Brazil's Wind Power Expansion Threatened by Changing Scenario

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Brazil plans to begin operating 4,592 megawatts (MW) of wind generation within the next two years, which will be added to the existing 1,502 MW of installed wind capacity. However, this expansion of wind power generation in Brazil faces several scenarios that destabilize installation schedules planned for the next two years. Connection problems, environmental licensing process, poor logistics and a lack of financing are causing delays and could lead to withdrawal from wind projects by entrepreneurs.

Regarding connection issues, during 2012 delays of up to 13 months are expected in the deliveries of energy collection stations (ICG), which will delay the commercial operation of 33 windfarms. For example, this situation affects 294 MW of the Bahia windfarm complex, which belongs to Renova Energia SA (Sao Paulo, Brazil) from a total of 811 megawatts (MW) traded at the A-3 Federal Auction in 2009. There are 14 windfarms in the complex that should start operations in June 2012, but the startup dates have been pushed out to 2013 because of a lack of connection. Some plants auctioned in 2010 will suffer delays, and there is a high possibility that the startup of wind projects negotiated in the A-3 and reserve auctions of 2011 will coincide with the proposed timetable for connection to the network.

The second problem faced by wind projects in the country is the slowness and lack of clear criteria for obtaining environmental licenses. Currently, Brazil's Ministry of Environment is working on a plan to harmonize licensing procedures on the federal and state levels. Among the affected projects is Eolica Tecnologica's (Recife, Brazil) 30-MW windfarm Pedra do Reino in the state of Bahia, which is still awaiting an installation license.

Another situation is the lack of logistics infrastructure. The plants are located in municipalities that are often distant from ports or big cities, and there is no road infrastructure that supports the necessary traffic during the construction time of the parks.

Finally, there is lack of financing for windfarm projects. This condition in the market was generated by a change in the Brazilian government's policy regarding the funding for wind power projects, which caused abrupt cuts to loans to investors. Against this background, some investors have negotiated an anticipated date of startup; however, others are worried that their projects may be cancelled due to a lack of funding.

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