The IFC has completed the US$375m in financing for the US$600m, 250MW Eurus wind farm that will support the expansion of private power generation, while helping develop the frontier region of Oaxaca. The IFC and the IDB were co-arrangers, with the IFC lending US$71m and the IDB US$62m, with tenors of 15–16 years.
“Our sense is that this showed the market that wind projects are do-able. Commercial lenders were interested and that’s significantly important. It shows to the market that it is possible to do,” said Gabriel Goldschmidt, the IFC’s manager for infrastructure in Latin America and the Caribbean.
The IDB and the IFC were the co-lead arrangers. BBVA and Espirito Santo, along with Proparco, a French development bank; DEGB, a German development bank, and Nafin, a Mexico supported entity, made loans of US$242m. The deal had almost been completed earlier, but the IDB had to finish some last-minute documentation.
Eurus, the largest wind farm in Latin America, is in Oaxaca State, an area with one of the best wind resources in the world. The project is expected to displace an estimated 600,000t of carbon dioxide equivalent annually.
The project sponsor, Acciona Energía, is a global player in renewable energy and one of the world’s biggest developers, constructors, and operators of wind farms. Acciona built the transmission line to hook up to the grid. The CFE will buy and distribute the power, with a lot of the energy going to Cemex, which needs it to run its cement plants. Acciona has a 20-year power purchase agreement with the CFE, and Cemex’s cement production plants across the country will buy and use the wind energy.
Oaxaca State is one of the country’s lowest-income regions. The local community will receive land-lease payments and benefit from community development and social programmes established by the sponsors.
Other parts of Mexico offer possibilities for wind farms, Goldschmidt said. Oaxaca is between the Pacific Ocean and the Gulf of Mexico, which creates different air pressures using large wind flows. The same can happen in mountainous areas of varying elevation. Mass air movements are needed. In Oaxaca, developers have measurable wind movements because of existing data and specific mapping. More wind farms are coming, maybe 4,000MW more in the next five years, Goldschmidt said.
The government has been upfront with its regulatory framework, and developers respect the PPP programme.
“The rules of the game don’t change,” Goldschmidt said. People can rely on the government regulations.
Other Latin areas have wind farm possibilities – Nicaragua, Brazil, Peru, Chile, Uruguay and Argentina, Goldschmidt said. In Brazil, the northeast has good wind resources, and others exist in southern Brazil in Rio Grande do Sul. This area has good wind resources, which are less than Pará in the northeast, but the southern area has more consistent wind.
Chile has a lot of wind in the north, and the northern grid is not connected to the central grid, so the wind energy could help a lot. In Argentina, there are wind resources in South Patagonia in Santa Cruz, which is just north of Tierra del Fuego. But the government has problems and little track record or regulatory framework.