Brazil is expected to become the 8th country with the highest installed power in wind generation by 2026, practically doubling its installed capacity at the source to something close to 25 gigawatts (GW), according to a study by consultancy AT Kearney, obtained exclusively by Value. One of the main factors that favor the country is the quality of the winds. While the capacity factor (ratio of actual plant production to maximum total capacity) is 28%, Brazil is over 50%, and is expected to reach 63% by 2021, according to the study.
Considering data from July 2018, Brazil was in 12th place in number of solar projects installed, behind markets like Germany, Denmark, China, the United States, France and Spain. According to Cláudio Gonçalves, a partner in the electric sector of AT Kearney in Brazil, the country has the potential to surpass some European markets in the ranking, such as Italy, the Netherlands and the United Kingdom.
“I believe that Brazil will rise in the ranking. We work with optimistic companies regarding the renewable energy market,” Gonçalves said, noting that the country has enormous wind potential. The European market, which is now ahead, is considered “saturated” in several countries, such as Italy, the United Kingdom and Spain. In addition, because of lack of space, countries like the Netherlands are betting on offshore wind farms that are more expensive. The United States, which also stands out in the wind sector, has shale gas available, which also has a very competitive price. “We see Brazil with great potential for penetration and favorable weather conditions. It will only depend on the economy.”
The Ten Year Plan for Energy Expansion (PDE) prepared by the Energy Research Company (EPE), the entity responsible for energy planning of the country, provides 12 GW increase of wind power in the country until 2026. “We are more conservative, we anticipate from 9 GW to 11 GW of expansion by 2026, “Gonçalves said.
After a period without the hiring of new projects, the auctions were resumed in 2017 and 2018. Meanwhile, the generators started betting on private auctions and free market contracts, which are a trend for continued source expansion in the next years. “The game will change, we believe that private auctions and the free market, especially, will continue to grow,” he said.
“The strategy of investors is now more aggressive in the free market,” said the expert. In the captive market, energy prices are expected to remain low, but not at the levels seen in recent auctions, below $ 100 per megawatthora (MWh). “But the market still has adjustments, it will take two to three years for factories to go back to full operation. Only when this happens will manufacturers be more price-sensitive,” he said.
AT Kearney has identified other trends for the wind sector in Brazil, such as the continued idle capacity of several turbine and tower manufacturers. “The market has grown fast and on a large scale, and the players have not been structuring themselves in the best way, so they have bigger factories and staff than is necessary, which is an opportunity to search for efficiency.”
From the point of view of project developers, the consultancy sees opportunities for portfolio prioritization. “They will need to improve practices to be more competitive,” he said, noting that today demand for new auction generation projects is lower, and the free market demands even greater quality and attractiveness of the developments.
An area that has attracted attention within the supply chain is the focus on asset operation and maintenance. According to Gonçalves, this segment is still very fragmented, but large companies in the electricity sector should play an increasing role in this. “Some companies have started to work efficiently internally, but today we see many discussing why not do operation and maintenance service also from neighboring parks.”