Developers sell wind assets to fund new projects

BRAZIL: After installing around 9.5GW in the past five years, Brazil's wind market is moving in a new direction.

Freeing up cash… Developer Casa dos Ventos sold two projects totalling nearly 400MW for around $575 million
Freeing up cash… Developer Casa dos Ventos sold two projects totalling nearly 400MW for around $575 million

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Assets are for sale. Investors seeking to develop their project portfolios are in need of financial resources.

In order to be able to build new projects, they are selling existing ones, particularly those already in operation. Others are selling in response to their level of debt, as well as the country's economic crisis.

According to the National Electric Energy Agency (Aneel), there are 133 wind projects now under construction, amounting to just over 3GW. Another 256 projects with a total capacity of around 6GW are in the pipeline. Installed capacity is expected to reach 11GW by the end of the year.

Elbia Gannoum, executive president of Brazilian wind energy association Abeeolica, puts the number of wind farms under construction at 175, with an estimated required investment of BRL 25 billion ($7 billion). To keep the market growing steadily, 2GW should be commissioned every year, Gannoum said.

In a scenario where public financing through national development bank BNDES is no longer an option, and developers need funding for new projects to keep going, selling projects looks like an attractive option. Local and foreign investors have started to snap up the best assets.

Chinese interest

Companies such as Casa dos Ventos, Renova Energy, Queiroz Galvao and Eletrobras, have all indicated a will to sell wind assets in 2017. Eletrobras, according to its latest report, has 2.4GW worth in shares in wind farms in the north-east and south of the country.

An as-yet unnamed Chinese generator is preparing to buy 750MW in wind projects that have been contracted in government energy auctions, the president of the Brazil-China Chamber, Charles Tang, confirmed. "Some of the projects are already in operation and others under construction, but all of them have signed power-supply contracts," he said.

The largest transaction involving operational wind farms was Casa dos Ventos's sale of two wind complexes totalling almost 400MW to Cubico Sustainable Investments for about BRL 2 billion.

"This will expand our investment capacity, allowing us to enable new projects and identify opportunities for 2016," said Lucas Araripe, director of projects and business development at Casa dos Ventos. The company has 700MW under construction and 15GW in development.

Renova Energy, owned by Brazilian power company Cemig, approved a capital increase of BRL 731.25 million this year and plans to reconsider future investments. This will also strengthen the company's investment budget for wind projects, and allow the payment of expenses and debts. The firm's short-term debt is around BRL 1.1 billion.

With 650MW in operation across small power plants and wind farms, Renova Energia also has 1.2GW of projects to be installed over the next three years. Due to the size of the portfolio, stories about assets on sale have been reaching the news as the company seeks funds to invest, especially after a failed partnership attempt with now-bankrupt SunEdison, involving assets amounting to $250 million.

Queiroz Galvao Energia, which has stakes in wind and hydroelectric projects, is also looking for business partners. The company currently has 350MW of wind power in operation and another 400MW under construction. It develops both wind and solar projects.

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