Uruguay commitment to wind energy because of its low prices

National power company UTE may purchase electricity from 600 megawatts of wind turbines projects that participated in an auction for new wind farms, four times more than expected, according to Ramon Mendez, director of energy at the Ministry of Industry, Energy and Mining.

Companies including Spain’s Enerfin Sociedad de Energia SA offered to provide power for as low as 62.35 dollars a megawatt-hour, prompting the government to consider buying more wind power. Aeolic energy is beating conventional power sources on price in head-to-head contests elsewhere in South America. Wind was the cheapest source of energy in a similar auction in Brazil last month. “The bids are amazing,” Mendez said. “I was quite surprised when I first saw them.”

The average cost of electricity generation in Uruguay is 73 a megawatt-hour and this may drop to 45 in 2015 as the country gets more of its energy from wind, biomass and liquefied natural gas-fuelled power plants, Mendez said today in an e-mail.

A stagnant market for new wind farms in Europe and the US has offered Uruguay an opportunity to install cheap power projects as turbine makers try to outbid each other for supply contracts, he said. This has allowed developers in Uruguay to offer their electricity at unprecedented low prices, Mendez said.

“We’re very happy to get this energy as soon as possible,” he said. “It is possible costs will rise in the future” as the global market for wind energy picks up elsewhere, he said. Uruguay may have as much as 850 megawatts of wind turbines online by 2015, about a third of what’s currently installed in the country, he said. It has about 100 megawatts commissioned or under construction, he said.

It costs about 1.7 million dollars to roll out one megawatt of wind farm in Uruguay currently, Mendez said. Seventeen companies proposed 1,097 megawatts of wind farms in last month’s auction, UTE said on its website. The auction was originally seeking 150 megawatts of wind farms.

Bids were as much as 28% below those offered in a separate auction for 150 megawatts of wind farms completed in January, when prices varied between 85 and 87 dollars a megawatt hour, UTE said in a statement.

Uruguay produced 51% of its electricity from hydroelectric dams in 2008, the International Energy Agency said on its website. About 39% came from oil imports and the remaining from biomass, the IEA said.