ANALYSIS: 'Big three' rise in Brazil

The fledgling, fragmented Brazilian wind industry is already entering a consolidation period and seeing the emergence of a “big three”.

Between them, Eletrobras, Renova and CPFL Renováveis account for a third – or 4GW – of all power-purchase agreements (PPAs) already signed in the so-far 12GW Brazilian wind market.

After the last A-3 tender, held in November, the state-owned company Eletrobras – mainly via its subsidiaries Chesf and Eletrosul – reached nearly 1.6GW of wind capacity contracted.

That saw it overtake the fast-growing developer Renova, with 1.4GW of wind PPAs, followed by CPFL, which has a little more than 1GW.

Those are the only three companies in Brazil that have surpassed the 1GW mark of firm wind contracts. All the indicators suggest they are destined to keep leading the sector.

Eletrobras tells Recharge: “Our strategy looks to the goal of be the biggest renewable generator in the world by 2020 [it includes large-hydro dams in its figures]. An active participation in the wind tenders are part of this strategy.”

It is obvious that Eletrobras will take an important role in the upcoming A-5 tender, linking with private players that hold competitive and feasible projects. “We look forward to partnering with private companies always when it's possible.”

Renova sees the A-5, to be held on Friday, as a great chance to keep growing. “We have a large appetite for the tender,” says the company's CFO Pedro Pillegi. He points out that Renova holds the best turbine supply deal among all the competitors, referring to the 1.2GW, R$3bn ($1.29bn) framework agreement inked with the French manufacturer Alstom.

With 400MW of wind projects to compete in the next procurement round, Renova is set to keep exploring the synergies it has created in Bahia, where the company is leading a cluster of suppliers to open up factories locally.

Notedly, CPFL Renováveis has a different growth strategy to Renova. Rather than develop projects in house, CPFL prefers to buy operational assets with low risk and a foreseeable cash-flow. “We like assets with long-term PPAs already spinning”, says CEO André Dorf.

CPFL currently has the largest wind operational asset base in Brazil. Its strong cash-flow, along with its capacity of financing acquisitions – as well as the possibility of getting resources from its giant parent company, CPFL Energia –  makes the company the best candidate to buy smaller players.

“We have always had all financial resources at home to implement our portfolio,” remarks Dorf.

The trio has all the attributes to stay in the top three positions in the market in the times ahead.

That means the young Brazilian wind industry, which currently has around 100 players pouring money into it, is proceeding along a consolidation path that means very soon it will be a market for grown-ups.