Opportunities in Wind Power

Technology value chain in Brazil

Seminar with Merinova

February 14th 2013

Matti Landin,

Finpro Brazil

1. INTRODUCTION -

Primary Energy Sources in Brazil

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Petroleum and

Derivatives 43 %

Natural Gas 9 %

Coal and Derivatives

1 %

Uranium 2 %

Hydro 14 %

Wood and Derivatives

10 %

Sugarcane 17 %

Other renewables

4 %

Petroleum and

Derivatives 50 %

Natural Gas 12 % Coal and

Derivatives 2 %

Uranium 1 %

Hydro 9 %

Wood and Derivatives

5 %

Sugarcane 17 %

Other renewables

4 %

2012 2021

Total: 257 106 toe Total: 565 106 toe

Apr 45 % of total energy matrix are renewables y2012

Introduction

Electricity

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• Share of renewable resources in electricity production will continue to increase in the next 10 years

according to the Ministry of Mines and Energy.

0

20 000

40 000

60 000

80 000

100 000

120 000

140 000

160 000

180 000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

MW

Renewable Non-renewable

Introduction

Electricity Production by Source

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• Hydroelectric power will continue to strong in terms of production capacity, but wind power is

presenting the largest relative growth.

0

20

40

60

80

100

120

140

Combustion* Hydroelectric Biomass Nuclear Wind Power

GW

2012

2015

2021

*Includes diesel oil, residual oil, natural gas and process gas being burned

to produce electricity.

Wind Energy

Targets: Energy Auctions

• Wind energy is the fastest growing

energy production form in Brazil.

Already 8 GW has been contracted.

• The licenses for wind farms are

granted in government held auctions.

• Currently wind energy license

auctions are held every year and will

continue to be held for the next 8-10

years.

• The contract auction system offers

long term contracts, which eases

project financing.

• 3-year construction period between

auction date and energy delivery

date.

• Selection by lowest price: 2009 apr

300 RS/MWh, 2011, 120 RS/MWh,

2012 under 100 RS/MWh

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5 © Finpro

208 218 385

573

1013 1288

3094

5142

7070 7070

8046,5

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Capacity Constructed by Auction (MW)

Proinfra 2° LER (A-3 2009) 2° LFA (A-3 2010)

3° LER (A-3 2010) 12° LEN (A-3 2011) 4° LER (A-3 2011)

12° LEN (A-5 2011)

Source: BNDES

Wind Energy

Introduction (2)

• In 2011 the Brazilian Development Bank (BNDES) financed wind energy with

3.4 billion reals, noting an increase of 173% from 2010. The bank estimates an

increase of funding between 20-25% for the year 2012 making the funding

between 4 and 4.25 billion reals ie over 2 USD Billion/y.

• The investment price per megawatt has significantly decreased in the past

years due to competition and increasing local component production

capacity.

• The BNDES provides loans for wind power development and the loan conditions

have strong incentives to support local production.

• Recently funding to certain projects developed by Siemens, Fuhrlander, Vestas,

Suzlon and Acciona have been frozen due to the local manufacturing requirements

not having been met by the companies in an inspection by the BNDES.

• BNDES issued new rules to local content 60% (-70%) to be impmented

gradually until 1.1.2016.

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1 BRL = 0.38 euros (Oct/2012)

Wind Energy

Operators: Capacity Under Construction and Licensed

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0 100 200 300 400 500 600

Renova

CPFL

Bioenergy

Energio

Enel

SIIF

Neoenergia

Dobrevê Energia

Gestamp

Galvão

Serveng

ContourGlobal

IMPSA

Tracktebel

MPX Energia

Brennand Energia/CHESF

Eletrosul

Ventos Brasil

Energisa

Enerfin

Petrobras

Under Construction (MW) Licensed (MW)Source: ANEELCurrent production

(09/2012), Energy operators

Wind Energy

Capacity by Locations

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In operation

Under construction

Licensed

Source: BNDES 12/2011

Wind Energy

Manufacturers

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0

1000

2000

3000

4000

5000

2007 2008 2009 2010 2011 2012 2013

Wind Turbine Production Capcity (MW)

Fuhrlander

Suzlon

Alstom

GE

Vestas

Gamesa

Weg/MTOI

Other 4 %

Siemens

2 %

Acciona 2 %

Sinovel 1 %

Alstom 5 %

Gamesa

6 %

GE 16 %

Wobben

20 %

Vestas 12 %

IMPSA 16 %

Suzlon 16 %

• Wobben, IMPSA, Alstom, Gamesa and Vestas have production in Brazil

• (Fuhrlander) and GE are constructing factories in Brazil. Several operators are planning factories to Brazil.

• Wobben and Tecsis produce currently blades in Brazil, while Eólice/LM and Aeris are opening factories.

• Towers have several producers, with 3 major ones: Gestamp, Engebasa and Tecnomaq

Source: BNDES / EPE

Wind Energy Manufacturers: Plants in Operation and in Construction as of 2011

Source: ABEEólica, Brasil Energia

Wind Energy

Nacelle Manufacturs

Source: ABDI

BNDES launched Dec 2012 new local

content requirements 60-70 % - Nacelle

Example

Table 2 BNDES , Phase 5 and 6 of Nacelle assembly and sourcing in Brazil;

• Starting 1.1.2015 -1.1.2016 Six components from frazil, at least 3 from col. B

• Starting 1.1.2016 – sourcing of 12 components at least one column A and 5

column B

Source: ABDI

Source: BNDES

A B C

Nacelle Structure –

casting and welding

Estructural

elements – Rotor

Estructural

elements – Stator

Inverter

Nacelle Cooling System

Elevator

Main Axis

Electrical protection panel

Careen (carenagem)

Yaw bearing

Main axes bearings

Transformers

Yaw drives

Yaw brake

Break system

Rotor lock system

Coupling

Medium tension cables

Hydraulic unit

Slip ring

Pulley

Structural bolts

External light signals

Anemometer (wind-gage)

Wind direction sensor

Wind Energy

Blade Manufacturs

Source: ABDI

Wind Energy

Tower Manufacturs

Source: ABDI

Wind Energy

Co-operation Possibilities

Key Commercial opportunities

• Sales of competitive key components to the wind mill OEMs manufacturing

in Brazil

• BNDES who finances over 90 % of the projects, has set tighter national content

rules starting to be implemented stepwise 2013-2016. In 2016 the national content

requirement will be apr 60-70 %.

• At the same time rules permit purchasing 30-40 % of imported components in

order to promote competition and development of quality among local

manufacturers.

• Companies who could have competitive scale of production in Brazil can

analyze production in Brazil. Overall cost level in manufacturing is not low in

Brazil.

• Competitive maintenance or service providers can also find attractive market

opportunities

• Industry association of operators and OEMs Abeeolica organizes supply chain

event in May 2013 in Sao Paulo

• Might be possible to organize delegation from Brazil to Finland get to know Finnish

technology, references etc might be joint with Bioenergy. . 18/02/2013 15 © Finpro