Brazil developers act in good faith -- Proinfa contracts still missing

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After a lull, Brazil is back, building serious volumes of wind power once again, with just over 140 MW set to come online by year's end as five projects finish construction (table). All have power purchase contracts with utility Eletrobrás under the government's renewable energy program, Programa de Incentivo às Fontes Alternativas de Energia Elétrica (Proinfa). Nearly 20 further projects with a combined capacity of around 600 MW are in various stages of construction, but will not make the end-year deadline for Proinfa purchase prices. Developers are cautiously optimistic, however, of an extension to the deadline.

"Optimistically, Proinfa should in total have 1340 megawatts installed if the extension is given for 2009, while pessimistically this could be 1100 megawatts, including projects that have already been installed," says Jorge Lima of Eletrobrás. Before this year, just under 220 MW of Proinfa contracts were operational.

Delays in getting financing and equipment are mostly to blame for developers missing the deadline. Most have licenses and financing and some have towers erected, while others have cranes ready for when the equipment arrives. For many of the projects that have already ordered the equipment, there is no turning back, says Lima. "It is still impossible to know which will start on time in 2008."

Despite the uncertainty, consultant Pedro Perrelli at São Paulo-based PTPme believes that most projects with licences, financing and equipment already ordered from reputable companies will be able to start next year. "Then wind projects will finally begin going up, surely and steadily," says Perrelli.

Decision soon

Brazil's Ministry of Mines and Energy confirms projects are applying for extensions. "The extension rule is being studied and a decision should be made in October," says a spokesperson. "There's no official extension of Proinfa, but we don't see a problem," says Everaldo Feitosa, president of Eólica Tecnologia. He expects the company's 50 MW Alegria I and 101 MW Alegria II projects in Ceará state will enter operation in September 2009. The main hurdle at the moment is a one-year wait to receive large transformers to connect to the grid, he says.

Luis Pescarmona, CEO of Argentina's Impsa Wind (story this page), also believes extensions to qualify for Proinfa contracts will be forthcoming for projects with financing and equipment contracts. "We're sure it will be okay," he says. Lauro Fiúza from Brazilian developer Servtec, which is building three wind farms to come online in 2009 -- Bons Ventos at 24.2 MW, Canoa Quebrada at 57 MW and Enacel at 31.5 MW -- is similarly optimistic."

A renewable energy specialist at the Brazilian branch of Greenpeace, Ricardo Baitelo, says Proinfa, while not perfect, has been a pioneering first step. What the market needs now is to know what the next step by government will be, beyond the current round of Proinfa projects under construction. The energy ministry is currently studying rules for a new program, based on competitive bids for concession contracts, which could begin during the first half of 2009.

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