Brazil’s wind power sector still attractive to investors despite some turbulence

Brazil’s wind power sector remains attractive to investors, despite the current crisis.

This is the view of Inês Gaspar, product manager at consultancy Aurora Energy Research. 

As explained in a BNamericas report published in July, the sector's current uncertainty stems mainly from the country's energy surplus amid an influx of renewable generation projects and the expansion of distributed generation, combined with relatively low growth in electricity consumption.  

Brazil's wind power market is expected to slow down for the first time since 2009. Last year, growth was 4.8GW, and in 2024 it should reach 2.5GW, similar to average growth in 2020, 2021 and 2022. 

However, severe drought affecting the country after two years of favorable rainfall is beginning to change the scenario, potentially making new renewable generation projects more feasible. 

In addition, energy-hungry datacenter and green hydrogen plants could help boost demand for electric power. 

“I don't believe the current situation will continue. Brazil has very cheap electricity with annual load factors above 40%, which you don't see elsewhere,” Gaspar told BNamericas. 

She added that one factor that still inhibits investment is the uncertainty surrounding the opening of the free energy market. In January, all high-voltage consumers were allowed to leave the regulated environment. 

The government expects low-voltage consumers to be able to join the free market in 2028, but this is not certain. 

An investment of 130 million reais (US$23mn) recently announced by Denmark's Vestas to produce wind turbines in Ceará state is evidence of the interest in the sector.

Brazil currently has approximately 30GW of installed wind power, which accounts for 15% of the electricity matrix. In 2023, the northeast accounted for 92% of the country's wind generation.

OFFSHORE 

Gaspar believes that Brazil is unlikely to see a significant influx of offshore wind energy into the system for another 12 or 13 years. 

Congress is debating a bill that will regulate offshore generation, and a series of issues unrelated to offshore wind inserted in the text of the proposal (known in Brazil as jabutis) are making it difficult for lawmakers to pass it. 

Another challenge is the fact that offshore wind energy is still not economically viable on the free market. 

“In Europe, offshore wind continues to be auctioned. If we still don't have a regulatory framework in Brazil, I see a need for more time for this technology to enter the country,” said the consultant.

But Brazil has elements that favor offshore wind, such as the oil and gas industry's knowledge of energy exploration and offshore infrastructure. 

“It's no coincidence that there are several oil companies such as Petrobras, Shell, Equinor and TotalEnergies with projects under analysis by [environmental regulator] Ibama,” said Gaspar. 

Another positive point is that, unlike onshore wind power, which has been established mainly in the northeast, far from the country's main consumption centers in the southeast and center-west, there is offshore potential all along Brazil's coastline. 

“That's why I see interesting synergies,” Gaspar said.