Vestas talks Southern Cone projects, permitting, green hydrogen

Danish wind turbine manufacturer Vestas is well established in the Southern Cone countries of Chile and Argentina, with a total of roughly 4GW installed.

Despite some challenges facing their respective overall renewables industries, wind remains a solid bet in the two nations, especially given the technology can also help complement solar PV and its potential deployment offshore and within the green hydrogen production chain. 

To discuss the company's presence and projects, and more, BNamericas spoke to officials Rodrigo Terc (pictured, left) and Andrés Gismondi (right).

Terc is Vestas Chile country head and sales director and Gismondi is Vestas business VP for LatAm South and North.

Globally, Vestas has 185GW of installed capacity across 88 countries.

BNamericas: How is Vestas performing in Chile and Argentina in terms of installed wind energy capacity, that is, its market participation?

Gismondi: Both Chile and Argentina are key markets for Vestas, where we've been present for more than 20 and 30 years, respectively. In Argentina, we currently have 2,427MW installed, distributed across the provinces of Buenos Aires, Chubut, Santa Cruz, Córdoba, San Luis, and La Pampa. Considering that 10 years ago we had only 77MW installed, we've grown approximately thirtyfold.

In Chile, we have 1,654MW installed, and last year we completed the construction of the San Matías wind farm in Biobío region.

In both countries, we have a privileged position thanks to our long history and the robustness of operations, being the first company to install wind turbines.

BNamericas: In Chile, planning for wind energy development in the coming years is solid. Why? What are the main drivers of this growth?

Terc: Chile has a unique opportunity to advance wind projects, both in the north and south, to position itself as one of the countries making steady progress in transforming its energy base.

Chile maintains a leadership position in Latin America because it has an aggressive transition plan, the closure of coal plants, a national green hydrogen strategy, and the attraction of EU investments. But it’s important to ensure that these plans are converted into renewable energy projects, and primarily, it's necessary to progress with permits to make these projects happen.

As the Marfán commission [created to provide technical input for government tax reform discussion] pointed out some time ago, reducing processing times for these permits by a third could increase GDP by 2.4% in 10 years, with higher average annual tax revenue of 0.32%. 

According to a report by the faculty of economics and government at Universidad San Sebastián, the approximate cost of permitting for the economy was estimated at nearly US$2bn in 2023. Over 67% of projects in 2023 were delayed beyond environmental impact study approval legal timeframes; in 2023, it took an average of 985 consecutive days to obtain an environmental permit, compared to a historical average of 434 days.

The institutional structure cannot continue allowing an 18-month delay for the approval of an environmental impact statement, and sometimes double that for an environmental impact study, plus the [sectoral permits] PAS. These delays hinder our ability to reach the desired and plausible energy leadership that we've promised the world. Instead, they make us the second most complex OECD country in terms of regulations and permitting processes, which diminishes our competitiveness.

For Vestas, Chile is a priority for investing and developing technologies that allow for the spurring and growth of the industry. Permitting thus becomes a relevant issue in this process. Without permits, projects do not advance, are not finalized, and investment cannot be made.

In this regard, we appreciate the progress that has been made with administrative and legal initiatives aimed at making the permitting process more agile and efficient. However, we believe that as a country, we need more ambition to go further and achieve a world-class authorization process, as Chile deserves.

BNamericas: Are you seeing any trends regarding the location of wind projects in Chile?

Terc: Wind projects in Chile are located in areas that have been well identified for some time now. On the one hand, the northern region hosts the Taltal wind reserve, whose characteristics make it a unique hub of strong and steady winds in the Atacama desert. On the other hand, the coastal zone, from Atacama to Valparaíso [regions], is quite attractive, because of both the resource and the proximity to centers of consumption.

From Santiago southward, Maule, Ñuble, Biobío and Araucanía regions stand out for their widely dispersed wind areas. Additionally, new wind development hubs have been identified in Los Ríos and Los Lagos regions.

Magallanes [region] is globally known for the strength and consistency of its winds, which has triggered the development of green hydrogen projects based on wind energy.

Finally, a future bet is the development of offshore wind technology in Chile, considering the advantages our country has both in terms of coastline and the existing coastal infrastructure for transmission that is no longer in use following the dismantling of coal-fired plants.

BNamericas: Are you still betting on green hydrogen in Magallanes?

Terc: In Chile, there is a high degree of consensus within the energy sector regarding a more sustainable future, with agreement on the need for more renewable energy, especially with the potential of green hydrogen and lithium. According to BloombergNEF, Brazil, Chile, and Argentina have the most competitive green hydrogen (LCOH) costs in the world.

Only 20% of global energy consumption is electricity, which means there is a huge opportunity to increase electrification and reach sectors that are difficult to electrify, such as heavy transport, mining, and the metallurgical industry. Green hydrogen offers the opportunity to export renewable energy in the form of fuel, and Chile can play a leading role in the global dynamics of green hydrogen production and its derivatives. Evidence of this is the number of projects in development in Magallanes and other regions of the country.

BNamericas: What projects do you have underway in Chile?

Terc: Recently, we have completed the construction of a wind farm in Biobío region and continue to actively participate in the evaluation and development of projects totaling more than 2,000MW. This demonstrates that confidence in wind technology, as well as in the backing of our brand, remains solid. This figure doesn’t include the wind projects in Magallanes related to green hydrogen, which are likely to have a longer development timeline.

BNamericas: How do you see the outlook for Argentina in the coming years? For example, will corporate power-purchase agreement market Mater continue to be the growth driver?

Gismondi: I think, on a general level, the sector is expectant about the expiration [scheduled for December 31] of the national promotion regime for the use of renewable energy sources for electricity generation, law No. 27,191. We will have to see whether renewal happens, to continue promoting renewable energies in the country and generating demand, or if we will risk losing the momentum which we have gained and which has helped the sector grow. 

Both the renewal of Law 27,191 and the implementation of [investment incentives regime] Rigi could consolidate the future of wind energy in the country and attract investments.

Argentina's financial volatility and the lack of transmission infrastructure are key barriers to building more renewable capacity. Renewable expansions should occur through the corporate PPA market facilitated by Mater.

BNamericas: Do you have projects underway in Argentina?

Gismondi: In the second half of 2024, we completed, along with [generator] Genneia, the construction of the La Elbita wind farm in southern Tandil, with installed capacity of 162MW. We also finished the Pepe VI wind farm in Bahía Blanca with [energy firm] Pampa Energía, which has installed capacity of 140MW. 

In collaboration with [generator] YPF Luz, we are finalizing the General Levalle wind farm in Córdoba, which is Vestas' first project in Latin America with 25 EnVentus technology turbines, and with capacity of 155MW. Together with [metals firm] Ternium, we are completing the development of the Vientos de Olavarría wind farm in Buenos Aires province, which has 99MW of installed capacity. And now, we are starting the construction of a wind farm with [metals firm] Tenaris, which will have 21 turbines.

BNamericas: Within the renewable energy industry in Argentina, is there optimism that investment will flow to ease transmission network congestion? Is it known when this might happen and who will finance it?

Gismondi: This is definitely a key need for the sector. Being able to connect wind farms – which are built in areas where we have the best winds but are far from major cities – to the consumption centers is crucial to continuing the consolidation of wind development in the country.

We are optimistic that Argentina will continue progressing in renewable energy development, specifically wind energy, and we see advances in creating conditions for investments to flow. The Rigi large investment incentive regime is an interesting tool in this regard, as it is designed to attract large investments and offer significant benefits.