Monday 16th June 2014

Wind Watch

Will Uruguay’s free-scoring and free-biting Luis Suarez play against England?

The South American nation punches above its weight in football terms — it came fourth in the last World Cup with a population of just 3.4million — but it will need Suarez fit if it it to make a similar impact this time. Remember, we will be showing the match at our Quarterly Drinks this Thursday (see details, right).

But it is not just football where Uruguay is outperforming larger rivals. The country has quietly built a renewable energy market with plenty to interest foreign investors and manufacturers. Prospects are exciting for the next few years if it can deliver on its ambitions, but less certain after that.

One reason that Uruguay should interest foreign investors is political and economic stability, which makes the country a more stable investment prospect than most other South American nations.

Its energy policies are also stable. Last Wednesday, in an interview on the government’s website, energy minister Ramon Mendez reaffirmed the country’s commitment to getting 90% of its energy from renewable sources by 2015, including 20% from wind farms.

These figures would look unrealistic for most countries, but Uruguay is an exception. Mendez says 84% of the country’s energy came from renewable sources in 2013, which is not surprising seeing as 45% of its power comes from hydropower and the country also has biomass and solar.

And this is the year that wind will finally become a major part of the mix. Capacity is due to grow from 50MW at the end of 2013 to 500MW at the end of this year, with a target of more than 1.3GW by 2015. The government wants wind to become the stable base of its energy network.

Uruguayan policymakers have also recognised that the country is too small to support its own wind manufacturing industry. It doesn’t have any interest in setting rules about locally-made parts, which means the market is an open goal for overseas manufacturers. And overseas firms should also be aware that foreign investment has, since 1998, been treated the same as national investment.

Businesses such as Gamesa are already taking advantage. Last week, utility Usinas y Trasmiones Electricas (UTE) ordered 70MW of Gamesa turbines for the Valentines project in the south of the country, which would be one of Uruguay’s largest. The deal depends on UTE securing funding.

The Spanish manufacturer also gained financial backing last week from bank China Minsheng to build turbines for the 50MW Talas de Maciel II project, which is due to complete later this year. There is no reason why other developers, investors and manufacturers can’t get involved too.

But it is unlikely to be a long-term play for investors. Yes, Uruguay’s economy is growing, and so is the demand for electricity. However, we should not forget that the country has a population of just 3.4million and so it would not take long for the country to reach saturation point.

It’s more likely to be a quick win — which either team would accept on Thursday!