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Dealing with conflict  

Credit:  Michael McGovern, Windpower Monthly Magazine | www.windpowermonthly.com 1 August 2012 ~~

LATIN AMERICA: Mexico has more than 1GW of wind capacity online, practically all of it in the northern state of Oaxaca, home too of Latin America’s biggest online wind project, the 306MW Oaxaca II, III and IV wind farms developed by Spain’s Acciona. Yet, elsewhere in Oaxaca, building of at least 600MW of capacity has been held up for months by local protests.

In January, an indigenous Huave Indian community took over their town hall, complaining that they had not been properly consulted on the prospective 396MW Marenas wind project. To date they remain in control, having ousted the mayor and forced him to renounce the project’s permit, signed in 2004 with Spanish developer Preneal. Installation of the 3MW Vestas turbines is now several months overdue.

Japan’s Mitsubishi, which recently bought the majority stake from Preneal, claims Marenas complies with all the regulations and that most citizens support this project from a point of view of local economic growth. The company maintains that the project will still be built on schedule by summer 2013.

The protesters, however, insist that the project does not comply with the federal San Andres ruling that industrial use of indigenous common land in Oaxaca must receive approval from the indigenous groups known as commune assemblies. They will not budge until contracts are renegotiated, and a neighbouring group say that they will take up arms if the project goes ahead as planned. These disputes follow a series of protests late last year against the 225MW Piedra Larga project further north in Oaxaca, where a man was shot dead. All sides involved agree the death was accidental, the result of a warning shot fired to disperse protesters.

History repeats

“Although events may seem extreme, things should be kept in context,” believes Ramon Fiestas, president of the Global Wind Energy Council’s Latin American committee. “As in the early days of Spain’s wind development, the industry was welcomed for bringing jobs, tax income and general wealth to poor communities in remote windy areas,” he says. “But some get land-lease contracts and jobs, others don’t.” The ensuing jealousies exacerbate historical rivalries among communities already living on the edge of the rule of law, according to Fernando Tejeda, president of the Latin American Wind Energy Association.

Early developers in Oaxaca, most of them Spanish, already paid relatively high prices for land-lease agreements but were compensated by rich winds in the area, says Fiestas. Later developments saw communities hold out for even bigger deals, leaving land holders of the earlier agreements feeling hard done by.

Spanish utility Iberdrola says indigenous groups backpedalling on agreements delayed its 102MW La Venta III by over a year. This is despite the company paying almost double for land leases in Oaxaca what it is paying on average globally, claims a company spokesman. Fiestas believes that negotiations over time will help to standardise agreements and points to a similar situation in Spain, now an orderly and mature market.

In the mid-1990s, developers arrived in Spain with wind measurements and viability plans, requesting permits to build wind farms. The regional governments gave priority to such plans and even took a capital stake in them, not without a certain amount of local outcry. Concessions were initially granted without competitive processes. After that kick start, however, development was regulated by competitive requests for tenders.

Now, such a shift is under way in Mexico, says Fiestas. Since 2006, federal regulation requires the state grid operator to call for bids for grid connection agreements and 20-year power purchase agreements linked to utility-scale wind development. Even so, the grid operator recently reported that of the 1.9GW lined up with grid agreement, mining company Penoles’s 30MW project is the only Mexican-owned one.

Service industry

Increasing local supply would help reduce animosity in Mexico, says Fiestas. Brazil’s local content requirement, introduced in 2002, spurred a fast-growing component and services industry, forcing turbine multinationals into alliances with local firms and creating jobs and wealth locally. With orderly regulation and local involvement, Fiestas says problems relating to processing in Brazil are mainly limited to administrative bottlenecks.

In Argentina, populist resentment to western ownership of major corporations led to Argentina expropriating Spanish-controlled energy firm YPF earlier this year. Just one in a series of signals of animosity, this move has kept Spanish developers thin on the ground in Argentina compared to other Latin American markets, where they generally lead the fray.

Projects in the pipeline in Argentina are largely from developers from the region, but include some from China, plus Danish developer Greenwind, which has just signed up Spanish Gamesa to supply the turbines.

International developers do not appear among those working the ground in Venezuela, Ecuador and Bolivia as yet, all of which have been sabre-rattling in recent years against what political leaders increasingly dub “imperialist corporations”. Still, among those countries, only Venezuela, with just under 300MW lined up for development, has a sizeable backlog of projects.

Learning curve

“By far the main problem relating to project processing in most of the region is simply that wind power is new,” says Fiestas. The fact that the 102MW, $270 million Cerro de Hula wind plant in Honduras took 18 years to develop and that Mesoamerica Energy dedicated some 15,000 man hours and spent over $200,000 just on land issues is not far from the Spanish experience, says Fiestas. But he admits that not all Latin American outposts have reliable land-registry records, complicating the process further.

Until proper mechanisms are introduced to establish wind markets outside Brazil and Mexico, development in the rest of the region could be hindered as much by administrative deficiencies as by conflict, he adds. But all countries have indigenous communities, many with potential axes to grind after centuries of marginalisation.

One model to smooth the path of progress is to follow the German and Danish community wind developments, suggests Sergio Oceransky, CEO of the Yansa Foundation, an organisation promoting this type of model in Oaxaca. Yansa owns 50% of the 101MW Ixtepec project under development in the Mexican state, the other half is owned by the local community. “The community will decide whose land is used and where the communal proceeds will go,” says Oceransky.

Meanwhile, in Chile, with just 172MW online, the previously approved 112MW Chiloe wind project was halted after a court ruled that Chilean-Swedish developer Ecopower had failed to consult according to a 1989 convention that protects indigenous rights. It is the first court ruling in favour of a local community by that convention in Chile.

Andres Devoto, a partner at Chilean corporate law firm Grupo Alianza, stresses the uncertainty regarding such conventions. Even when a consultation is done in good faith by a company and governing body, developers may be left wondering whether a community or individual from a recognised ethnicity in Chile could still question the process and take new legal action against the project through fresh claims, he says.

Fiestas insists many regulations are vague and disperse until markets bring them into the mainstream. “It is mainly a question of time before that happens in these new markets; and it must happen if wind development is to push ahead.”



Local content

Government incentives


40% minimum

Reduced interest rates on loans from BNDES



Tax relief through accelerated depreciation



Production incentive
various provinces



Temporary feed-in tariff until 2015






Source:  Michael McGovern, Windpower Monthly Magazine | www.windpowermonthly.com 1 August 2012

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments via e-mail.

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