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As evidenced by its $320 million investment in the 74 MW Bii Nee Stipa II and 70 MW Bii Nee Stipa III wind farms, Enel Green Power (EGP) envisions Mexico as a region ripe with wind energy potential. And with a global installed capacity of around 8 GW – which includes wind, solar, hydropower, geothermal and biomass – EGP is well versed in navigating emerging markets, such as Mexico. (For more on the Mexican wind market, see “After Years Of Showing Promise, Mexico Is Set To Deliver.”)

“One of the reasons why we chose to invest in the wind farms was the Mexican government’s decision to foster the development of wind energy,” explains Nicola Melchiotti, head of Enel Green Power Mexico and Central America. “We see a lot of potential [for wind] that has not yet been developed.”

In fact, EGP, a subsidiary of Italy-based Enel S.A., hopes to capitalize on its partnership with developer/manufacturer Gamesa, which developed a 26 MW wind farm – Mexico’s first utility-scale wind project – in 2006. The wind farm is located in the Mexican state of Oaxaca, the same area where Gamesa built the Bii Nee Stipa I wind farm. (Gamesa later sold that project to Iberdrola Renewables, the wind farm’s current owner and operator.)

In 2011, EGP purchased the development rights for the second and third phases of Bii Nee Stipa from Gamesa, which designed and developed the wind farms pre-construction. Bii Nee Stipa II was connected to the grid last June, and Bii Nee Stipa III was interconnected in December.

The wind farms are located in the isthmus of Tehuantepec, in the state of Oaxaca, an area with wind speeds exceeding 10 meters per second. In addition, Bii Nee Stipa’s capacity factor is around 40%, making it among the most productive in EGP’s global wind portfolio, Melchiotti notes.

The second and third phases both feature Gamesa’s G80 2 MW turbine, a Class 1 machine that operates reliably in windy and turbulent regimes, according to Manuel Garmendia Zarandona, Gamesa’s commercial director for Latin America. He adds that the G80 helps to improve competitive investment ratios per megawatt installed and to lower the cost of energy produced.

“We have developed special towers and other wind turbine features specifically to support special seismic and grid conditions in the region,” Zarandona explains. “The use of our G80 turbine in a variety of special conditions in various locations gives us a proven track record so we can ensure great reliability in very strong wind conditions, such as those found in Tehuantepec.”

Other than a few high-wind days that limited construction activities, nothing out of the ordinary occurred during wind farm construction.

“The terrain is simple and plain, which gives the wind farm a good foundation,” Melchiotti explains. “The site is not complicated.”

With regard to financing, EGP signed a $76 million loan agreement with the Inter-American Development Bank (IDB) to cover part of the overall $160 million investment in the Bii Nee Stipa II project. The 10-year loan for its Mexican subsidiary is backed by a guarantee by parent company Enel GreenPower. The IDB’s goal is to foster growth in Latin America and the Caribbean in order to ensure economic, social and sustainable development.

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EGP says the Bii Nee Stipa III project also required an investment of $160 million.

There are subtle differences wind developers should be aware of if they are planning to do business in Mexico, such as how the off-take agreements are formulated. In the country, developers need to rely on a public auction or a bilateral contract with an industrial off-taker, Melchiotti explains. In the case of Bii Nee Stipa, the off-takers are Nestlé and Femsa, a Mexican beverage company. However, EGP would not disclose the duration of the contract.

While there are no financial incentives – such as a feed-in tariff – in Mexico, wind developers can expect reduced transmission costs and help from the country’s so-called energy bank.

“The energy bank allows generators, in times of production exceeding consumption, to virtually store the excess energy in the ‘bank’” – energy that can then be returned to the generator during periods of low production over the course of the year, Melchiotti explains.

Thanks to strong signals from the Mexican government, EGP expects its Mexican wind power portfolio to expand quickly. Although the region is no longer underdeveloped – nearly 2 GW of installed wind energy capacity has sprouted up over the last few years – EGP will continue expanding its footprint, according to Melchiotti.

For example, in November, EGP won the right to build a 102 MW wind farm in Oaxaca. Melchiotti says completion of the wind farm will require an overall investment of approximately $130 million. As the winning bidder, EGP has the right to enter into a 20-year power purchase agreement with the Comisión Federal de Electricidad, Mexico’s government-owned electric utility. EGP expects to complete the wind farm later this year. w

Profile: Bii Nee Stipa Wind Farm

EGP Invests Heavily South Of The Border

By Mark Del Franco

Enel Green Power sees plenty of development potential in Mexico, thanks to the country’s abundant wind resource and appetite for energy.

 

 

 

 

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