Emerging markets: The new frontier for renewable energies

Emerging markets represent a potentially strong growth scenario for renewables in the next few years. The competitiveness of such energy sources, in countries which need to increase productive capacity to keep in step with economic growth rates, makes them an increasingly soughtafter energy option.

The cost of renewable energies has fallen dramatically in recent years. Taking an analysis of wind and photovoltaic power, the price of wind turbine generators has fallen by 30% on average in four years (20% for the turbines with bigger diameter rotors) and the price of photovoltaic panels is down by around 60%. The energy cost (investment in the renewable project + operation and maintenance of the plant during its useful life) has fallen by similar percentages.

Competitive energy

These circumstances mean that both technologies are already competitive with conventional generation in markets that need to increase their productive capacities to cover strong growth in demand.

The situation is very different from that in industrialized countries. The take-off of renewables in the latter was mainly for environmental reasons and to reduce energy imports. It was helped by support mechanisms that allowed the incorporation of renewable energy into the system and drove technological development.

A different context

In emerging countries, however, the maturity of renewable technologies and their reduced costs make them direct competitive alternatives to conventional energies, even excluding external environmental and social costs associated with the latter.

A photovoltaic or wind developer in emerging countries is now able to offer a competitive electricity generation price in calls for tender or other contracting procedures, and utilities are interested in obtaining renewably-sourced electricity at costs lower than fossil fuel generation.

Flexibility of renewable technologies also makes them a more competitive option for direct supply to business or industrial concerns, especially when access to the grid is difficult, which is often the case in emerging markets.

Such a scenario was unimaginable a decade ago and offers great opportunities for renewable energy growth. With installation already high in a good number of developed countries, where the economic crisis has led to cuts in remuneration for renewable operators and there is presently zero or very reduced growth in electricity demand, the spotlight appears to have moved to other countries in which the energy and economic context is currently more attractive.

ACCIONA Energy is very aware of this and has strengthened its strategy towards these markets, obviously without forgetting other countries in the developed world offering business opportunities.

COST EVOLUTION FOR RENEWABLE ENERGIES

(*) Average fall in price of large turbines is around 20%.

Good base for growth

ACCIONA Energy’s renewable projects, operational or under construction in emerging markets, amounted to 969 MW at 30 June 2014 and already represent 37% of the Company’s own capacity at international level. This is a trend which we plan to increase over the years to come.

In terms of turbine sales, the 1,826 MW of ACCIONA Windpower machines supplied or contracted represent 48% of those contracted by the Company internationally and 31% of its total sales. Of turbines sold in these countries, 57% are to ACCIONA clients (third parties).

MEXICO: OUR FIRST MARKET

ACCIONA Energy has four operational wind farms in ownership in Oaxaca, Mexico, totaling 556.5 MW; it has begun building two others under the EPC model (turnkey contract for clients) in the state of Nuevo León, totaling 232 MW; and the Company has installed wind turbine generators for third parties in Cancún. The total is 810 MW, all of them ACCIONA Windpower machines.

The Company has further wind farm projects for clients in Mexico at different advanced stages of development, totaling another several hundred MW. It has also entered the photovoltaic sector. The recent energy reform in the country should favor the realization of more new projects in the future.

CHILE: ALL OPTIONS POSSIBLE

The special characteristics of the Chilean energy market, with a mix dependent on coal and demand that outstrips supply —increasing emissions and raising energy prices— has led to non-conventional renewable energies entering the fray. It is expected these will increase over the next few years.

ACCIONA Energy is building a 45 MW wind farm in ownership and has signed EPC contracts for the construction of two photovoltaic plants with a capacity of up to 47 MWp. In previous years, it supplied, also to third parties, wind turbines for a 60 MW wind farm.

The Company currently has a good number of projects, in ownership and for clients, and which use wind and photovoltaic technologies.

BRAZIL: WIND TURBINE GENERATORS

Brazil has become the biggest market for 3 MW ACCIONA Windpower turbine generators. The Company had sold a total of 222 turbines (666 MW) by mid2014, mainly large diameter rotor models, and expects new orders in the coming months.

The reliability of the AW turbine, its adaptability to different wind conditions and its reduced energy cost, has made the machine enormously competitive in the Brazilian wind power market.

SOUTH AFRICA: TWO TECHNOLOGIES

The country’s extremely high dependence on coal, the need to reduce CO2 emissions and thus diversify its energy mix, has driven the development of renewables in South Africa. ACCIONA Energy took part in the second round of the energy call established by the Government and was awarded, in a consortium with other companies including the South African, Aveng, an 138 MW wind farm and a 94 MWp (75 MW nominal) photovoltaic plant. Both facilities are currently under construction.

OTHER COUNTRIES

The Company has commissioned a 49.5 MW wind farm in Costa Rica, majority-owned by ACCIONA in partnership with a local company, Ecoenergía.

ACCIONA Energy has three wind farms in ownership in India (85.8 MW), as well as various other initiatives under development.

SIt is also to supply 3 MW turbines to a 57 MW wind farm in Turkey, and is taking part in a competition to award 850 MW of wind power in Morocco. The Company also has initiatives which will see it grow in other countries in the Middle East and North Africa.