Brazil

Brazil

Brazil gears up for regional export drive

The decision to hire local workers was instrumental in Brazil's Leme Engeharia securing the engineering, procurement and construction contract to build Peru's first utility-scale wind farms.

Continental drift… Wobben, with three factories in Brazil, is winning contracts elsewhere in the region
Continental drift… Wobben, with three factories in Brazil, is winning contracts elsewhere in the region

The consultancy, which serves as the Brazilian engineering arm of French multinational utility GDF Suez, is employing 38 workers on the 30.6MW Talara and 81MW Cupisnique wind projects, only one of whom is Brazilian.

From taking its first steps in Brazil's wind power sector to winning its inaugural contract outside the country took just a year, says Ivan Veloso, Leme Engenharia's Peru manager.

"Leme decided to enter the wind sector in 2011 and a series of exchanges was made between Brazil and Belgium to import know-how," he says. "Since then we have signed several contracts and not only with Tractebel Energia (Brazil's largest private electricity producer, 68% owned by GDF Suez). So when we came to Peru, which is a greenfield site in wind power terms, we could provide expertise in the sector."

Leme, best known for its expertise and experience in hydroand thermo-electric power generation, is betting on the rapid growth of wind energy in Latin America. Aside from looking at more than 2.9GW in wind projects under development or consideration in Peru, the company also has offices prospecting contracts in Chile, from where it can cover other countries such as Uruguay, and in Panama, which positions it well for Central America and the Caribbean.

Brazil is well placed in a region with large potential for wind power and a commitment being displayed by neighbouring countries. Uruguay, for example, with 53MW currently installed, is aiming for 1GW by 2015. Meanwhile doubts remain over the commissioning of new projects in Brazil and demand at local government-organised auctions.

Consistency

"In 2012 we had no auction in Brazil, and new rules on supply and grid connection guarantees will reduce significantly the number of projects to be contracted at the auction from the 16GW of projects already registered," says Elbia Melo, executive secretary of Brazil's wind power association, Abeeolica. "We need to have a yearly demand of some 2GW."

Leme is one of the few wind sector companies that could act as a spearhead for the internationalisation of Brazil's wind developers and equipment makers, which have profited from the country more than doubling its installed capacity in the past two years.

"Going abroad makes sense in the medium to long term," Melo says. "On the one hand, many of these countries do not have the industrial capacity or sufficient wind-power potential to attract factories. On the other, Brazilian-located factories must be guaranteed constant demand."

Early days

Melo says some Brazilian firms are already looking abroad, citing plans by developers to study projects on the border with Uruguay. But she cautions that there is a great deal of work to be done before decisions can be made on export incentives for equipment makers and the logistics of transporting the huge components. "We do not know yet what is best: export by land to our neighbors or by sea," she says. "Studies need to be made."

Brazil today counts nine international wind turbine makers investing in local factories, with a potential combined annual output of 2GW of turbines a year. To comply with local content rules implemented by Brazil's national development bank (BNDES), companies such as Spain's Gamesa, France's Alstom, Denmark's Vestas, India's Suzlon and US company GE have all had to expand their role as local suppliers and build large facilities to assemble the equipment. BNDES approval so far has been granted to Alstom, Gamesa, GE, Vestas, as well as German Enercon's subsidiary Wobben, Argentinian Impsa, and Brazilian WEG.

Gamesa is now looking beyond Brazil's borders, with more than one Brazilian wind developer approaching the company's Brazilian operation to negotiate supply for projects abroad, according to David Sigismondi, Gamesa's wind farm solution manager. "Brazilian companies want to build wind farms abroad," he says.

BNDES confirmed to Windpower Monthly that several wind-power equipment manufacturers and developers have sought information about financing exports from Brazil. BNDES has finance for export of infrastructure goods and services. For example, it offered a $200 million loan to Venezuela's government in 2005 to contract Brazilian companies to build an underground train system in Caracas and a hydroelectric dam in La Vultosa.

Wobben Windpower is another BNDES-approved Brazil-based firm looking to establish a foothold abroad. Last year it signed a contract to supply turbines for the 100MW Peralta project in Uruguary. Eletrobas, Brazil's biggest power utility, is also in talks with Uruguay's state-run grid operator Usinas y Trasmisiones Electricas to build another 100MW project.

"Brazil is a market in full consolidation," says Eduardo Lopes, commercial director at Wobben's Brazilian headquarters. "Although it has had its ups and downs, the moment we started competing in earnest with other sources at the auctions, we recognised we needed more experienced professionals from equipment suppliers and wind developers."

Achilles' heel

But Brazil's Achilles' heel is its heavy-handed bureaucracy and high taxes, locally known as the 'Custo Brasil' (Brazil cost). According to Abeeolica's Melo, this, above all, needs to be tackled to allow the country to grow its international trade and business.

Abeeolica has been discussing export plans with the government since the beginning of the year,confirmed Brazil's industry ministry. Melo says: "The government approached us and we are in initial talks. But there is a lot to do to reduce costs. We need a reduction in import and export taxes, other tributary costs and logistics that will definitely need to be in the double-digit figure range." The first proposed measures from the talks are expected some time next year, she says.

The association also signed an agreement in July with Brazil's industrial development agency to draw up studies focusing on the wind sector, while its own research will focus on technology development.

Brazil still has a considerable distance to travel before it can supply home-built wind power equipment to its own country, let alone to its neighbours.

As Leme Engenharia's Veloso points, the first wind farms in Peru will be equipped with 62 1.8MW V100 Vestas turbines built in China and transmission towers from India. "In the future it makes more sense to to have this equipment constructed in Brazil, since the final assembly and montage needs to be made here," he says. "The companies that offer these services and can also provide maintenance will be able to gain market share."

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