period, bolstered by constant growth in onshore wind power additions and upcoming offshore wind power projects.
Key Market Trends
Onshore Segment to Dominate the Market
- Onshore wind energy power generation technology evolved over the last five years to maximize electricity produced per megawatt capacity installed, to cover more sites with lower wind speeds in South America.
- In 2018, two auctions executed (A-4 in April 2018 and A-6 in September 2018) captured 1 GW for onshore wind in total. The lowest average winning bid, 67.6 BRL/MWh for onshore wind, made wind once again the most competitive technology in the Brazilian auctions, in turn, expected to drive the Brazil onshore wind power market during the forecast period.
- Chile has more than a gigawatt of installed onshore wind capacity, which is the second-highest in South America. Chile has ambitious plans for renewable energy, which, in turn, is expected to drive the onshore market in the region.
- Furthermore, decreasing the cost of power generation and growing investments, particularly in Brazil, Chile, and Argentina, is expected to drive the onshore wind turbine installation, which, in turn, is expected to drive the wind power market in the region during the forecast period.
Brazil to Dominate the Market
- According to the Brazilian Wind Power Association, the country’s potential for generating wind power is estimated at 500 GW. As of December 2018, the country had a total installed wind capacity of 14,707 MW and added approximately 1,939 MW of wind power capacity in 2018. Out of the 14,707 MW, 14.44 GW was in commercial farms in operation (98.17%) and 0.27 GW in the test phase (1.83%).
- Wind power in Brazil has proved to be the most competitive technology, with an average price of BRL 98.62/MWh (around USD 30/MWh), well below the prices of large hydropower plants.
- The Association (Abeeólica) also stated that the country is expected to have nearly 18.8 GW of installed wind capacity by 2024, considering 186 new wind farms that are scheduled to come online by 2024. In addition to this, the government’s 10-year energy development plan forecasts the country to reach 28.5 GW of wind capacity by 2026.
- In 2018, around USD 1.27 billion was invested in wind power, representing 35% of the total renewable investments in Brazil. The decline in wind power investments during 2018 was primarily the result of there being no auctions between 2015 and 2017 and with the first-ever de-contracting auction held in August 2017, allowing projects to be released from their commitment by paying reduced penalties.
- In February 2018, GE Renewable Energy signed an agreement with ENGIE, to supply 144 of its 2.5-116 turbines for the Umburanas Wind Farm Complex in upstate Bahia, Brazil. This 360 MW wind project is added to the 326.7 MW, under commissioning by GE at the neighboring Campo Largo wind farm.
- In 2018, two auctions executed (A-4 in April 2018 and A-6 in September 2018) captured 1 GW for onshore wind in total. The lowest average winning bid, 67.6 BRL/MWh for onshore wind, made wind once again the most competitive technology in the Brazilian auctions, in 2018. The continuation of the auction program in Brazil ensures a steady market development and is expected to improve the demand for the wind power market in the country.
- As a result, the Brazilian wind power market is expected to witness robust growth during the forecast period, in the wake of the declining cost of wind energy and supportive government policies.
Some of the key players involved in the wind power market include Acciona Energia SA, Vestas Wind Systems AS, Siemens Gamesa Renewable Energy SA, Xinjiang Goldwind Science & Technology Co. Ltd (Goldwind), EDF SA, and General Electric.
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