Could you give an overview of EDF’s portfolio in the Latam region?
EDF has been present in the region for almost 10 years, after starting operations in Chile in 2014 and in Brazil in 2015. Today, Brazil is our largest market in the region, with 1.4 GW of installed capacity in operations - 400 MW solar, 1000 MW wind, and an additional 500 MW under construction, due to come onstream by beginning of 2025. In Brazil, EDF has a significant pipeline of both onshore and offshore opportunities, with 5 GW of solar and wind onshore projects and close to 7 GW of wind offshore projects under development. Meanwhile, in Chile we have two projects in operation, one solar and one wind, for a total capacity of around 300 MW. Colombia is an incipient market for renewables, where we develop a pipeline close to 1 GW that we hope to start constructions soon. Peru is at an earlier stage of development.
What are the main enablers and drivers for the wider adoption of renewables in the region?
The main driver is consumer awareness of the energy transition, combined with the strategic vision of the country to start green power projects. Government incentives, such as reduced tariffs, have supported the growth of a strong local renewables energy industry in the country. While Chile does not provide specific incentives, the installation of solar plants has increased exponentially over the past decade thanks to Chile’s highly liberal market and we’re studying the adoption of integrated model of renewable generation and battery storage systems, which would make the generation flatter and more consistent throughout the day. In Colombia, there were some tenders carried out, though few projects have finally been built so far, while Peru is currently evaluating a bill of law to entice investments in renewables.
Even as incentives like those of Brazil are to end in the next few years, the preoccupation of various industries with their carbon footprint is likely to continue driving the adoption of renewables. Moving forward, the emergence of the green hydrogen economy, using green electricity to produce green hydrogen which can then be transformed into green ammonia, as well as other products, is one of the most topical issues discussed today. Producing locally green steel, green plastics, and other products from a green energy input will be revolutionary.
What are the constraints you identify in today’s market? How does the price of renewable energy compare to that of traditional sources in the region?
One challenge for the scale-up of renewables, both solar and wind, however, is the licensing of land to deploy the projects. Previous wind and solar parks were built in more remote and available areas, the new developments are getting closer to communities, increasing the necessary social dialogue. In terms of pricing, the cost of green electricity is always dependent on the upfront cost of the equipment. During the pandemic, the price of new infrastructure went up, but we see this stabilizing. In Brazil, to give one example, we have very competitive energy prices of renewable sources. One factor that determines competitiveness of wind projects is the capacity factor of the plants, which can be, in Brazil, almost double of the capacity factor of some European onshore projects. That means same-size plants can produce double the power. Similarly, Brazil has very attractive solar irradiation and availability of areas, translating into high capacities being installed.
Brazil is one of the biggest recipients of FDI in the energy transition. Do you expect investments to continue?
Yes, Brazil meets all the conditions to be an attractive destination for the development of green energy – with plenty of land, very good natural resources, and reduced vulnerability to extreme weather changes and events (like earthquakes or hurricanes). We have also seen positive developments on the macroeconomic front following the government change last year, which, although it initially spurred some uncertainty, this has now reduced. Also, in the context of increased awareness against global warming, renewables are also very welcome. All factors align for more FDI in green energy production in the coming years.
What are your objectives moving forward? Do you have a final message for our international audience and APLA members?
Our main priority is to keep growing, capitalizing on the emerging trend of green energy demand and green hydrogen production as fossil fuel replacement got traction specially in Europe and Asia. The demand for green products and local fertilizer production is also a driver. We want to be at the frontline of the production of green hydrogen.
