WIND POWER IN BRAZIL NO MORE EXPENSIVE THAN SHALE GAS IN US

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16 may 2013

Brazil: Wind gathers force in mix of renewable sources

By Joe Leahy, The Financial Times, May 16 2013

On a busy day in Brazil’s main port of Santos at the height of the soyabean harvest, the relentless convoy of grain trucks is forced to stop suddenly.

Coming down the road is something so large it could be the fuselage of a medium-sized passenger jet. Instead, it is the propeller of a wind turbine.

This type of cargo has become a common sight at Brazilian ports these days as the country launches one of the most ambitious wind programmes of an emerging market country.

Brazil is already a global force in renewable energy and is seeking to broaden its energy mix to keep pace with rising demand for power from a growing middle class. Most of its electricity comes from hydropower.

“Brazil is building momentum and has demonstrated an impressive commitment to wind energy with installed capacity and output growing at a fast rate,” says Mauricio Bermudez Neubauer, global head of offshore wind energy at Accenture.

According to the Brazilian association for wind energy, Abeeólica, Brazil had 1431 megawatts of wind power capacity in 2011, rising to 2508MW last year. This had risen to 2693MW by May this year. The association estimates that, based on existing contracts, the country will have 9000MW of installed capacity by 2017.

“Combined with Brazil’s significant hydroelectric capacity, with which wind energy has considerable synergies, the country could become one of the cleanest electricity producers in the world,” says Mr Neubauer.

Brazil’s rapid emergence on the wind power scene has been partly thanks to the success of operators in the industry in a series of government power auctions in 2011 and 2012.

Wind energy operators snapped up 55 per cent of the contracts to sell power in these years, outcompeting conventional electricity producers on price, according to Bloomberg data.

The strong winds in the country, particularly in the northeast, mean that turbines can operate for a greater amount of time than in Europe and elsewhere.

Abeeólica says the average capacity factor – power generated compared with the installed capacity of Brazil’s wind farms – was 38 per cent as of December last year. But the capacity factor of the country’s new wind turbines, known as phase 2, which are taller and have greater generation capacity, was 57 per cent.

“Projects planned for the sector will attract $10bn in investment between 2013 and 2017,” the association says.

The industry’s potential could be raised if Brazil is able to exploit its expertise in offshore oil and gas to develop offshore wind generation, argues Mr Neubauer.

Although this is a new technology and therefore does not yet have a cost-effective supply chain, offshore wind farms in Brazil would have the potential to generate more wind energy without the expense and inconvenience of the onshore option.

“Brazil has a significant wind resource onshore but also a very important wind resource offshore,” Mr Neubauer says.

The problem for Brazil will be to maintain its commitment to wind energy, which presently accounts for only about 2 per cent of the country’s electricity generation, at a time when droughts at its big hydropower dams are making it more urgent to build gas-fired thermal power plants.

Marcio Zimmerman, Brazil’s deputy energy minister, said the country would continue to emphasise renewable sources but this would not always be possible.

New rules mean that wind energy producers will not be bidding for the same power contracts as coal and gas-fired producers, which could sharply reduce the amount of wind capacity sold this year.

There are also questions over the viability of some wind projects in Brazil, according to research firm GlobalData.

Jonathan Lane, Global-Data’s head of consulting for power and utilities, said recently: “Brazil’s latest wind auction, held on 14th December 2012, produced some of the lowest prices for wind generation outside of China.”

He added that prices awarded at the auction of R$87.94 per megawatt hour ($43.3/MWh) were on a par with the average 2012 wholesale electricity price for a US power pool of US$42.2/MWh. This priced “Brazilian wind generation on a par with shale gas-fired US generation,” he said.


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