After hiccups in the project selection process, Brazil's Proinfa program continues its stumbling progress. Over 40 license holders face looming deadlines to bring energy online by December next year -- an impossible task in the time available. Project developers are now locked in negotiations with national utility Eletrobrás, which holds the power purchase contracts, to postpone deadlines until December 2008. "We are sure the dates will be changed because otherwise the Proinfa project will fail," says Fabio Diaf of the Brazilian Association of Small and Medium Electric Energy Producers.
A key stumbling block, however, is the lack of local manufacturers to supply wind turbine components. Under the terms of Proinfa contracts, 60% of the equipment must be manufactured locally. So far, only one supplier, Germany's Wobben Windpower, an offshoot of Enercon, owned by Alloys Wobben, has set up local production facilities. Another German wind turbine maker, Fuhrländer, is building a manufacturing facility at Pecem, north of Fortaleza. From January or February it will be able to produce about 20, 1 MW turbines a year, says the company.
"With 1400 MW of energy needed by the end of 2006, these two companies will each need to supply parts to 700 MW of facilities, and this is an impossible task," says Everaldo Feitosa, a long time member of the Brazilian wind industry. Without a stable market, there is no financial basis for setting up wind turbine production in Brazil. "Without any decision on Proinfa 2, other potential investors do not want to risk moving into the market," says Feitosa.
With a virtual monopoly on the market, Wobben Windpower reports it has orders from a series of customers for delivery of 300 MW by December 2006 in the states of Rio Grande do Sul, Santa Catarina, Rio Grande do Norte and Ceará. The company has three manufacturing facilities in Brazil for production of generators, blades and towers. "We are negotiating additional contracts under Proinfa and hope to sign new contracts soon," says the company. It declines to divulge details of its customers.
Despite the market uncertainty, announcements of wind projects in Brazil have been flowing in. Local power company New Energy Options says it will invest BRL 529 million ($229 million) in construction of a 150 MW wind farm in Guimare, in the northern state of Rio Grande do Norte. From Germany, Renergy reports it will be installing a 10.2 MW wind plant called Millennium in the state of Paraíba. Renergy and its Brazilian subsidiary, Soluções de Energias Sustentáveis, will invest BRL 47.95 million ($20.48 million) in the facility.
In July, Brazil's president, Luiz Inácio Lula da Silva, reshuffled his ministers and swore in former Eletrobrás CEO, Silas Rondeau, as the new mines and energy minister. "It is too early to make an assessment of the new minister, but he supports the Proinfa program, which is the main thing," says Feitosa.