18/12/2013 back

Queiroz Galvão plans to invest R$6 billion in wind farms by 2020

Published in Valor Econômico on 12 Dec 2013

Queiroz Galvão plans to invest R$6 billion in wind farms by 2020, says the CEO

Queiroz Galvão Energias Renováveis (QGER), the operational arm of the building company for the renewable resources market, plans to invest R$6 billion by 2020 to reach the target of 1,450 megawatts (MW) of installed capacity. As part of this effort, its first wind farm, the Icaraí complex, in the state of Ceará, will become commercially operational in January, producing 65.1MW.

At the start of the month, the Brazilian Electricity Regulatory Agency (Aneel) authorized tests to begin at the wind farm, which is located 170km from the city of Fortaleza. “When the operational tests are completed, we will request a commercialization authorization from Aneel", the company's CEO, Max Xavier Lins, told Valor.

Queiroz Galvão also plans to start operational tests in January for two other large wind farms in the same state that are currently under construction: Taíba, with 56.7MW, and Amontada, with 75.6MW. Investments for the three projects total R$700 million.

QGER is also establishing a fourth wind farm to produce 145.8MW in the state of Rio Grande do Norte. Called Riachão, the project is expected to become operational in November 2014. And the construction of a fifth project in the state of Piauí to produce 400MW is planned to start in the second half of the next year.

These five wind farm complexes are the first step in investments by QGER totaling around R$3 billion and almost 800MW of installed capacity, as Valor informed in August. According to QGER’s CEO, the first wind farms to become operational (Icaraí and Taíba) are the result of the first reserve energy auction held in 2009 and were negotiated at the time at R$142 per megawatt hour (MWh) – or approximately R$174/MWh, if adjusted to today’s price.

The other projects will focus on the free market. According to Lins, QGER has already secured long-term energy supply contracts to ensure the feasibility of the complexes. “Nobody makes an investment of this magnitude before securing a contract”, said the chief executive. Earlier this year, Queiroz Galvão created an energy commercialization company to intermediate contracts in the free market.

“In addition to managing its own portfolio, it [the commercialization company] is expected to secure contracts that will allow us to expand our generation plants”, Lins explained.

According to the chief executive, the free and captive (regulated) environments are two of three ways to expand a business in the renewable sources market. The third way is to acquire companies in the sector. QGER’s CEO believes the wind power market will still go through a consolidation process and only a fewer number of larger-sized competitors will remain.

“This [the sector’s consolidation] will happen in the next five or six years. A company will only be competitive if its scale allows it to reduced fixed costs”, he said. To that effect, the company has created an integrated operations center for the Fortaleza wind farms to operate them remotely and reduce costs.