INTERVIEW: Bahia's wind supremo
Compared to the states of Rio Grande do Sul, Rio Grande do Norte and Ceará, Bahia came to prominence in Brazil's wind-power map relatively late.
Today, not only does it boast an installed capacity of 233MW (6.4% of Brazil's total), but also 959MW is under construction and last year it revised its wind atlas to identify the state's potential at 70GW at 100 metres.
Bahia is already home to Gamesa, Alstom, Acciona, Aeris, Tecsis and Torrebras. According to Rafael Valverde, the state's superintendent for industry and mining, another three manufacturers should announce local facilities.
Valverde, an electrical engineer by profession, has been one of the forces behind Bahia's wind power drive in recent years.
His role is to analyse, advise and help negotiate the development of the industry. While the views expressed in this interview are personal, he flags up new, rapid, developments in the Bahia wind industry resulting from the local government's industrial policy.
Aside from the new manufacturers, which he declined to name until all negotiations are concluded, Valverde said that connection problems in the Caetité region will be mostly solved by June, allowing 17 completed wind farms to start producing.
At the same time, Valverde revealed that the government has already allocated a budget to implement a wind power research centre, which will help local developers and manufacturers adapt equipment and know-how to local conditions, as well as train workers.
What are the three challenges for Brazil's wind power sector in 2014?
This is a strategic year for wind power. The start of operations of wind farms commissioned in 2009 and of the ones that hadn't started operations because of a lack of grid connection, which will be finally overcome, will allow us to see how the technology actually works, and how much power will effectively be produced.
Another important issue is the reappraisal of the planning of the transmission system. It's now clear that we can no longer have reactive planning.
We need to have the infrastructure available to support the connections with generation projects. Finally, energy planning needs to be aligned with planning in other sectors such as environmental, industrial and infrastructure. In this way, it will be possible to have integrated policies that will affect the wind power sector, optimising resources and becoming a useful tool for everybody.
This year, Brazil will add more than 3GW in new wind capacity. Won't the intensity of construction activities affect the appetite to participate in auctions this year?
I don't think so, because as wind farms are completed along the year they will add to a great number of parks that are already clocking up revenue. This should, on the contrary, stimulate investors even more than previous years.
Prices are still an unknown factor, and the foreign exchange rate could have an important effect, as will the consolidation of local industrial park. This initially, could increase prices. Nevertheless, Brazil's bet on the lowest possible power rate for wind power will be the best defence, and investors won't forget this.
There have been several mergers and acquisitions in Brazil's wind sector in the past months. Does this indicate that the sector is already mature?
I believe that this is a natural trend, a part of the maturation process of a technology that is reaching a third wave in the country but that only now is able to grow fast and obtain a larger market penetration.
Consolidation will crown the companies that looked ahead and accepted the risk of being pioneers. Now, I think it is natural that larger companies, normally slower, or investments funds, start to look at a more structured wind power market as a business opportunity and start acquiring smaller companies as an easier way to enter the market, since these small firms are highly capitalised or have access to advantageous financing.
What are your expectations for the development of the sector in Bahia and what are the main local challenges?
We are very excited about 2014, finally we have solved the connection problem in Caetité. We managed to align planning with the federal government for the development of our transmission system, having set up working groups with EPE [the federal Energy Planning Company], [Brazil's federal power company] Chesf and other sector agents which could result in a new way to plan and tender these transmission projects.
On the industry side, we have confirmation of three new players in the wind power production chain setting up in Bahia. Aside from this, the ones that are already here have announced expansions and confirmed investments that were announced in recent years.
In 2014, we will focus on technology development. There is already a large mobilisation for the creation of a renewable energy technology center, which already has budgets guaranteed for the development of laboratory infrastructure, the offering of services and the realisation of innovative projects aimed at improving various equipments and studies for new wind farms.
It will be something revolutionary because it will also help generate a skilled labor force, since the centre will be accessible to professional of all levels.
How do you think elections and external factors will affect wind power in this year?
The foreign exchange risk is external to the wind sector, holding it to ransom. But I don't think this alone can damage the development of the sector, except if a large economic turnaround happens.
As for elections, I usually say that the wind power sector in Bahia has been developed as state programme, which is the way I also look at the federal government. The wind power sector in Brazil wasn't developed as an answer to specific interests. It was an answer to a necessity to supply infrastructure and technology that could be implanted in the short term, that would be reliable and sustainable.
Whoever wins the local elections will receive a portfolio of hundreds of projects that have already been commissioned, with jobs being created, with an institutional structure already in place to continue developing on its own in the coming years.
Changing this blueprint is a risk that I don't believe will be of interest to any of the candidates and, moreover, to the voters.