IN DEPTH: GE's Brazil bonanza

Brazil’s biggest renewables developer, Renova Energia, handed a massive 1.2GW order to Alstom in February last year.

That was seen as a devastating blow for GE, which until then had been the company’s sole turbine supplier. But it didn’t feel that way at GE.

“The sadness at having lost Renova lasted for half an hour,” Sérgio Souza, GE’s renewables sales director for Latin America, tells Recharge. “In 2013, we sold more than 1GW [of wind turbines], which is basically the same volume we would have sold to Renova. But our contracts were signed with much better prices.”

According to a rival bidder for the Renova deal, who wishes to remain anonymous, “nobody in their right mind” would have accepted the developer’s “unfair” proposals. “It’s the cheapest turbine contract that exists in the market,” he reveals.

Then, in the summer, GE tore up a 640MW, $900m memorandum of understanding with Bioenergy after the Brazilian developer found itself struggling to finance its wind projects.

Yet despite these setbacks, 2013 ended up being GE’s best ever year in Brazil, with 1,045.7MW of orders and an estimated R$7bn ($2.9bn) in revenue.

According to data compiled by Recharge, GE finished the year as the number-one turbine supplier in the country, with almost 2.5GW of orders signed for a whopping 1,500 machines.

After grabbing 461.7MW at the wind-only reserve tender last August, GE snapped up 70% of the total demand at the A-3 tender in November, inking more 504MW of contracts.

The huge 2.3GW A-5 tender was held a month later, with GE only booking one 80MW order so far. However, most of the contracts from this tender have yet to be agreed, as projects do not need to come on line until May 2018.

GE has been active in the Brazilian wind market since 2004, when it competed for orders under the government’s Proinfa alternative-energy programme.

“I worked around the clock at that time, but we sold nothing,” says Souza, who has been with GE since 2000.

It took about five years before the government decide to contract wind power again. At the end of 2008, government officials travelled to Spain to learn more about wind power, and came back enthused and excited, creating a buzz around the energy source in Brazil. Major international manufacturers started to make plans to explore this emerging market.

GE had been doing pretty well in the US, but then the financial crisis struck in September 2008. With its future at risk, the board called its regional leaders around the world to map out potential new markets. Jean-Claude Robert, the current GE Wind boss in Brazil, came to the country for a one-week visit and Souza took him to see government officials and potential clients.

“Jean-Claude got very excited and at the end of the week, he said to me: ‘Brazil is the market we should look at’,” says Souza. “I replied: ‘What we need to do is comply with [Brazil’s national development bank] BNDES local-content rules, give prices in Brazilian reais and build a service centre for maintenance’.”

In August 2009, GE announced it would construct a hub assembly plant and gets its Finame accreditation with BNDES, which allows developers using its turbines to receive cut-price finance. At the first wind-only national tender in December, GE sold 528.4MW of turbines.

The hub assembly plant in Campinas, a city 100km from São Paulo, began production in 2010, a year that saw GE sell 339.17MW of turbines. Installations started in 2011, when the company won a further 562.85MW of orders, including 170MW on the unregulated market.

The facility was built in 2010 inside Gevisa, an industrial complex owned by GE that has built everything from locomotives to hydraulic equipment since 1962.

By the end of 2014, GE will begin production at a new nacelle plant, which is to be built beside the hub factory. This is a must for GE. To comply with BNDES’s increasingly stringent local-content requirements, turbine manufacturers will need to produce nacelles in Brazil by January 2016. GE wants to do it earlier, by the end of this year, to build the orders it took in 2013 from the likes of Chesf, Eletrosul and Casa dos Ventos.

The responsibility of building this new plant falls to Bernardo Anzae, the designer, boss and “brain” of the hub factory. “While I have 80-90 sets of components at the hub factory, I will have 400-500 at the nacelle plant,” he tells Recharge. “It’s a much more complicated operation.”

More than 40 workers will be hired for the new nacelle plant, in addition to the 50 at the hub facility. These 90 employees will be able to deliver up to 600MW a year on one shift, according to Anzae, who has been responsible for training all GE’s wind engineers in the country since operations began.

“We assemble ten hubs per week,” he says. By comparison, Alstom is making four, Recharge has learned.

“Sometimes people complain that our factory is far from the construction sites in the Northeast [of Brazil],” says Anzae. “But people forget that most of the components are built in São Paulo. So there are some advantages to be around here as well.”

Souza has no doubts that 2014 will be another good year for GE and the Brazilian wind sector. “[The market] is going to be big, at least 2GW this year,” he tells Recharge with a wide smile.

“I have seen all phases of the wind industry. I ate the bones before, but now we have the filet mignon.”