Spotlight: The keys LatAm needs to harness offshore wind

Latin American countries will require heavy infrastructure investments and a clear regulatory framework to harness the region's outstanding offshore wind potential, according to market analysts and developers.

The new industry must be accompanied by development in areas including power transmission and particularly in local supply chains and port infrastructure.

"To build big offshore wind projects you need a large logistical support base," Sergi Ametller, director of offshore wind at Spanish technology and engineering group Sener, told BNamericas. 

"In Latin America, we're not yet seeing the kinds of port investments being made out in other parts of the world, like the United States," he added.

"We'll need shipyards, workshops [to build floating and fixed foundations], ports, and this is likely to require long-term planning and a prolonged effort. It's more difficult to develop this kind of capacity than fulfilling some of the technology's other parameters. This is a factor that could slow down the early projects, and we hope to see the industry react and for these critical junctures to be alleviated as the market prepares for implementation."

Brazil and particularly Colombia are currently at the forefront of offshore wind development in Latin America, mainly due to their attractive resources and their willingness to push forward with their regulatory frameworks for the budding sector.

"Brazil and Colombia are the front runners," said Kárys Prado, a research analyst of power and renewables at consultancy Wood Mackenzie. 

"They have published their roadmaps. The next step is establishing a clear regulation, and overcoming the challenges developers face in the region: including limited energy demand, transmission constraints, competition from other sources, project bankability and supply chain limitations," she told BNamericas.

Behind them are Uruguay, which is preparing a series of tenders for offshore wind development for hydrogen production, and Chile, where Sener says there is some early-stage industry interest. Some smaller projects are also being explored in the Caribbean.

Wood Mackenzie has estimated that, driven by off-grid projects that bypass the need for new transmission lines to inject their output into the national grid, offshore wind is expected to reach an installed capacity of 34GW in Latin America between 2032, when the first projects are expected to come online, and 2050. This would require an annual growth rate of over 15%.

A key driver is expected to be green hydrogen production, as offshore wind allows developers to build large hydrogen production fields with 24/7 output, skipping habitual roadblocks to large projects like land availability and community opposition.

Another central driving force will be regulations and incentives, as offshore wind is more costly than onshore alternatives, Prado said.

"Policymakers have consistently advanced regulation where they flag key non-price aspects," she said," including local content requirements, sustainability, power grid integration. From a global perspective, offshore wind doesn't necessarily need to be cheaper than the others to get built. That's why regulations across the region will be decisive. Depending on the criteria that are defined, the market could have the way paved for development."

In this sense, what is driving offshore wind development in Latin America is different from what pushes the industry forward in other regions of the world.

"Globally, offshore wind is driven by official targets, an imbalanced renewable energy mix, land constraints, etcetera. Some of these aren't part of Latin American reality. Many countries have large onshore potential with unexplored areas .... And so, the first step is to have a clear policy framework" that provides security and the right incentives to go offshore, Prado said.