Why Casa dos Ventos is betting on Brazil in difficult times
Brazilian developer Casa dos Ventos announced an agreement with Vestas for the acquisition and maintenance of wind turbines for the 554MW Babilônia Centro complex, in Bahia state, and the 756MW Serra do Tigre park, in Rio Grande do Norte.
Capex for both reaches 9bn reais (US$1.78bn).
In this interview, company head Lucas Araripe details other projects in the pipeline, including solar and green hydrogen plans, and talks about market prospects.
BNamericas: Are new large-scale ventures economically viable, considering the pressure emanating from inflation and interest rates, and the low free power market reference price?
Araripe: Today, we have higher capex due to high commodity prices and logistics issues, besides high interest rates, but we have projects that are very competitive, with robust wind resources, a lot of scale and optimization of investments. For example, Babilônia Centro is only 10km from the substation.
Whave assured connection to the transmission grid. We sell part of the energy in the regulated auction, with a reduced and stabilized transmission rate, with very competitive opex and optimized financing capacity.
We have elements to reach a competitive PPA [power purchase agreement] level, also because we’re joining partners that invest or may invest in the plants.
The [free, non-regulated power] market’s price is on the floor, but this is a moment of very full [hydroelectric] reservoirs that guarantees cheap energy, probably for some years. And besides economic issues, companies have decarbonization goals, so there are other attributes that are considered besides the economic factor.
The order closed with Vestas was the company’s largest in the onshore segment, and this shows our commitment to invest, even in a very challenging scenario.
BNamericas: How will the new projects be financed?
Araripe: That will depend on the PPAs, if, for example, they will be closed in reais or dlars.
We expect to announce, in the next few months, a good part of the PPAs of these projects. But the base case scenario is [development bank] BNDES, which is financing our Umari wind complex [203MW, in Rio Grande do Norte, with 907mn reais].
BNB is also supporting, but its budget is smaller, so maybe we’ll have a smaller portion there. We’ve also been working with some resources from [northeast development entity] Sudene, but smaller volumes as well. The capital market, today, has a somewhat high price level.
BNamericas: Are there difficulties in obtaining authorization for grid access, in the face of the boom of renewable energy generation?
Araripe: This comes from a problem, a lack of isonomy among the energy sources. Today, to apply for wind concessions, it’s necessary to declare guarantees. Solar energy, on the other hand, has no such requirement. This resulted, in fact, in a very large number of projects that applied for the allocation, that entered the base of the syste, ut were not effectively built. We need regulatory improvement to require a compliance guarantee to clean up this base.
BNamericas: Casa dos Ventos intends to triple its installed capacity by 2025. Which wind farms will start operating in this period?
Araripe: We have in operation the Folha Larga, Rio do Vento 1 and Babilônia Sul wind farms, which add up to 1GW of capacity, besides 700MW under construction, which are the Rio do Vento 2 and Umari projects.
By the end of this year, we’ll have 1.5GW in operation. In 2024, another 200MW will start operating, and in 2025, another 1.3GW. So we’ll have at least 3GW by 2025. I say ‘at least’ because we also have solar energy projects that we’re working on.
BNamericas: What are the developments of the joint venture formed with TotalEnergies so far?
Araripe: The JV with TotalEnergies was born with 6.2GW in the pipeline, of which 1.7GW in construction or operation and 1.3GW in advanced stages of development. And this pipeline already incude hybrid and stand-alone solar plants.
BNamericas: Are green hydrogen projects under study?
Araripe: Today we have MOUs signed with the ports of Pecém [in Ceará], Suape [Pernambuco], Aratu [Bahia] and Açu [Rio de Janeiro].
We’re more advanced in Pecém, where we have a basic project, with licensing in progress, advancing so that, still this year, we’ll have the first pre-FEED [front-end engineering design] decision.
We’re registering this project in some international ammonia offtake initiatives, but we want to develop projects in the domestic market, including with clients with whom we already have PPAs, be it for the fertilizer industry, steel industry, mining and transportation.
These are important potential partnerships to generate demand for our power generation projects. We sell electricity, but we can also sell other products and molecules, such as hydrogen, ammonia and green methanol. We can use our electrons for other markets.