Investment: Brazilian wind players look to wider Latin American market

Brazilian wind-industry players are seeking business opportunities in other South and Latin American countries, despite the potential for growth in their home market.

Brazil's new ten-year expansion plan, known as PDE 2024, which is still awaiting approval from the federal government, aims to increase installed wind-power capacity to 24GW in the next ten years, or an 11.5% share in the country's energy mix. Brazil currently has 7.7GW of online wind capacity, according to Windpower Intelligence, the data division of Windpower Monthly.

Yet, Brazilian companies like utility Eletrobras and developer Renova Energia are seeking business opportunities in countries such as Uruguay, Chile and Mexico, which are increasing their investments in renewable generation.

Integration of the wind-power sector across Latin America is an irreversible trend, which is why Eletrobras seeks business with countries in the region, said Pedro Luiz de Oliveira Jatoba, head of international operations for Eletrobras. "What we don't know is the speed of this integration, as it will depend on government policy and regional strategic planning," he added.

The company plans to develop wind farms in Uruguay, in partnership with state-owned utility UTE. They both own a 50/50 share of developer Rouar, already owner of the 65MW Artilleros wind farm. The project, 130 kilometres from Uruguay's capital Montevideo, went into commercial operation in February. It uses 31 Suzlon S95-2.1MW turbines and received $100 million investment.

Renova Energia, owner of 1.8GW in wind farms, is also taking its first steps in search of business in other countries. The company is looking at Chile, which will hold an auction for wind energy next year. However, the company did not register any project in the auction.

"It was basically a learning process because we wanted to understand the opportunities and characteristics of the Chilean market," explained Mathias Becker, president of Renova Energia. "In the region, it is another Brazil in terms of potential. However, only time will tell which countries will mature their businesses."

Chile, Mexico and Uruguay are all seeking wind expansion via auctions, a model that has been working well in Brazil since 2009. In Uruguay, where the government has adopted renewable energy as a state policy, wind power is gaining in importance. According to Fernando Schaich, president of the Uruguayan Association of Electricity (Audee), this year 35% of the energy consumed will be from renewables.

Financing issues

Project financing is a major concern in Latin America. One source is the Development Bank of Latin America, CAF, which has been looking at creating a fund for energy integration, estimated between $500 million and $1 billion.

"Many countries have been studying their wind and solar potential. Uruguay is ahead in the game," said Hamilton Moss de Souza, corporate vice president for energy at CAF, which provided $58 million of the loan to the Artilleros wind-farm partnership. The bank estimates that over the next 20 years, the Latin American region will need an investment of $3.7 billion in energy.

Moving into these countries can also be a way for manufacturers to reduce the impact of tight profit margins from orders in Brazil. GE, for one, is seeking to provide the market with competitively priced turbines, blades, towers and nacelles.

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