Investors Needed for Renewable Energy Development in Latin America
 

Investors Needed for Renewable Energy Development in Latin America

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Given the increasing GDP growth in the emerging countries in Latin America, for the past five years the governments have been designing several strategies to attract new investors for renewable energy ...

Given the increasing GDP growth in the emerging countries in Latin America, for the past five years the governments have been designing several strategies to attract new investors for renewable energy development. The process is leveraged by the global reduction and commoditization of the main components (solar silicon panels and wind turbines) and by the search for a clear energy matrix independent from fossil fuels.

Why should you attend?

- Receive an overview of the key trends in renewable energy in Latin America
- Understand the interaction between GDP growth and renewable energy adoption
- Identify the drivers and restrains of the renewable energy market
- Discover regional impacts, such as shale gas and local industry development

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  • Good moorning and good arfternoon. My name is Gustavo Stainoh, I am a research analyst for the Frost & Sullivan Energy & Environment Practice and today I will be presenting our overview and key findings on the renewable energies in Latin America.

Investors Needed for Renewable Energy Development in Latin America Investors Needed for Renewable Energy Development in Latin America Presentation Transcript

  • Renewable Energy in Latin America Overview and Trends that will shape the future. Gustavo Stainoh, Research Analyst, Energy & Environment August 6,2013 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  • 2 Today’s Presenter Gustavo Stainoh Research Analyst Energy & Environment Frost & Sullivan Latin America Buenos Aires, Argentina Gustavo Stainoh joined Frost & Sullivan in 2012. Since September, he accomplished research services in the renewable energies in the Southern Cone, Andean Region and Mexico working with the latest information and focusing on supporting policies, the impact of local industries and processing industry characteristic figures. In 2010 he co-authored the chapter on “Renewable Energies” in “Public policy, civil society and legislative agenda” of the Argentinean Senate.
  • 3 Occasion for this Analyst Briefing • Latin America’s strong GDP growth rates coupled with the challenges shown by conventional power generation systems have led local governments to promote new alternative energy sources. • The region has been gaining knowledge and developing supportive policies and local supply chain industries. • This briefing is supported by Frost & Sullivan renewable energy industry studies for Latin America.
  • 4 How is Latin America Growing? Source: ECLAC; World Bank Latin America GDP AAGRs 2004 –2012 6.8% 4.8% 4.7% 6.2% 2.7% 3.9% 6.3% 7.0% 4.6%
  • 5 Impact of GDP Growth in the Addition of RE Installed Capacity Third condition Market penetration Second condition Active focus on renewables First condition Long term energy planning goals Economic growth Growing electricity demand Support policies implementation Industry growth Installed capacity add-on requirements
  • 6 Outlook – Mexico • SENER strategy includes ambitious installed capacity goals, including CC and Wind. (4.9% and 7.8% AAGR) • Mexico opened the borders to foreign and private IPPs. Regulation is efficient and proved positive results. LAERFTE. •US shale gas looks foward to increase CC installed capacity. Does it impact RE? Third condition Market penetration Second condition Active focus on renewables First condition Long term energy planning goals The availability of primary sources Funding from public institutions and international organizations Government promotion of renewables Expansion of the national natural gas pipeline system Drivers Restrain
  • 7 Outlook – Andean Region • Excluding Venezuela, all countires have long term goals. • Colombian regime prejudices large renewables. Ecuador focuses on solar PV. Peruvian public competiting bidding shows positive results. • All countires have still significant unexploited large hydropower resources. Third condition Market penetration Second conidition Active focus on renewables First condition Long term energy planning goals The availability of primary sources Opportunities in the distributed power generation market Unexploited small hydropower and biomass resources Lack of experienced supportive policies Drivers Restrain
  • 8 Outlook – Brazil • Brazil long term energy planning is consolidated in it’s 2030 PNE. • Guvernamental focus on developing RE with several supportive policies: PROINFA, Taxes reductions. • Recurrent energy crisis associated to a high dependent hydropower energy matrix benefits thermal power plants. Third condition Market penetration Second condition Active focus on renewables First condition Long term energy planning goals High competitiveness of wind power Local industry development An electric grid expansion is still required Drivers Restrain
  • 9 Outlook – Southern Cone Third condition Market penetration Second condition Acitve focus on renewables First condition Long term energy planning goals • Uruguay defined long term multi-party planning. Chile and Argentina focus on private and public short term projects respectively. • Chile and Uruguay reached over 5% of share in 2013 through diverse supporting policies. Argentinean focus is lighter. • Chile cancelled HydroAysen and Castilla for over 4.7 GW. Uruguay lacks of additional primary resources for hydro and thermal. Argentina focuses on YPF & shale gas development. The availability of primary sources (Solar Chile and Wind Argentina) Both three countries have energy deficit associated to hydrocarbon fuels imports Most project are delayed in the finance stage Drivers Restrain
  • 10 Renewable Energy Support Policies Argentina X X X X X X X X Chile X X X X X X Uruguay X X X X X X X Brazil X X X X X X Colombia X X Ecuador X X X X Peru X X X Mexico X X X X X Source: REN 21 Report REN 21 Renewable Energies Support Policies Dashboard, 2012
  • 11 0.0 2,000.0 4,000.0 6,000.0 8,000.0 10,000.0 12,000.0 14,000.0 16,000.0 2012 2013 2014 2015 2016 2017 Wind Power Trend Latin America, 2012 - 2025 Mexico Southern Cone Brazil Andean Region 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 450.0 2012 2013 2014 2015 2016 2017 Solar Power Trend Latin America, 2012 - 2025 Mexico Southern Cone Brazil Andean Region Renewable Energies Installed Capacity Forecast
  • 12 Key Trends: Local Industry or Imported technology? Mexico Local supply support & market opening • Political atractiviness • Active support policies and promotion programms • Limited procurement structure • Increases average LCOE Argentina, Brazil • Low country’s long-term benefit • Active support policies and promotion programms • Fast procurement structure • Increases competitiviness and reduces CAPEX Chile, Uruguay, Peru Lower growth, more stable market Higher short term growth Local Industry: RE as key local industry driver Imported technology: Focus on developing RE Impact on RE development Negative Neutral Positive
  • 13 The impact of Shale Gas Restrain? Driver? • High efficient and cleaner gas turbines • Lower LCOE for CC gas power stations rather than wind, solar or small hydropower • Sustained development of the upstream gas industry • Gas is still considered a clean fuel (low Nox emmissions) Conclusion: gas instead of renewables • Increasing the gas power stations fuel supply asserts the base load power structure and allows renewables to compete demand curve during peaks. Hydropower regulates the daily power generation. Source; Energy Information Administration. Image source: US department of Energy. 1 3 5 7 9 11 13 15 17 19 21 23 Typical daily power demand curve Base load Peak hydro + RE Demand Rank Country (trillion cubic feet) 3 Argentina 802 6 Mexico 545 10 Brazil 245 1 3 5 7 9 11 13 15 17 19 21 23 Typical daily power demand curve Base load Peak hydro + RE Demand
  • 14 Successful Case - Chile 166 MW installed in 2013 - 50% of the add on demand High economy growth and market penetration 12,847 MW in planning stages (17,745 MW total) 1,047 MW installed (June 2013) Expected to overcome 10% by the end of 2014 Source: Centro de Energias Renovablesn (CER)
  • 15 Key Insights 1 Excluding exceptions, there is an evident intention for developing the RE industry in Latam, leveraged by the global reduction of CAPEX. 2 The following years will expose the effectiveness of the supportive policies and how they attract private investors. 3 Strategies, planning and market penetration are imperative to guarantee a medium term development. .
  • 16 Q&A ¿?
  • 17 Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) Email: myfrost@frost.com
  • 18 Your Feedback is Important to Us Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. What would you like to see from Frost & Sullivan?
  • 19 http://twitter.com/frost_sullivan Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan https://www.linkedin.com/groups?gid=4480787 http://www.slideshare.net/FrostandSullivan
  • 20 Analyst Contact Information Francesca Valente Corporate Communications & Marketing (+54) 11 4777 5300 francesca.valente@frost.com Gustavo Stainoh Research Analyst, Energy & Environment (+54) 11 4776 4433 gustavo.stainoh@frost.com Gustavo Stainoh Juliana Passadore BU Leader, Energy & Environemnt (+55) 11 3065 8471 juliana.passadore@frost.com @Frost_Latam @Frost_EPS
  • 21 The Frost & Sullivan Research Southern Cone • Solar Market (2011) • Wind Turbines (2011) • Chilean Electricity Market (2011) • Argentinean Energy Market (2011) Andean Region • Peruvian Electricity Industry (2011) • Wind Turbines (2012) • Renewable Energy (2012) Mexico • Solar Power (2011) • Geothermal Generation Market (2012) • Wind Turbines (2012) Brazil • Wind Power (2012)