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Brazil

Brazil

Licensing and grid delays stall rapid growth plans

BRAZIL: Delays in licensing and construction of transmission lines are expected to hold up Brazil's 9.2GW wind installations due to be completed by 2020.

Nearly 6GW of allocated projects due online 2020 have not started construction
Nearly 6GW of allocated projects due online 2020 have not started construction

Local government auctions have already allocated 390 new wind projects, totalling 9.2GW, an ambitious target for 2020. While Brazil is used to aggressive growth of wind power, with recent construction taking its current installed capacity to 9.5GW, the 2020 growth plan is looking unlikely to be met.

According to Brazil's electricity regulator Aneel, which oversees the construction schedule of wind farms, 5.8GW, or 242 of the projects scheduled to start operating in the next five years, have been classified as middleor low-feasibility.

By early May, 230 projects, totalling 5.5GW, had not started construction or were still dealing with environmental licensing issues. Another 12 projects (333.6MW) had serious issues, including licence suspension or being declared environmentally unfeasible.

"The survival of the market is at stake here. If there's no guarantee on power demand, the developer will look for new markets outside Brazil," says Leontina Pinto, CEO of Ingenuity Research, Development and Consulting.

Transmission woes

In addition to grid connection delays, Brazilian investors also face a lack of power lines. In recent transmission auctions, several available lots received no offers. To address the issue, the Ministry of Mines and Energy (MME) is evaluating the permitting stages and consolidation of wind farm development, as well as the transmission auctions, environmental licensing, implementation and operation.

In the recent debate on the challenges of power transmission in Brazil, Mauricio Tolmasquim, president of energy planning agency EPE, advocated the creation of more flexible contract terms, giving the regulatory body the ability to revoke concessions for projects that have serious installation issues. The faster this is done, the quicker the project can be resubmitted for a new tender, he said.

The availability of transmission lines is one of the key challenges for continued growth, says Elbia Gannoum, president of Brazilian wind energy association Abeeolica. "The government decision to only include wind-farm projects with transmission lines is a good start," she says.

Pinto agrees that integrated planning for projects and grid connections is necessary, but points to the need to change the auction system in order to achieve this. Currently, power lines are built based on investors' demand, she says:

"The solution is to do the opposite: Determine the amount of transmission lines needed per year based on the potential of each power source and then decide which projects to push forward - and, of course, transmission must precede generation."

She suggests that all plans should include an extension period, to take into account possible delays in licence approval or construction.

Stability needed

Planning does not fit into an ideal world, she says. "It's time to get back to the idea of the optimal portfolio of integrated generation and transmission growth, in which planning is consistent over time - no sudden changes from one year to another - that guides investors to build what we really need and in a manageable schedule."

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