The growing importance of wind energy

By Germano Mendes de Paula*

THE global relevance of wind energy is growing quickly. According to the International Energy Agency (IEA), wind electricity generation amplified by a record 273TWh (up 17%) in 2021. This was a 55% higher growth than that achieved in 2020 and was the most significant compared to other renewable power technologies. Such rapid development was possible due to an unprecedented rise in wind capacity additions, which reached 113GW in 2020, compared with 59GW in 2019. Furthermore, wind remains the leading nonhydro renewable technology, generating 1,870TWh in 2021, almost as much as all the others combined.

Graph 1 shows that global wind energy installations in total skyrocketed from 24GW in 2001 to 906GW in 2022. The compound annual growth rate was extremely high. In the years 2001-2010, it reached 26%, which can be attributed to a low basis. Afterwards, it was equivalent to 17% in the period 2010-2015 and 11% in

2015-2022. The same graph demonstrates that the share of offshore wind has also enlarged from ~1% during the period 2001-2009 to 7% in 2021-2022.

The Global Wind Report 2023, published by the Global Wind Energy Council presented installed capacity by the largest players. In terms of Latin America, Brazil leads the pack, having widened its capacity from 15.5GW in 2009 to 25.6GW in 2022 (Table 1). As a consequence, it amplified its regional participation from 55.3% to 57.4%, respectively. Mexico, due a relatively mild expansion from 6.2GW to 7.3GW during the 2019-2022 period, lost share from 22.2% to 16.4%. Chile improved its relative importance in the region by 1.9%, while a similar trend was observed by Argentina, with an additional 1.7% points.

Latin America’s onshore wind energy installed capacity was equivalent to 4.5% of the world in 2019 and to 5.3% in 2022. No data was provided about offshore wind energy capacity in the region as of 2022.

Steelmakers’ investments in wind energy

It can be argued that steel and wind energy have a symbiotic relationship in the context of decarbonization. On the one hand, wind energy, in particular offshore, is a steel intense activity. It is estimated that more than 80% of the parts of towers of wind turbine generators are made of steel. On the other hand, steel companies can utilise wind energy to clean their respective energy matrix.

With this in mind, at least four investments in wind energy were announced by Latin American steel firms recently. In September 2022, ArcelorMittal Acindar agreed to join forces with Argentina’s PCR to increase its investment in the San Luis province’s wind farm project by $70m. Eight more wind turbines with a joint capacity of 36MW will be added to the 17 existing wind turbines (with a total capacity of 76.5MW) installed as part of the first phase of the project. It is also planned to build a solar power plant with a 18MW capacity in the same territory. The total investments of PCR and ArcelorMittal Acindar in new energy capacities will amount to $210m. Thanks to the projects, the steel producer will be able to cover more than 30% of its electricity needs from renewable sources in the second half of 2023. are subsidiaries of Techint group.

In February 2023, Tenaris unveiled plans to invest $190m in the construction of a wind farm in Buenos Aires, Argentina. The wind park would supply close to 50% of Tenaris’ electricity requirements for its Siderca mill, reducing CO2 emissions by 152kt/yr. It would include 24 turbines with a combined power of 100.8MW, generating a total 509GWh of annual electricity production. It is planned to become operational in the second half of 2023. Its capacity factor (or the average output concerning the peak power capacity) is expected to be 57%, one of the highest outputs in Argentina in terms of wind farms.

In March 2023, Ternium Argentina announced that it will invest approximately $160m to build a new wind farm in Buenos Aires from which it will source electricity in Argentina. It is programmed to be operational during the second half of 2024 and will have a nominal power capacity of 72MW. The company plans that it will replace approximately 65% of the electricity that its Argentinian subsidiary currently purchases from third party providers. The company also anticipates that the wind farm will help Siderca reduce its CO2 emissions by 92.5kt/yr.

In April 2023, ArcelorMittal unveiled the establishment of a joint venture with Casa dos Ventos to construct a 554MW wind power project (with 123 wind turbines) in Brazil. ArcelorMittal Brasil will hold a 55% stake in the venture, with Casa dos Ventos holding the remaining 45%. The total investment will be equivalent to $800m, while ArcelorMittal’s total equity investment will be $150m. It is estimated it will provide 38% of ArcelorMittal Brasil’s total electricity needs in 2030. The company’s current electricity consumption is 500MW, half of which is generated by its own hydroelectric plant and by recovered blast furnace gases from the Tubarão steel mill. In 2026, due to the expansion of industrial facilities, its consumption will jump to 750MW.

The so-called ‘Babilônia project’ will be located in the central region of Bahia, north-eastern Brazil. The site location has been selected due to several competitive advantages, including high-capacity forecast load factors (in excess of 50%) and a short distance (23 km) to connect to the national electricity grid. There is also the potential to expand the capacity of the project by adding a further 100MW of solar power. The project is currently at an environmental and regulatory permitting stage, with construction work anticipated to start later this year, and is expected to be operational by January 2026. ArcelorMittal Brasil will enter a 20-year power purchase agreement with the joint venture for the supply of electricity. Babilônia’s output will avoid the emission of 208kt/yr of CO2

It is interesting to realise that regarding these four projects, two belong to Techint group’s subsidiaries and two to ArcelorMittal’s ones.

Considering only wind energy, the combined installed capacity amounts to 939.3MW, of which 66% will be produced in Brazil and, conversely, 34% in Argentina. It should be highlighted that two of the projects are planning to produce solar energy as well.

It is expected that in the coming years additional wind energy projects will be announced by Latin American steelmakers aiming to adhere to decarbonization strategies. �