Preparing for a development spree -- Brazil's 1050 MW decree

Wind industry players are jostling shoulders for access to the wind power purchase contracts expected to be on offer in Brazil following the government's call for 1050 MW of wind plant on-line by December 2003 (Windpower Monthly, September 2001). Companies from Spain, Germany, the United States and Japan have joined the list of those planning projects and waiting for the final details of the federal government's Proeolica wind power decree. These should be announced by year-end.

Endesa Cogeneración y Renovables (ECYR) and MADE, both subsidiaries of Spanish power giant Endesa, have signed a letter of intent with the government of north east Brazil's Ceará state to build 100 MW of wind power "when the necessary technical and economic conditions are present," MADE's Carlos Gual says. These are dependent the details of the wind power decree. Meantime the companies are continuing wind measurement at several sites on the coast of Ceará.

Once projects are identified, MADE will make and assemble the turbines, seeking some 40% in local content, preferably from Ceará, but if not then from other areas of Brazil. ECYR's role is promotion and it will take an initial 100% stake in the wind farms, although both companies will consider opening them up to local investors at a later stage, Gual says. Although Endesa also controls Ceará's utility Coelce (the state retains ownership), the wind plants would not necessarily be sold to Coelce. MADE and ECYR are also interested in competing for Coelce's project to develop two 60 MW wind farms at Paracurú and Camocim.

The Brazilian offshoot of German wind company Fuhrländer is considering two projects in Brazil's Ceará state, says Fuhrländer's George de Melo Lima. The projects, 25 MW at Beberibe and 50 MW at Pecem have good average wind speeds and a capacity factor of around 40%, which together with relatively cheap Brazilian labour means the company expects to install the plant for just $850/kW. At that level the company can recoup its investment within five to six years, Lima continues.

Fuhrländer is seeking to finalise financing for the projects with European and Brazilian sources, though not without difficulty in the current economic climate. Once financing is settled, Fuhrländer will sign a 15 year power purchase agreement, with an option for a further ten years, with state electricity holding Eletrobrás, a deal that would be under the auspices of the Proeolica decree, that guarantees power purchases at set prices. Both projects have the respective environmental licenses, and while Beberibe already has the necessary operating license from energy regulator Aneel, Fuhrländer expects the Aneel green light for the Pecem project to follow shortly.

Fuhrländer is building an assembly plant in Ceará state from where it expects to produce ten 1 MW turbines and eight 1.5 MW turbines each month from early 2002. The state of Ceará has donated land for the manufacturing facility and Fuhrländer will invest some R$5 million. Towers and blades are to be produced locally -- the latter from Brazilian manufacturer Wobben -- and the remainder will be imported.

America and Japan

San Diego wind project development company Seawest Windpower and Japanese conglomerate Marubeni "would like to test the possibility of developing 500 MW" in wind farms in north east and south east Brazil, Seawest's Brazil manager Andre Leal says. Studies of four sites started at the beginning of the year, the precise locations of which Leal prefers not to disclose. The partners are measuring wind strengths over a 12 month period, as well as studying economic and market conditions.

If commercial aspects are favourable, construction could begin in mid-2002. Projects will be developed on a 50:50 basis "at least in the beginning," Leal says. A wind turbine vendor has not yet been picked. Development costs are expected to be at least $500 million.

Under the Proeolica wind power decree, state electricity holding Eletrobrás or any of its subsidiaries, guarantee to buy up to 1050 MW of wind power. Marubeni and Seawest, however, will not necessarily sell to Eletrobrás and are focusing on selling directly to local utilities serving the sites they have in mind. The exact manner in which to sell the power will be made clearer once the final details of Proeolica are released.

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