Brazil wind group raps price moaners

Wind is on the road to a big generation share in Brazil

Wind is on the road to a big generation share in Brazil

Developers and manufacturers should stop complaining about low prices set at recent Brazilian wind tenders – prices that are the result of their own bids, said Lauro Fiuza, vice president of Brazil's wind energy association ABEEólica.

Some European wind turbine manufacturers and utilities have privately told Recharge that the low prices at recent Brazilian tenders have impeded them from entering that promising market, while others expressed hopes rates at least won’t fall any further.

“If companies are saying ‘there is no way to supply the market with such prices', they have to think about the offers they are bringing to the market,” Fiuza said, replying to a question posed by Recharge during the EWEA 2014 conference in Barcelona.

The lowest price at Brazil’s last wind power tender in 2013 was actually offered by a “very big Portuguese company” working together with a “big Spanish manufacturer” as turbine supplier, Fiuza stressed.

“Those are very well structured companies" aiming to stay in Brazil for the long run to build their market share, he said, adding that those “big guys” hardly would make auction offers they can’t fulfill later.

At Brazil’s last A-3 auction the top price for wind power was R$126/MWh ($53.8). Average wind power prices came in at R$124.43/MWh, 1.25% below the maximum.

The rock-bottom rates could mean some developers may stop construction of their projects at some point, or even default, he conceded, without giving further detail.

To avoid possible defaults of wind power projects, the government’s energy planning agency EPE asks companies for guarantees, demands to see their balance sheets, and imposes requirements on the financial and technical side, Fiuza pointed out.

Notwithstanding the price dilemma, ABEEólica predicts a giant leap in wind power capacity in South America’s economic powerhouse.

Brazil’s installed wind power capacity likely will jump to close to 8GW at the end of 2014, from 3.4GW at the beginning, ABEEólica estimates, bringing it closer to more mature wind markets such as the UK or Italy, Fiuza said. By 2022, the group expects capacity to have risen to 21.8GW, meeting 11.9% of the country’s power generation.

In total, Brazil has a massive potential for 300GW in cheap onshore wind, making the deployment of offshore wind any time soon highly unlikely, Fiuza reckons.

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