By a Potencia correspondent

The development of renewable energy in Latin America represents a host of opportunities for foreign companies. To begin with, many of the countries in the region are rich in natural resources and they face the challenge of increasing power generation as demand grows. Further, Latin America is investing heavily in renewable energy – the region was the second highest last year.

$13.1 billion, an increase of 39 per cent compared to 2009, according to data gathered by the Inter-American Development Bank (IDB) and the UN. However, it isn’t yet the region that utilizes most of its renewable energy resources, which represents an enormous growth prospect.

According to official figures, renewable energy represents 70 per cent of the region’s generation, which satisfies around 30 per cent of the primary energy needs, more than the 13 per cent global average.

Brazil and Costa Rica are among those countries where the index of renewable energy production is the highest, according to the IDB. Along with Colombia, Costa Rica is pioneering in the production of energy based of sugar cane. And Costa Rica it’s the first carbon neutral country in the world.

While hydro energy is still the main source of renewable energy, wind and photovoltaic energy are going through an increase in countries like Colombia, Argentina, Brazil, Paraguay and Costa Rica, where hydroelectric resources generate 80 per cent of the energy supply. According to estimates, the rapid growth of renewable energy in the region is attracting potential investments of countries like China, Germany, Spain and India.

There are reasons why they should be interest. According to Grubbs & Meyers, the potential in the wind energy alone is 5,460 terrawats/hour. The study identifies Brazil as a leader, while Mexico, Colombia, Argentina and Venezuela have clear potential. Northeast Brazil and some arid regions in Chile are favorable areas to operate solar plants in the long run and the high level of sunlight is good for investment there, the study said.

Analysts have also identified more political willingness to carry out renewable energy projects, which before represented a key obstacle.

According to a report in Capital Madrid, Spain has special experience and knowledge in the region given its history of three decades developing renewable projects.

“Spain is the third country in the world with the most installed wind energy, the first to create a center to control renewable energy and in 2010 renewable energy represented 37 per cent of the whole generation of the country,” the report said.

Spanish companies already have projects in Latin America. Gamesa and Iberdrola are carrying out the construction of a wind farm in Honduras, which will generate 102 MW. The installation will be finished in around 18 months.

But Spain isn’t the only country with a keen interest in the region. German company E.ON has sent a group of specialists to Brazil to assess the investment potentials in the country, according to a report by BNamericas which cited sources familiar with the firm.

Italy wants a piece of the action too. Enel Green Powe, a subsidiary of Italy’s Enel, is planning to invest around US$570 million in renewable energy projects in Chile.

Outside the European continent, there are other cooperation projects in place too. Uruguay is considering the idea of cooperating with India in the wind power sector. A delegation led by vice president Danilo Astory visited a wind turbines factory in Chennai, in the south of India. The factory belongs to the wind power company RRB Energy.

Chile, meanwhile, has called on China to invest in various sectors of the economy, including renewable energy. China became recently the top investor in renewable energy in the world. The possibilities are endless.