Brazil – Wind: Vestas/EDP Renovaveis deal may involve Brazil

The wires are buzzing this week with news that Portuguese electricity company EDP Renovaveis has granted Vestas a concession for 1.5 GW of wind turbines (yes, that’s a “G”), with an option for 600 MW more.  That represents around a third of EDP’s existing capacity base.  Vestas already accounted for a significant share of EDP’s project pipeline, but this announcement is a clear vote of confidence for the Danish manufacturer.

Neither Vestas nor EDP is talking about where the Vestas units will be installed, but it is possible that production from this deal may be part of EDP’s 70 MW Tramandaí park in Brazil, which broke ground last month (see earlier post).

While EDP’s presence in Brazil forms only a small portion of the company’s global portfolio, the company has indicated it would like to grow further in Latin America and we take a look here at the history of the Brazilian position:

EDP entered Brazil in the middle of 2008 with the purchase of Central Nacional da Energia Eólica (CENAEEL), which had 14 MW of existing capacity and another 70 MW in the pipeline.   In 2009, EDP also purchased the Brazilian portfolio of German wind developer innoVent, held through subsidiary Elebrás, adding another 530 MW to the company’s pipeline (all in the state of Rio Grande do Sul).

During the presentation of EDP’s 2009 results, president of EDP Brasil António Pita de Abreu highlighted the importance of Brazil to EDP’s growth strategy.  However, speculation has emerged in Brazil recently that the company is planning to scale back some of its plans in 2010, and an article in Power last month implied that EDP may have been spooked by price adjustments in 2009, causing it to retreat from investments in additional wind, biomass and hydro generation.

“De repente, parecia que o Brasil iria começar a quebrar contratos”, diz Abreu, que agora se mostra satisfeito com a forma como a Aneel conduziu os processos de negociação dos aditivos aos contratos. “As pessoas esquecem que pagamos alguns bilhões para ter direito a essas concessões”, diz. “Mas é claro que todo processo regulatório pode ser aprimorado, e foi o que aconteceu agora.”