Analysis: Local supply-chain focus for manufacturer compliance

BRAZIL: Wind-turbine manufacturers in the thriving Brazilian market are working hard to comply with the country's changing local content rules.

Approved… Acciona is one of two manufacturers to have already qualified under new BNDES rules
Approved… Acciona is one of two manufacturers to have already qualified under new BNDES rules

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Two companies out of seven have already completed all the steps to reach 60% local-supply ability ahead of the January 2016 deadline and make it on to the approved supplier list of the National Bank for Economic and Social Development (BNDES), an institution that promotes infrastructure in Brazil.

The bank has required increasing levels of local-content supply for wind-farm developers seeking the low-rate BNDES financing through the Finame programme. The latest increase requires suppliers to source 60% of components and produce nacelles in the country by January.

Of the seven manufacturers registered in Finame, WEG and Acciona have already met all the requirements. GE Energy, Alstom, Gamesa and Wobben Windpower are on schedule to meet the targets. Argentinian firm Impsa is lagging behind after suffering financial problems that affected its Brazilian operations.

Since January 2013, the bank has required three major components — from blades, towers, hubs and nacelles — to be made in Brazil. Those manufacturers registered have already met these requirements, but may need to increase supply or add nacelle elements to their local production.

Supply chain

"There are few items that do not have local production," said Adriane Rodrigues, manager of the BNDES registration department for machinery and equipment manufacturers. "The challenge now is to establish a local supply chain."

Since the launch of the compliance programme in December 2012, 49 new investments in local production for wind generation were made in Brazil. The total investment associated with the wind industry is estimated at $500 million, generating 20,000 jobs. "The programme brought new suppliers to the wind energy market," said William Gandra, head of the BNDES machinery registration department.

The first company to comply with all stages of the BNDES programme, Brazilian electric equipment manufacturing group WEG, estimates it produces 90% of its components in its home country, with the other 10% imported from places such as the US and Germany. "This is the most Brazilian wind turbine in the market," said John Paul Gualberto da Silva, director of wind energy at WEG, which has plans to start exporting wind turbines in the next three or four years.

To develop its supply chain, WEG first looked within the group itself. Out of 5,850 suppliers to the company, 265 of them were able to meet the conditions and supply to the wind-power division. Another 33 suppliers that were not registered to deliver, decided to do so. "Six of them have made investments in factories to meet our requirements," said Gualberto.


US manufacturer GE has fulfilled the latest Finame criteria, but is awaiting certification from BNDES. "We have reached a local supply ability of more than 80% and expect to conclude the entire accreditation process ahead of schedule," said Rodrigo Ferreira, director of GE renewables supply chain for Latin America. In the process, the company has developed a supply chain with more than 100 suppliers and has encouraged the installation of six new manufacturing facilities, with investments reaching $43 million.

With two of its wind turbines having already acquired the Finame/BNDES compliance under the current rules, Alstom is pushing the subcomponents domestic supply schedule to adapt them to the bank's requirement. The French-headquartered company's factories in Brazil, representing a total investment of $50 million, produces nacelles, hubs and towers and is developing blade moulds, resins and new machine tools.

"This ($50m) investment is very important to push forward the entire supply chain in the country," says Pierre Francois Chenevier, senior vice-president of Alstom Wind for Latin America.

Chenevier said the company also encouraged the implementation of 12 new factories from suppliers and 14 new production lines in existing units, as well as increased production at five units already in operation from Brazilian suppliers.

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