Bloomberg News

Alstom Wins $1.35 Billion Turbine Deal as Renova Drops GE

February 06, 2013

Alstom SA, the biggest maker of hydropower equipment, will provide Renova Energia SA with more than 1 billion euros ($1.35 billion) of wind turbines in South America’s largest order as the Brazil-based developer drops current supplier General Electric Co. (GE:US)

Alstom will provide Renova Energia with 440 onshore turbines with 1,200 megawatts of capacity starting in 2015, the companies said in a joint statement today. Delivery will take three to four years.

Alstom is usurping GE as Renova’s principal supplier as demand for wind power surges in Brazil. It’s the region’s biggest turbine deal to date and will let the Levallois-Perret, France-based power-equipment maker invest in its South America supply chain to achieve economies of scale, according to Renova Energia Chief Financial Officer Pedro Pileggi.

“The deal put on the table by Alstom was better” than Renova’s contract with GE, Pileggi said in a telephone interview today. “Price is always important. By providing manufacturers with long-term planning capabilities they’re able to reduce costs.”

Renova Energia agreed to buy 230 GE turbines for wind farms that won contracts to sell power in government-organized auctions in 2010 and 2011, Pileggi said.

The developer will use Alstom turbines for 400 megawatts of wind farms it will build in partnership with the Brazilian utility Light SA by September 2016, and for a 22-megawatt project that received a contract to sell power in a government- organized auction last year.

Renova also expects to sign contracts to sell power from 122 megawatts of wind capacity to factories and other large energy consumers by June. Alstom will provide turbines for those projects and about 650 megawatts of other wind farms that Renova will build by 2019, Pileggi said.

Emerging Markets

Alstom will double production at its factory in the northeastern city of Camacari to fulfill the order, he said. GE didn’t immediately reply to calls and an e-mail from Bloomberg News seeking comment.

Alstom’s energy business is focusing on emerging markets where economic growth is fueling demand for new power plants, Lionel Pellicer, an analyst at Paris-based equity research company AlphaValue SAS, said today in a telephone interview.

“The hotspots for Alstom are in Asia and Latin America because these countries are growing at high speed,” he said. “This is a very big deal” for its energy business.

Demand Doubling

Demand for wind turbines in Brazil will more than double this year to 2,024 megawatts from 732 megawatts in 2012, according to data compiled by Bloomberg. Wind farms account for about 1.5 percent of Brazil’s installed capacity, according to the country’s power regulator.

“Two years ago, virtually all of our onshore wind turbine sales were in Europe,” Jerome Pecresse, president of Alstom’s renewable power unit, said in an interview today in Sao Paulo. “Now, more than half are in Latin America.”

Brazil will add about 2,000 megawatts of wind farms to its grid every year and is on track to get as much as 10 percent of its power from wind by the end of the decade, Pecresse said.

“This partnership is very ambitious,” Pecresse said. It “provides for a significant amount of volume.”

To contact the reporter on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


Too Cool for Crisis Management
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • GE
    (General Electric Co)
    • $25.57 USD
    • 0.13
    • 0.5%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus