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Brazil

Brazil

A step away from monopoly in Brazil

Referring to "Brazil Puts Market Framework in Place". The article refers to a clause in the new energy law as a "step back" for wind power. This clause restricts the portion of eligible projects available to developers that are not classified as "autonomous independent producers." We have not understood why it was considered as bad news, unless for the two companies which have had their interests cut down.

From: The Board, Novaenergia,

Rio de Janeiro, Brazil

Referring to your article "Brazil Puts Market Framework in Place" (Windpower Monthly, May 2002, we would like to give you some comments for your consideration.

The article refers to a clause in the new energy law as a "step back" for wind power. This clause restricts the portion of eligible projects available to developers that are not classified as "autonomous independent producers."

We have not understood why it was considered as bad news, unless for the two companies which have had their interests cut down. As mentioned in the article, these companies had a market share of 93% of the projects approved by the authorities. In almost any country in the world this would be considered a market monopoly (or oligopoly at least).

This was not good for the market nor for competition as other players were prevented from access to power purchase agreements under equal conditions. Neither is it at all true that this clause could rule out thousands of megawatts of wind projects. It actually opened a window for investments from all the other companies interested in developing wind projects in Brazil, including local companies. Their participation was not feasible with the rules as previously written in the draft.

We are sure that many other projects from different investors like us will arise in the next months, boiling up the market, but in a competitive way. It is important to point out that the market will be made feasible by a financing system (CDE) that will be paid by the Brazilian consumers, so it does not make sense (for any country) to make use of internal resources to finance the profits of foreign monopolies.

We would like to add that one of the best characteristics of the wind energy business is that it allows lots of new companies to grow up and participate in the power industry, breaking up a virtually closed market and allowing thousands of small investors to be players. So, we consider the mentioned clause a very important and welcome tool, and a sure forward step in the right way.

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