Queiroz Galvão creates energy trader to facilitate the commercialization of 1GW in the free market
In line with the market trend for generators focused on energy production based on incentives, such as Renova Energia, and for large-sized generators, such as Tractebel and CPFL Energia, the Board of Directors of Queiroz Galvão Energias Renováveis has recently decided to enter the commercialization segment to ensure an alternative way to expand and avoid depending exclusively on regulated auctions promoted by the government.
Its aggressive plan establishes the trading of approximately 1GW of installed capacity from wind farms and small hydroelectric power plants by 2017. The company believes that a portfolio of complementary sources combined with new financing solutions will break down the barriers to the implementation of these projects in the free contracting environment. Today, there are obstacles to obtaining long-term Power Purchase Agreements (PPAs) to be used as loan guarantees.
Max Xavier Lins, the company’s CEO, explains that their portfolio of new projects already has 800MW generated by wind farms, of which 122MW come from farms negotiated under the regulated environment and the remaining power can be sold to free agents. The wind farms are located in Brazil’s Northeast region, in the states of Ceará and Rio Grande do Norte. Additionally, around 300MW from conventional hydroelectric and small hydroelectric power plants will also be sold in the free market.
“Due to the complementary nature of this portfolio, with different submarkets and seasonality curves, it is natural to consider commercialization. It maximizes our position”, the CEO told Agência CanalEnergia. The trading company is due to become operational in the first quarter 2013, so all legal and regulatory procedures for forming the new company have already been initiated.
According to Lins, financing for the construction of the wind farms may include loans from the most important financing agent in this market, Brazil's National Development Bank (BNDES). But he believes other financing sources may be available. “We are still studying this. Part of the investment will come from equity, part will come from loans. There might be other players, and we are going to look for them”, he said.
Lins said that some free market contracts have already been signed involving free consumers, generators and trading companies. “We are developing our portfolio with long-, medium-, and short-term PPAs”, he said. The strategy consists in securing a number of contracts that justifies the construction of a plant. “If you don’t have this, you will depend on the auctions, and they are very competitive and pose uncertainties, such as whether or not a tender will be conducted”, said the CEO, who has worked for Elektro and Eletropaulo and was one of the creators of the trading company Neoenergia in the early 2000’s.