The Sector
Wind power development in Brazil
In 1992, in the archipelago of Fernando de Noronha, the first wind turbine installed in Brazil came into operation, the result of a partnership between the Brazilian Wind Energy Center (CBEE) and the Companhia Energética de Pernambuco (CELPE), with funding from the research institute Danish Folkecenter. During the next ten years, wind energy grew little, partly because of the lack of policies, but mainly because of the high cost of the technology.
During the energy crisis of 2001, there was an attempt to encourage the hiring of wind power generation projects in the country. The Emergency Wind Energy Program (PROEÓLICA) was created. This program aimed to contract 1,050 MW of wind energy projects by December 2003. At that time, there was already talk of the seasonal complementarity of the wind regime with the hydrological flows in the hydroelectric reservoirs. This program, however, did not obtain results and was replaced by the Incentive Program for Alternative Sources of Electric Energy, PROINFA. In addition to encouraging the development of renewable sources in the energy matrix, PROINFA paved the way for the establishment of the wind turbines and components industry in Brazil with national content requirements for wind turbines resulting from this program.
At the birth of PROINFA, wind power generation technology was still very expensive and development in competitive auctions would only come later. At the end of 2009, the first energy commercialization auction exclusively focused on wind power took place. This auction, called Reserve Energy Auction (LER), was a success with the contracting of 1.8 GW and opened the door to new auctions that took place in the following years.
Since then, wind power has shown solid and consistent growth, and is now a consolidated energy source. Wind power is no longer an “alternative” source to play a fundamental role in the Brazilian electricity matrix. It is today the second source of the electricity matrix, with more than 10% of participation. What explains this development?
Well, first of all, our winds. To produce wind energy, good winds are needed: stable, with the right intensity and without sudden changes in speed or direction. Brazil is fortunate to have a huge amount of this type of wind, which largely explains the success of wind power in Brazil in recent years. The characteristics of good Brazilian winds result in a capacity factor that is practically double the world average.
This strength of the Brazilian winds means high productivity and, with more and more wind farms operating, wind farms have been breaking record after record during the “wind harvest”, a period that runs from June to the end of the year, reaching Northeast for a whole day and about 20% of the country.
The success of wind power in Brazil can also be explained by the rapid development of a local and efficient production chain, which started with a nationalization rate close to 60% and reached the production in national territory of 80% of a wind turbine, according to the financing rules of the FINAME Program of the National Bank for Economic and Social Development (BNDES). Brazil currently has six turbine manufacturers, blade factories and wind towers and hundreds of companies that work in other components, in addition to transport, various consulting, planning, works, etc.
The development of wind power in Brazil has already accumulated an investment of more than US$ 42 billion in the last 11 years. In 2021, for example, the investment was US$ 5.15 billion. The investment data released by ABEEólica is provided by Bloomberg New Energy Finance (BNEF) and can be seen in more detail in the Annual Bulletin of Wind Generation, produced by the association.
As one of the countries that most invests in wind energy in the world, Brazil has been classified as a wind power and already occupies the sixth place in the Installed Capacity Ranking of the GWEC, the Global Wind Energy Council. Another factor that explains the efficient development of wind energy in Brazil is its great potential. We estimate that Brazil has, on land, a potential of more than 700 GW.
To consult updated data on the Brazilian wind sector, visit our ABEEólica Data page and consult Infovento and the Annual Generation Bulletin.
Future: offshore, hydrogen and other technologies
At the end of January 2022, the Government published Decree No. 10,946, which provides for the assignment of use of physical spaces and the use of natural resources at sea for the generation of electricity from offshore projects. This was a crucial advance for Brazil to start its path in the implementation of offshore wind farms safely for investors, government and society. We believe that the decree not only serves public and collective interests, but is also an important basis for the companies’ work to be carried out in a planned and organized manner.
In a sector that is taking its first steps, this security is essential, so that both companies, society and government know what are the technical criteria, requirements, mandatory studies and the bodies that will respond and will be responsible for analyzing, approving and formalizing the advance. of each stage of the projects, which are more complex than onshore wind power.
The decree only comes into force in June 2022. The Ministry of Mines and Energy (MME) will then have 180 days from that period to improve the rules. From the point of view of the regulatory base, the decree is enough to start the process, the rest comes through ordinances and resolutions, but it is also necessary to develop infrastructure of transmission lines and ports and that takes time.
What is already known is that the investor’s appetite and our potential are enormous. In April 2022, we already had more than 100 GW of projects under analysis at IBAMA and the EPE Wind Roadmap shows a potential of 700 GW. This is a potential that we usually call “infinite”, because considering the technical need to have a diversified electrical matrix, no one would bet on a single source and we will never need all this energy in our sea winds.
n the not-so-distant future, our offshore wind farms may still be linked to one of the industries that will play a central role in the next generation of energy, which is hydrogen. The states of Northeastern Brazil, for example, already aware of this possibility, have signed cooperation agreements that will allow the production of green hydrogen within a few years, using mainly wind power, with emphasis on the possibilities of offshore wind farms which, it is worth remembering, are always large-scale projects.
Green Hydrogen is a promising technology because it carries some advantages related to storage, energy security, reduction of price volatility, adaptability of renewable energy systems and fuel production and transport. Recently, IRENA released the report “Green Hydrogen: A Guide to Policy Making”, the document shows that different countries have created national plans for the production of hydrogen from renewable sources. Countries such as Germany, France, Spain, Japan, China, Chile and Norway have already outlined their hydrogen production strategies via renewable sources. This shows that hydrogen can be a driving mechanism for the installation of new renewable energy capacity and make this type of source increasingly competitive.
The EPE took the first step in the national context and in early February launched the technical note called: “Bases for the Consolidation of the Brazilian Hydrogen Strategy”. The document raises the main initiatives related to Hydrogen that Brazil has carried out and their opportunities and challenges. The material reinforces the need for Brazil to have a strategy for the production of Hydrogen from various energy sources existing in the country to generate a competitive advantage in the industry. The role of Green Hydrogen is highlighted due to its potential to generate competitiveness. The document mentions that renewable sources can reduce hydrogen production prices by up to 60% by 2030. Advancing a hydrogen strategy, as proposed by the EPE, can help Brazil to become an important player in the international market in terms of commercialization of this fuel, based on the competitiveness of the country’s renewable sources and on the current discussions and climate agreements signed between the countries.
Energy Transformation
Talking about energy transition, in the case of Brazil, is easy. We already have an electricity and energy matrix with a share of renewables above the world average. In the case of electricity, for example, we have 83% renewable, while the global average is around 25%. In the energy matrix, we have 46% and the world average is around 15%. And we will be increasingly renewable. We have one of the best winds in the world for onshore wind power generation, in a few years we will have offshore wind farms, our solar potential is enormous, biomass is growing solidly and we have the possibility of taking advantage of natural gas from the pre-salt layer to generate energy.
Our challenge is therefore not to manage scarcity of clean natural resources, as is the case with so many countries that have had to invest billions in renewable development policies. Our challenge is to manage their abundance for energy production, getting the best out of each one of them, protecting nature and bringing social and economic returns to society.
And it is precisely because we have this abundance that we can understand the energy transition process as an opportunity for it to mean an energy transformation. When we talk about energy transformation, the concept is broader and involves, for example, all the changes and technologies that are developed along with renewables, to meet and allow their growth, in addition to the consequences on society.
We can see, then, that the true potential and opportunity of transformation is the fact that investment in natural resources, in a responsible way, generates economic and social development through income distribution, inclusion and the reduction of economic and social inequalities. . It is necessary to take this leap of reasoning and action: it is not enough to generate renewable energy that does not emit CO2, it is necessary that this energy positively impacts people’s lives. Then we started talking about a real energetic transformation.
In the case of wind power, we already see this very well. Wind farms reach remote regions of Brazil, especially in the Northeast, positively impacting communities through, for example, direct and indirect jobs and income generation with the land leases of small owners, who continue with their livestock or plantations, since only a small portion of the area is used for the placement of wind turbines. There are also impacts of increased tax collection that, with proper public management, can mean improvements for the municipality. The technological development that comes with renewables also means a new path of professional performance.
In November 2020, ABEEólica published the study “Socioeconomic and Environmental Impacts of Wind Energy Generation in Brazil”, carried out by the team of economist Gesner Oliveira, from the consultancy GO Associados, and which quantified the already known positive impacts of wind energy. The work analyses, for example, the multiplier effects of investments made by companies, as well as the impact of amounts paid for land leases for the placement of wind turbines. The study also made a comparison between a group of municipalities that received wind farms and another that does not have wind energy, to assess the impact of the arrival of the parks on the Human Development Index – IDHM and on the municipal GDP.
With regard to the IDHM and Municipal GDP, municipalities that have wind farms performed 20.19% and 21.15% better, respectively, for these two indicators (Oliveira, Curi, Felini and Ficarelli, 2020). This is a result that shows that there is no doubt: wind energy arrives and its positive multiplier effects impact the indicators of the municipality.
The study also estimated the multiplier effects of lease payments. This is a very important point of the study, because the leases are a direct income injection in the region. It is important to explain that when a small owner leases a piece of his land for the placement of a wind turbine, he can continue with his plantations or cattle raising. The lease payment then becomes a fixed amount for landowners who can invest in their own land and expand their production.
For 2018, the study estimated a value of 165.5 million lease payments. To estimate the impacts on the local economy of these payments made to families related to land leases, the MIP Regional-IBGE methodology was used. The main hypothesis is that the amount received by families for the lease would be used mainly for consumption in goods and services. First, the relative importance of expenditures made by families, aggregated into twelve macro sectors in the budget of Brazilian families living in rural areas, was considered, given that wind farms are commonly located in rural areas. Second, the most recent data from the IBGE’s Household Budget Survey (“POF”) (structure of household consumption) were used.
Thus, considering 2018 data, land lease payments for the expansion of the wind sector of around R$ 165.5 million per year, have the potential to lead to an expansion of production in the Northeast and South Regions (added value) of the around R$ 524.6 million, generating more than 8 thousand jobs and R$ 43.2 million in salary mass. In addition, R$ 45.4 million are collected in related taxes, of which almost R$ 25.5 million in ICMS and R$ 2.5 million in IPI. (Oliveira, Curi, Felini and Ficarelli, 2020).
The study also evaluated an important benefit of wind energy, which is the low rate of land use, reaching the conclusion that, even in a scenario in which the wind turbines would be closer, at least 92% of the area would be free for other activities, This value may be even higher depending on the distribution of wind turbines. (Oliveira, Curi, Felini and Ficarelli, 2020).
In February 2022, ABEEólica released a new study, the “Estimates of the dynamic impacts of the wind sector on the Brazilian economy” which showed impacts of wind investments on GDP, jobs and reduction of CO2 emissions. The material was prepared by Bráulio Borges, associate researcher at FGV-IBRE and senior economist at LCA Consultores.
The objective of the study was to quantify the direct and indirect impacts of investments in wind energy for GDP, jobs and also for the reduction of CO2 emissions. “In the case of the GDP impact, we started with the amount invested from 2011 to 2020, which was R$ 110.5 billion in the construction of wind farms. Using a methodology that calculates the multiplier effects of different types of investments, we reached the value of over R$210.5 billion referring to indirect and induced effects, totaling R$321 billion. This means that every BRL 1.00 invested in a wind farm has an impact of BRL 2.9 on GDP, after 10 to 14 months, considering all the effects”, explains Bráulio Borges, the researcher responsible for the study.
The study also assessed the impact of these investments on employment. Considering previous research on the subject in other countries and in Brazil, as well as an assessment of a more general scenario, an estimate of almost 196 thousand jobs was reached between 2011 and 2020, or 10.7 jobs per MW installed in the construction phase. of the parks. The study also points to an average of 0.6 jobs per MW installed for Operation & Maintenance. This is a number that allows the realization of some scenarios for the near future, since the sector has a good mapping of how much will be installed in the coming years. “Internationally, we work with values ranging from 10 to 15 jobs per MW. With this value of 10.7, we are in a reasonably conservative estimation scenario, and now we want to refine these data to have an even more detailed scenario of what we generate in jobs across the country. At this very moment, we have almost 5 GW under construction across the country, so with this value of the study we know that there are more than 50 thousand workers at the moment building our future wind farms, in addition to the more than 15 thousand in Operation & Maintenance”, explained Elbia Gannoum, President of ABEEólica, on the occasion of the launch of the study.
As a third point, the study assesses the impact of wind power in reducing CO2 emissions and what this means in monetary terms. From 2016 to 2024, the Brazilian wind sector will have avoided greenhouse gas emissions valued at between R$ 60 and 70 billion. “It is important to explain the concept of “Social Cost of Carbon”, which tries to quantify, in monetary terms, the economic costs associated with greenhouse gas emissions (such as carbon dioxide itself, methane, CFCs, among others). To estimate the Social Cost of Carbon, several prospective scenarios are constructed for the countries’ GDP, considering different temperature scenarios and their impacts on economic activity. Differences between such scenarios are brought to present value and this generates the estimate of the Social Cost of Carbon, generally presented in US$ per ton of CO2 equivalent. In this way, the emissions avoided by the wind sector in monetary terms can be understood directly: a reduction in the future Brazilian and global GDP of something between R$ 60 and R$ 70 billion was avoided”, explains the researcher.
What our good winds mean, in addition to clean and reliable energy, is this: a real, palpable and measurable benefit for society through the improvement of indicators as important as the MHDI and GDP.
The discussion of energy transformation and the effects of energy on society has become even more crucial after the pandemic, which seems to have had the effect of opening humanity’s eyes even further to the unavoidable fight against global warming. And, in this process, sources that do not emit greenhouse gases and present social, economic and environmental benefits, such as wind power, are our best bet. In addition, the conflict in Eastern Europe in early 2022 made clear the importance of countries investing in energy independence through sources such as wind and solar. In the case of Brazil, the good news is that one of its main comparative advantages in relation to the vast majority of countries is the fact that we are an energy powerhouse with a great diversity of clean energies and, in the case of wind power, there is still the fact that we have one of the best winds in the world, which means very competitive energy. In Brazil, the energy of transformation is abundant and it is our role to work in its favor.
This material was prepared by ABEEólica with the objective of summarizing the main information and figures on the development of wind energy in Brazil. If you need more information, please contact our press office at selma@abeeolica.org.br
