There’s no denying that Brazil’s new far-right president, Jair Bolsonaro of the Social Liberal Party, is a controversial figure. A vocal opponent of environmental protection, same-sex marriage, and immigration, Bolsonaro is also an advocate of guns and has defended the use of torture and the death penalty. Not so social or liberal.
But here at A Word About Wind, we’re going to focus more on his environmental and energy policy – although Bolsonaro and his team have been tight-lipped on details.
We know that, during campaigning, Bolsonaro pledged to pull Brazil out of the Paris Agreement on climate change, but made an abrupt volte-face just days before the second round of voting. This implies his other pledges may also be subject to short-term changes. This brings uncertainty, and we’re sure investors will be taking note.
And, as an opponent of environmental protection, it is little surprise that wind farms get much of a look-in in his manifesto. Bolsonaro has said that he would support the transition to renewable energies but, in his manifesto, wind power is mentioned only twice and solar once. Renewable energy is clearly not a priority.
It’s not hard to see why. Bolsonaro’s rise to power came against a backdrop of economic crisis, rising unemployment, increasing violence and murders, and a deepening distrust of politicians due to corruption scandals.
With Brazil suffering 13% of all global homicides, the most urgent matter at hand is combating the rise of violence. Bolsonaro, who was himself the victim of a stabbing in September, knows this all too well.
Perversely, though, that lack of attention could be good news for renewable energy. The new administration has bigger priorities, which means that it may avoid tinkering with the country’s existing renewable energy tenders and policies.
Just think Trump. Our observations of the US market over the past two years have taught us that, with the right investment conditions and expertise, wind markets can be successful under ambivalent, or even hostile, leadership.
And Brazil’s wind market is still a promising one. Over 2GW of capacity was installed in 2017, taking the country’s total to 12.8GW. This is around the same as European markets such as France and Italy, and way ahead of Brazil’s immediate neighbours. Chile and Uruguay are the next-biggest Latin American markets with 1.5GW each.
With Brazil boasting some of the best wind resources on the planet, leading players in the global wind markets have been keen to invest. Vestas has made nacelles for the V110-2.0MW platform in the state of Ceará since 2016 and will soon expand this capability to its V150-4.MW turbines.
Vestas and others will now be hoping that there is no change to Brazil’s renewable energy auctions under Bolsonaro’s leadership. The latest auction, held in April of this year, awarded support for 114MW of wind projects, with average prices reaching an all-time low of £0.014/kWh. This was only a small tender and prices this low are a cause for concern for some firms, but they also show Brazil is highly competitive.
We don’t expect Bolsonaro to become a champion of Brazil’s wind market – but that is no big problem as long as he isn’t trying to actively damage it. Hydro accounts for 80% of the country’s electricity needs: renewables are a way of life for the Brazilians.
But the market will have to contend with political upheaval. Bolsonaro thinks that his plans to relax gun laws will curb violence in the country. We are inclined to disagree.
And with Brazil facing uncertain times, flexibility from foreign investors and local businesses alike will remain crucial. That’s one thing that won’t change.
The Irish Government has unveiled changes to its second offshore wind tender that the industry said have created “massive levels of uncertainty”. We look at what this means for the up-to-80GW of offshore wind projects in development in Irish waters.