Brazil regulator launches Bonanza -- First batch of approvals in nearly 4000 MW of expected projects

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Brazil's electricity regulator, Aneel, has authorised the construction of 20 wind projects that will bring as much as 1773 MW on-line between July 2002 and December 2005. The projects are merely the first batch of wind development applications that Aneel has considered. Last month it was due to give the all-clear to a further 2000 MW before the end of the year. If all the development goes ahead, Brazil will become one the world's major wind power producers, ranking alongside Germany, the United States and Spain.

The 20 projects are to be developed by the Brazilian offshoots of two European wind power development companies, one of which has the backing of Spain's huge Iberdrola utility, while the other is part owned by French national utility Electricité de France (EDF). Eighteen of the plants will be in the four northeastern states of Rio Grande do Norte, Ceará, Pernambuco and Bahia, while the other two are in the southeastern state of Rio de Janeiro.

Enerbrasil Energias Renováveis do Brasil will build 13 of the projects, with a combined capacity of 693 MW. Enerbrasil is linked to Spain's Cia Americana de Energias Renovables, in turn a 50:50 joint venture between Iberdrola and Empresa Hidroeléctrica de Navarra (EHN), Spain's largest developer and operator of wind plant. Three projects totalling 188 MW will be built by Enerbrasil this year, another 188 MW in four projects in 2003, five projects totalling 277 MW in 2005 and a 40 MW project in 2005.

SIIF Énergies Brasil, a subsidiary of French renewables company SIIF, owned 35% by EDF, is responsible for a further seven developments. Aside from one 31 MW project this year, all the others, with a combined capacity of 1056.6 MW, are scheduled for construction in 2003.

The 20 projects approved by Aneel and those pending approval take the total capacity of authorised plants to 3773 MW, well over the 1050 MW of the federal government's Proeolica decree (Windpower Monthly, September 2001). The decree obliges state power sector holding Eletrobras or its subsidiaries to buy up to 1050 MW of wind power at set prices for a period of at least 15 years. Under the terms of the decree the sooner a plant comes on-line, the higher the price it receives for electricity generated.

contracts caution

Where the 2700 MW difference between the Proeolica limit and the new capacity cleared by Aneel leaves Enerbrasil, SIIF and the numerous other developers considering investments in Brazil is not certain. While one person connected to the process assures that the Proeolica limit will be raised to 3000 MW, the Mines & Energy Ministry denies this will happen. For now, wind projects not included under the Proeolica umbrella will sell output on the country's wholesale energy market, says the ministry. As independent power producers they will be free to sell to any client -- utility, industrial consumer or otherwise -- under negotiated power purchase agreements (PPAs).

Enerbrasil director general Alberto Seisdedos, despite receiving the go ahead to develop 693 MW, is cautious: "The only thing for certain is that we can now negotiate power purchase agreements," he says. "There are no projects without PPAs, and there are no PPAs without [regulatory] authorisation, so this is a step forward." Enerbrasil asked for authorisation for a total of 2000 MW and Seisdedos expects more approvals to come through.

For SIIF Brasil director Cesar Aguiar the big issue is to find the money. "Now we start the search for financing," he says. Aguiar sounds almost disappointed to have received approval for "only" 1080 MW. "We asked for 2500 MW and hope to get the rest in the second lot for approval," he explains.

Both SIIF and Enerbrasil are linked to some mighty utilities and potential customers for the wind power. SIIF's part parent EDF serves Rio de Janerio's private sector distribution company, Light, while Iberdrola controls the Guaraniana consortium that operates distribution in the northeast of the country through local distributors Coelba in the state of Bahia, Celpe in Pernambuco state, and Cosern serving Rio Grande do Norte. Seisdedos says Enerbrasil will negotiate with the Guaraniana consortium for PPAs, or even offer it an opportunity to buy stakes in the projects.

Despite the close links with their respective parents, both Seisdedos and Aguiar say they have had discussions with a range of possible buyers of the output that goes beyond just family ties, although neither is willing to disclose with exactly who. Similarly, both directors maintain they have made no commitments to definitive equipment suppliers.

Gamesa or Enron

Iberdrola also controls Spanish wind turbine manufacturer Gamesa, which has just split from Vestas of Denmark, but despite the link Seisdedos maintains he is open to offers for the best equipment to suit the job. "It could be Gamesa, it could be Enron, or it could be someone else," he says, emphasising that no decision has yet been made.

Aguiar goes no further than saying that SIIF uses different suppliers in different locations and that in Brazil the turbines will probably not be smaller than 1.5 MW. SIIF Énergies specialises in solar power, cogeneration and small scale hydro as well as wind. Company boss is French renewables maverick Andre Antolini. He is president of the French renewables lobby group SER and a vice president of the European Wind Energy Association.

Installed wind power in Brazil today is no more than 18.8 MW, just 0.13% of the total generation of some 74,400 MW. Because of drought, however, there is a severe shortage of hydro power, the country's generation spine, and a series of new thermoelectric stations is not due to start in earnest until 2003. Even then it will only reduce the power shortage instead of overcoming it. As a result, wind power in Brazil continues to offer rich pickings to those that get plants operating fast.

Another initiative

In a separate initiative to the Preolica program, Brazil's Santa Catarina state distributor, Celesc, has signed a letter of intent for 50 MW of wind power in Agua Doce, being developed by local firm Energisul. "With this first step the developer can settle financing and acquire equipment," says Celesc's Gilberto Kunz.

With a Power Purchase Agreement commitment in hand, financing can be settled in January for the $45 million project, says Energisul's Joel Cunha. Talks have been started with federal development bank BNDES, he adds. According to Kunz, construction should begin in April. Cunha adds that plans are for 84, 600 kW turbines and that Energisul is negotiating with local manufacturer Wobben.

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