The Queiroz Galvão Group will invest R$3 billion in the Northeast
In an article published in the newspaper Valor Econômico on 6 Aug. 2012, the CEO of QGER talks about the consolidation of the company’s renewable energy activity in view of the volume of investments allocated to the initial phase of its projects in Brazil’s Northeast region. Read the full text below.
By Claudia Facchini | From São Paulo
Three months ago, Max Xavier Lins took on the leadership of Queiroz Galvão Energias Renováveis. The company already had a portfolio of 800MW when it was created.
The Queiroz Galvão Group operates in engineering, oil and gas, highway concessions and steel, and will invest approximately R$3 billion in wind farms in the Northeast by 2016. The first wind farm of the recently formed Queiroz Galvão Energias Renováveis (QGER) will be operational in Ceará at the end of the year, with an installed capacity of 122MW.
But the portfolio of the new company already has contracts to supply 800MW from wind power, and this positions QGER among the five biggest independent wind power generators in Brazil, says Max Xavier Lins. A former director of Elektro, Lins has also worked for Eletropaulo and Neoenergia and became CEO of the conglomerate’s new company, headquartered in Rio, three months ago.
Originally from the state of Pernambuco, the Queiroz Galvão family is following the footsteps of other Brazilian entrepreneurs who also see electricity generation from wind power as a profitable, low risk business, since supply contracts are usually both long-term and sustainable. In addition to these factors, the loans provided by Brazil's National Development Bank (BNDES) are also an attraction. BNDES finances more than 50% of the total amount invested by the companies at low interest rates.
The country’s wind power capacity is expected to grow from 340MW in 2008 to more than 7,000MW as of 2014, when several wind farms will become operational, according to the Brazilian Association for Wind Energy, Abeeólica. The participation of this segment in Brazil's energy grid is expected to jump from 1.3% to 5.3% in four years’ time.
Many of these projects are being developed by businessmen who have made their fortune in other sectors, such as the Pentagna Guimarães family, from Minas Gerais, who owns the BMG bank.
Entrepreneurs and businesses that have already invested in wind farms include the Weege family, owner of the clothing manufacturer Malwee, and the Pragma Patrimônio fund, linked to the founders of Natura. Both are members of Desa, which has just opened its Morro dos Ventos wind farm in the state of Rio Grande do Norte. The Seibel family, shareholders of Telhanorte and Duratex, entered into a partnership with Servtec for the Bons Ventos project. With wind farms in Ceará, Bons Ventos was sold to CPFL for over R$1 billion earlier this year.
Though new in the market, Queiroz Galvão Energia Renováveis has already sold the power to be produced in the wind farms the company will build. The electricity was sold both in recent auctions held by the government and in the free market, through bilateral agreements with companies whose names were not disclosed. According to Lins, QGER has also strengthened its portfolio by buying contracts from third parties in wind power auctions held in recent years.
Regarding the company’s participation in the next energy auction to be held in October, Lins says this is still to be decided. “We are waiting to see the conditions", he said. The government has not held any auctions this year due to the lack of demand, seeing that after the economic slowdown, many distributors have had a surplus of contracted energy. In the last auction, held last year, power was sold at R$112 per MWh. “But since then, the exchange rate has changed and there has been inflation", Lins said.