Vestas: We're in Brazil to stay
Vestas' boss in Brazil tells Recharge that the Danish turbine maker is considering big new investments to meet new local-content requirements.
General manager Paulo Fernando Soares insists that the company is willing to keep its feet in one of the world's fastest-growing wind markets, although the precise business strategy has not been chosen yet by the board.
“We are going through the business plan approval process. We need to decide which turbine we will produce locally according to the new rules and the market situation,” he explains.
That is a tough decision for Vestas, which has been undergoing a global restructuring, laying off workers and analysing a “marriage proposal” with Mitsubishi.
“The commitment with Brazil requires a massive investment. Some companies do not have this financial capability,” Soares says.
He believes there is no room for all ten of the turbine-makers currently operating in Brazil. “Consolidation is on the way. The local-content rules will tell very soon who is indeed going to stay here.” His bet is that five or six companies will eventually be operating in the country.
Soares will not disclose the investment needed to meet the local-content requirements set down by the national development bank, BNDES, pointing out that it depends a lot on which turbine model is selected. The only certainty is that the blades will have to be manufactured in Brazil. Parts of the nacelles, hubs and towers are already made locally.
This means a new factory might be opened up – or the existing one in Ceará state will be enlarged.
The Rio Grande do Norte state government has spoken with Vestas about the possibility of building a new factory there, and Soares says the state - home to 740MW of Vestas' 950MW turbine order backlog in Brazil – is "very important" to the company. However he adds that Vestas can accommodate any necessary manufacturing operations at its existing site in Fortaleza, Ceará state.
Vestas' 254MW deal with Brazilian developer CPFL Renováveis will be fulfilled in Rio Grande do Norte. This order will have to meet the new local-content rules to allow the investor to access BNDES cheap financing.
Other agreements being delivered in 2013 – from 350MW to 400MW – have to meet the old local-content requirements that caused Vestas headaches last year when a surprise audit by BNDES took the company (and five other turbine-makers) off the list of companies allowed to supply developers that have signed subsidised financing deals with the bank.
Soares claims that this was a misunderstanding. He says that at the time of the inspection, Brazilian Vestas' workers were at US factories being trained, and the local facility was empty.
“After we showed to the bank all the workers' contracts, everything was fine. We had to wait until the bank ends the whole procedure with the others who got banned as well to get our licence back again,” he says, adding that this happened before he took the helm last November, although the company never told the press, only clients.
Meanwhile, 90MW of Vestas turbines are about to come on line in Bahia state. The Sento Sé complex was built by a consortium of Brazilian private developer Brennand Energia and state-owned generator Chesf. It will be added to Vestas' 292MW already operating in Brazil.