The Brazilian wind power market has been expanding gradually in recent years. The rise in electricity demand and government focus on renewable energy has resulted in a series of favourable transformations for the wind power sector.
Brazil's first wind-energy turbine was installed in Fernando de Noronha Archipelago in 1992. Ten years later the government created the Program for Incentive of Alternative Electric Energy Sources (Proinfa) to encourage the use of other renewable sources, such as wind power, biomass, and Small Hydroelectric Power Stations (PCHs).
The importance of wind power in Brazil's overall energy matrix is reflected by the fact that wind capacity has grown at an estimated compound annual growth rate (CAGR) of 50% from 2006 to 2012. The installed wind power capacity in Brazil has grown from under 300 MW in 2006 to more than 2500 MW in 2012.
High energy production costs, coupled with the advantages of wind power as a renewable, widely available energy source, have led several countries to establish regulatory incentives and direct financial investments to stimulate wind power generation.
The number of operational wind farms has also been increasing in the country, raising the total of electricity supplied by wind power in the nation. This also speaks volumes about the high return potential of investing in the sector, which has attracted various domestic and foreign companies into the Brazilian wind power sector.
In contrast to markets such as the US or many European countries, the Brazilian wind energy market is growing strongly without the support of subsidies from the Government.
However, many project developers remain heavily dependent upon debt financing from BNDES, the national development bank. As private sector lenders enter the market, tough analysis of the risk profile of wind power projects will increasingly be applied.
The challenge remains to ramp up domestic production of wind turbines and related equipment quickly enough to meet the growing demand. Internationally, wind equipment makers have excess production capacity and many might prefer to export equipment manufactured by factories in their home nations to Brazil, rather than to establish new facilities. However, many major players have committed to building a manufacturing presence in Brazil.
For more information on the Brazilian wind power market, see the latest research: Brazilian Wind Power Market
Follow us on Twitter @CandMResearch
Companiesandmarkets.com issues news updates and report summaries covering all major industries and sectors. The service provides additional client monitoring and timely alerts to breaking industry and sector news leading the day's business headlines. News articles, written by our staff, contain additional analyst insight, providing value added insight for our readers. News updates and real-time alerts on newly-released market reports are also available from our Facebook page, Twitter feed @CandMResearch and RSS links. We also welcome inquiries from business journalists and the news media.