12 de maio de 2017 Agência ABEEólica


Brazil has spent the last two years in its worst-ever recession. Over that time, the economy has contracted by 8% and demand for electricity has fallen.
This has brought an end to a wind energy boom that lasted from 2009 to 2015, and saw installed capacity grow from 341MW at the start of 2009 to 8.7GW by the end of 2016. Last year was the first since 2009 that the South American nation did not hold a tender for new wind capacity, and
those across the supply chain are suffering. But Mario Araripe, president and founder of Brazilian developer Casa dos Ventos, is confident about the fundamental strengths of the country’s wind sector; and say that
the economy is “coming to a turning point and starting to recover” too. But is that just wishful thinking for a firm that has 15GW of projects in its development pipeline?
We spoke to Araripe and his son Lucas, business and project development director, about the 20GW of developments that the firm has worked on since it was founded in 2007.
They also discuss how Brazil’s recession is re-shaping its wind market; how this affects investors; and the country’s long-standing problems with transmission.


For Mario, the move into wind ten years ago was a departure from his background in automotive, construction and textiles – and it owes a great deal to two factors: the sale of jeep manufacturer Troller, and his lifelong friend Odilon Camargo.

Araripe graduated from Sao Paulo’s engineering university Instituto Tecnologico de Aeronautica in 1977, and went to work at his father-in-law’s textiles business Textil Bezerra de Menezes. In 1981, he set up
a construction business that specialised in building beachfront properties in northeast Brazil. He sold this firm in 1994 to buy a pair of textiles firms; and, in 1997, bought troubled off-road vehicle maker Troller.
Troller was founded two years before the acquisition and, under the leadership of Araripe senior, commercialised its utility vehicles and then started mass production in 1999 before expanding overseas. In January 2007, he sold Troller to Ford for an estimated $280m, which gave him a war chest to invest in other sectors.
It was around this time he spoke to Odilon Camargo, a college classmate and longtime friend who had established himself as an early expert in Brazil’s wind sector.
“At that time, there were no government and you had to truly believe wind energy would be a reality in our country to make this kind of investment,” he says, but adds that he was confident in the potential
for wind power in Brazil. He also had experience of running hydro projects
with his other firms and, while hydro was Brazil’s main power sector, he was not convinced in its long-term prospects. Camargo convinced Araripe to invest in wind, and he formed Casa dos Ventos in 2007. In those early days, it worked closely with Camargo’s wind measurement consultancy
Camargo Schubert to find the most promising wind sites in Brazil. His son
Lucas, a business graduate, joined the business in its early days in 2008.
Lucas takes up the story. He says the firm’s first priority was to set up a factory to produce met masts – 700 in total – and assess wind resources across a wide area.

“We came up with many areas where the wind wasn’t so good, and we focused on some other areas, mainly in the northeast of Brazil. This first-mover advantage back in 2007 and our willingness to really invest
have made us a very large portfolio,” he says. Understanding the wind resource data enabled Casa dos Ventos to secure a portfolio of sites with project with a total headline capacity of around 20GW. So far, around 5GW of these have been developed. Casa dos Ventos has developed around 1GW of these, of which it still owns 705MW, and has sold 4GW. This means that, of the 18GW of wind projects in operation or under construction in Brazil, Casa dos Ventos has developed more than one quarter – or 27% — of them.
The company started construction on its debut projects in 2013, and completed the first two – the 210MW Ventos de Araripe 1 in Piaui state and the 182MW Ventos de Santa Brigida in Pernambuco state – in
2015. It sold the completed projects to the London-based investor Cubico in January 2016 for just under $500m. The firm followed this by bringing its 126-turbine 216MW Sao Clemente complex in Pernambuco into operation last June; and its 77-turbine 130MW Tiangua complex in Ceara in September. Finally, it is commissioning the 156-turbine 360MW Ventos de Araripe III complex on the border between Piaui and Pernambuco, which started on the first turbines in November and is due to complete on the final turbines this month.

It has sold other projects to overseas players including European utilities such as EDF, EDP and Enel Green Power; US developer Contour Global; and both stateand private Brazilian firms, including CPFL. It tends to keep a minority stake. This means the company has shifted from a pure developer until 2009; to being a developer and minority-stake investor between 2010 and 2013; and now develops schemes itself alongside those other activities. The business is looking to continue with a strategy of selling some projects, or stakes in them, and developing others. The sales enable Casa dos Ventos to recycle capital and invest in building projects
that can grow the size of its portfolio of operating assets: “Our idea is to have Casa dos Ventos as a utility itself, generating and producing energy, and not only being a developer and selling projects,” he says. But
utilities in Brazil have had tough time.

The recession in Brazil is partly the result of China’s financial slowdown, which has cut demand for Brazilian commodities. Falling confidence from overseas investors; political uncertainty; and rising unemployment
have also helped to curtail electricity demand. This forced the nation to scrap its auction for new wind capacity in 2016. Sergio Brandao, a Sao Paulo-based director at Actis, says 2016 was a “disaster” that
followed on from a “very depressive” 2015, and he expects 2017 to be “very weak”.
He said there may be a potential upturn in 2018. The tough economic situation has highlighted schemes that are no longer feasible and is threatening manufacturers.
Lucas Araripe calls the lack of projects a major threat to Brazil’s established supply chain: “There is a fear that, if we start having
two years of contraction, there is going to be a big hit on the supply chain,” he says. Brazil’s leaders want to stop the supply chain collapsing and are taking steps to get new projects moving again. In July, the government is planning an auction where developers can terminate any
contracts awarded in previous auctions where the scheme is no longer viable, and re-tender the capacity in an auction in September. Araripe says this could lead to more orders and protect Brazil’s manufacturing
base: “It is not wise to not have contracts and eventually lose all of those
factories, because of one year,” he says. This could also push smaller developers out of the market, though this is a process that has been happening anyway as overseas utilities have moved in. Araripe adds that smaller developers have also found it tough to finance schemes because of difficulties securing credit, which again favours the big-budget overseas players.

Casa dos Ventos has, to an extent, been insulated from this. While holding a 15GW project pipeline comes with costs, it also gives the firm the flexibility to sell some of its projects when it needs to raise money.
These include the $500m sale to Cubico. He says: “We’re family-owned, we’re not in the stock exchange, so we have a limited investment capability. Eventually, it makes sense for us to sell a project so we can
build one that is larger, and to really start growing with the recycling of capital. We sell some projects, but we don’t sell to get
out of the market.”

On its own construction projects, Casa dos Ventos is sole equity investor and has to then raise debt from development bank BNDES. This is a feature for all developers in the Brazilian market because the power
purchase agreements are priced in reais and so companies avoid currency risk by securing financial support from BNDES.

Casa dos Ventos also complements its equity and BNDES debt with 12-year project bonds. However, Araripe says its wind sector could be more competitive if part of the PPA was denominated in dollars, as it would enable developers to raise money from overseas investors. If it did not need to secure BNDES funding then this would enable developers to avoid local content rules, and thus reduce the cost of energy. But this would be politically-sensitive in a country where the government is already
battling to protect a wind supply chain that is at risk of collapse, and where the rate of unemployment is now over 13%. Araripe
is forthright about the benefits.
“You would have much more financing options, much lower costs on financing, on capex, and you would be more efficient and more competitive,” he says, but also concedes it would be unpopular among
many people, including nationalists, who want to “protect the players that are already here” by restricting imports.

His father agrees. Mario Araripe says that “access to credit in a global scale would bring substantial benefits to the dynamism and growth of our wind industry”. This is unlikely to be a priority for Brazil’s leaders as they exit the nation’s worst recession.


Brazil’s other long-standing problem is about grid connections. The government has not conducted enough auctions for transmission schemes to match demand in busy years. When it has, the projects have been won
by state-run Brazilian firms that have not developed them in a timely manner; or have been won by Spanish firms, such as Abengoa and Isolux, that have faced other problems caused by Spain’s downturn.
Mario Araripe says that delays to construction on new transmission infrastructure as created “a bottleneck… that restricts many wind projects”. The government is continuing to award licenses: it did so in
two auctions last year, and a further one last month. Araripe senior adds the plan was investment in Brazil’s grid on an “unprecedented”
scale to “re-establish the reliability of our transmission system”. The whole sector, not just his own company, will hope that he is correct

This is a major challenge for developers, and is a key factor that Casa dos Ventos takes into account when choosing which project to develop. After completing the commissioning of the 360MW Ventos de Araripe III, which is due to happen this month, the company will choose which
projects to submit for future auctions. Araripe says that securing and developing the best sites is an important lesson that he learnt from working in the property sector, but it is not the only one.
“From the textile business, the relation is the need for state-of-the-art technology to achieve high productivity levels,” he says,“[and] an analogy to car manufacturing would be the necessity to use robust components that will operate in a reliable way during several years of operation.”
Regardless of problems with transmission this knowledge can be used to benefit Brazil’s electricity system. He says: “We have a one-of-a-kind wind resource that provides reliability to our supply, and this
has to be exploited.” As Brazil recovers, it is a resource that the
Araripes will look to keep exploiting.

Fonte: A Word About Wind – 12/05/2017


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