RIO DE JANEIRO, BRAZIL – Brazil cannot complain about the abundance of natural resources at its disposal. In power generation, the country has always enjoyed the waters, a renewable matrix, with the hydroelectric plants, for being the most viable – and also the cheapest.
Despite the abundance, Brazil has faced serious energy crises in its recent history. After all, water resources are finite, that is, with no planning or proper management, at some point, the source will literally dry up, as occurred between 2001 and 2002, in one of the most chaotic periods of power generation in Brazil: the blackout crisis.
The lack of rainfall coupled with the poor organization of Brazilian authorities left the country completely exposed and its hands tied by the impending energy collapse.
At the time, the Fernando Henrique Cardoso (FHC) government was forced to cut 20 percent of Brazil’s electrical consumption and did so by setting targets, applying penalties, and, of course, by rationing. Seven years later, an audit by the Federal Audit Court (TCU) found that electricity blackouts in 2001 and 2002 cost the public coffers R$45.2 billion (US$9 billion).
The poor energy management of the start of the century exposed the need to invest in other renewable sources, opening a wider range of options for the country to achieve a more balanced energy matrix, thereby reducing the chances of new blackouts. The new investments made room for a variety of alternatives, such as solar and biomass energy, but it was wind power that surprised most, either because of its high efficiency or because it also proved to be an economically accessible option.
To expedite the process, in March 2004 the National Electric Energy Agency (ANEEL) created the Program to Encourage Alternative Sources of Electric Energy (PROINFA), in which 1.4 gigawatts (GW) of wind power were contracted. At the time, the source was still five times more expensive when compared to hydroelectric plants, a scenario that would undergo significant changes in the following years.
Although the contract was considered only a starting point, Brazil quickly reached wind energy know-how, which eased the inflow of new investments and reduced the cost of the installation process. Another important factor for the growth of the sector was the requirement since the first contract made with public incentives from the National Bank for Economic and Social Development (BNDES), that production be at least 60 percent domestic content.
The high productivity of Brazilian wind, coupled with the bank’s demand, attracted dozens of foreign companies, which permanently settled in the country to meet the demand for wind turbines. From that moment on, a number of events marked the sector’s growth in Brazil. In 2009, the first wind energy auction took place, raising R$9.4 billion in investments; since then, all bids of this type have exceeded the mark of 2 GW per year.
Two years later, in mid-2011, the wind turbines became the second most accessible energy source in Brazil. In 2013, the domestic contentrequirement increased from 60 to 80 percent, thereby boosting job creation, particularly in the Northeast region, which further cheapened the construction of wind farms, which in 2017 exceeded hydroelectric plants and became the cheapest power station in the country.
The drop in price is the result of investment in technology. All renewable sources have become more competitive in the market, particularly wind, because of the nature of the Brazilian wind, which has almost double the productivity compared to other countries. In other words, we can expect major investments in the Brazilian winds for the coming years.
One of the features of wind energy developments in Brazil is the leasing of land, which ultimately increases the income of small landowners, given that the economic activity in the Northeast, where most wind farms are installed, is lower than in large urban centers.
With the lease, these small-scale landowners have guarantees for the entire duration of contracts, which run for an average of 20 years. “These are families that used to receive the ‘Bolsa Família’ (Family Grant) and now, with the growth of wind power, eventually settle in these regions, producing a very important socioeconomic impact,” explains Elbia Gannoun, president of ABEEÓLICA (Brazilian Association of Wind Power).
Statkraft, for instance, considered the largest generator of renewable energy in Europe, announced on September 28th the construction of a new wind farm in Ibipeba (BA), expected to be delivered by the end of 2023.
The ‘Ventos de Santa Eugênia’ will benefit from a R$2.5 billion investment and will more than double the company’s installed capacity in Brazil, reaching 987 megawatts (MW). “Brazil is probably one of the most competitive countries in the world when it comes to renewable energies. In this respect, I am very pleased to see that Statkraft is able to produce a high-level project like this,” said Fernando De Lapuerta, CEO of Statkraft in Brazil.
Global demand
As in virtually all sectors of the world economy, the coronavirus pandemic caused negative effects for the sector, particularly in energy demand; after all, the market plummeted by approximately 20 percent in mid-April, according to the National Electric System Operator (ONS), but has gradually recovered since then.
However, the moment of instability has undoubtedly led some investors to retract and defer important decisions. In any event, announcements such as Statkraft Brasil already point to a resumption of wind farm construction in the country, although the drop has not been as steep.
“The pandemic brought short and medium-term impacts, which will dissipate in one or two years. In the short term, they even interrupted some works, which have now been resumed. The reduction in demand for energy has impacted auctions, which this year will be canceled because they are only held according to energy needs, which declined in 2020. We hope that from the third and fourth year this factor will change, also because the load by energy is now at the same levels as in 2019. The greatest challenge for the sector does not actually lie in the sector, but rather in the Brazilian economy, it is very important that the country grows again,” says Gannoun.
Wind power generation in 2019 represented 9.7 percent of all generation injected into the National Interconnected System (SIN), one of the advantages of the Brazilian matrix, which after the serious energy crises, began to have new and different alternatives, that is, when one source is scarce, others may offset the potential losses, thereby balancing the system. The number of households supplied by wind power in 2019 reached 28.8 million – or 86.3 million inhabitants. It is estimated that 22.9 million tons of CO2 emissions were prevented, equivalent to the emissions of about 21.7 million cars.
In all, there are 653 wind farms and 7,920 wind turbines in the country. In September 2020, the installed capacity stood at 16.68 GW, with an estimated 25.5 GW by 2024, according to InfoVento, an ABEEÓLICA survey. The sector’s employment capacity is strongly associated with the expansion of the industry itself. The investments should reach an average of R$7 billion per year, which will generate clean energy for the country, improve the quality of life of local populations and contribute to the economic development of the regions where the parks are built. “It’s a Brazil that succeeds,” concludes Gannoun.
Source: Veja