Local-content rules designed to boost Brazil’s domestic wind-turbine industry may drive up the price of equipment, according to renewable-energy developers.
Turbine makers including General Electric Co. (GE:US) and Gamesa Corp. Tecnologica SA (GAM) may raise prices as much as 20 percent in Brazil to cover investments in the country’s domestic supply chain and comply with policies that took effect last month, said Renato Volponi, country manager for EDP Renovaveis, the renewable-energy unit of Portuguese utility EDP-Energias de Portugal SA.
International wind-turbine makers with plants in Brazil are required to source at least 60 percent of their components from domestic suppliers and must produce or assemble some of the main elements within the country. The policies will spur local industry and may also boost electricity rates, said Antonio Luiz Curioni Vieira de Barros, director of commercialization and new business at Dobreve Energia SA.
“The effect of all this will be the price of energy in Brazil rising,” de Barros said today at at a conference in Sao Paulo. “I don’t know how companies will comply with these new requirements within their time frames.”
Some companies may decide to exit the Brazil market rather than comply with the rules, said Mathias Becker, president of Renova Energia SA. (RNEW11) He expects the number of turbine makers in Brazil to fall to about five in two years from more than a dozen now, as companies decide not to invest in local factories to participate in the market.
“Many companies are still deciding whether they should stay or go,” he said. “The price of equipment is going to go up as will tariffs.”
Brazil’s national development bank Banco Nacional de Desenvolvimento Economico e Social is restricting financing for developers seeking to buy turbines from companies that don’t comply with the local-content rules.
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