Montevideo – Uruguay is quickly turning into a leader in Latin America in terms of using its wind resources to fuel the economy. And it is using the revenue stream from carbon credits to catalyze the investment, the World Bank announced on August 15.
A 10 MW wind farm built at Sierra de los Caracoles in Maldonado (eastern Uruguay) became the second wind power project in Uruguay to earn Certified Emission Reductions, commonly known as carbon credits, through the project’s registration with the United Nations Framework Convention on Climate Change (UNFCCC) on August 8.
The project will generate around 180,000 carbon credits during its first crediting period of seven years. These will be purchased by the World Bank’s Spanish Carbon Fund, bringing in an important revenue stream to the project. The wind farm is located in one of the most promising areas for wind farm development, where the wind averages 9 meters per second, and it is part of the Ministry of Industry, Energy and Mining of Uruguay ambitious plan to have 1,000 MW of wind capacity installed by 2015 – up from today’s 43 MW – which would represent 25% of the electricity generated in the country.
“The Caracoles Wind Project was indeed one of the first steps we took on the path to change the energy matrix in Uruguay, prioritizing renewable energy,” said Ramón Méndez, Director of Energy at Administración Nacional de Usinas y Trasmisiones Eléctricas (UTE).
Over half of Uruguay’s electricity comes from renewable sources, mainly hydropower. But concerns about lack of rainfall are pushing the country to enhance its energy security through diversifying its energy matrix.
“We are thrilled to support Uruguay’s drive to develop renewable energy and diversify its sources of electricity. It’s also significant to see how carbon finance can play an important role as a catalyst to realize such a project,” said Peter Siegenthaler, World Bank Representative in Uruguay.
The Sierra de los Caracoles Wind Farm is the first in the country using the more efficient 3-blade VESTAS technology. It will generate approximately 39,000 MWh of clean energy annually and feed this back to the national electric grid through a 20 kilometer long transmission line, displacing more carbon-intensive fossil-fuel based electricity. Around it, in the Caracoles Hills, more wind farms are popping up in this area ideal for wind farms because of the high wind potential, low environmental impact, reasonable accessibility and connection to the grid.
The project, developed and managed by the publicly owned UTE is being financed through a debt-swap agreement between Uruguay and Spain, and in part with UTE’s own investments.
UTE bought five wind turbine generators from the Danish manufacturer VESTAS (supplied by the Spanish firm EDUINTER). It was a groundbreaking project for UTE, not only because of the innovative financial model using carbon finance and swaps but also because it was its first experience with wind energy. Its success has already led the company to replicate the project with the construction of Sierra de los Caracoles II.
Source: The World Bank.
