While it expands its wind generation capacity, Brazil’s Casa dos Ventos is working to diversify its portfolio, with solar and green hydrogen projects in sight.
An important driver of the company’s growth will be a joint venture with French multinational TotalEnergies.
In addition to an investment of 3bn reais (US$570mn), the partnership with the company should reduce debt capital costs, improve conditions with suppliers, and expand its customer base, the director of new business at Casa dos Ventos, Lucas Araripe, tells BNamericas.
In this interview, he sheds light on the plans and comments on the company’s business prospects.
BNamericas: What is the importance for Casa dos Ventos of the joint venture with TotalEnergies? What are the expected impacts for the company’s business?
Araripe: We tried to structure the business to maximize the complementarity between the companies. TotalEnergies joins a company that will have 1.7GW in operation and construction and 4.5GW in development. In addition, we have other projects in the pipeline that may be purchased by the JV.
We capitalized ourselves with more than 3bn reais with the entrance of TotalEnergies. It’s an important injection of capital, we’ll be able to have more equity to continue growing and have corporate guarantees to reduce the cost of capital with debt, for example with debentures. This gives us more robustness and reduces the need for bank guarantees.
Since TotalEnergies is a global company, we may be able to access better conditions with suppliers. And it has a giant portfolio of clients, including in Brazil, which could improve our PPA [power purchase agreement] client portfolio.
There’s also the issue of intellectual capital. TotalEnergies has 200 traders in Geneva with sophisticated systems and lots of technology. They already have green hydrogen pilot projects in other regions, so they bring a lot of knowledge in new energy frontiers.
BNamericas: What’s the status of Casa dos Ventos’ power generation projects in the country?
Araripe: We have two projects in operation, one of 150MW in Bahia and another of 504MW in Rio Grande do Norte. And we’re assembling the wind turbines for phase 2 of this undertaking in Rio Grande do Norte, which will add 534MW.
In addition, we have a 360MW project in Bahia whose turbines are being commissioned.
So we have, today, about 700MW in operation and another 1GW that will come into operation by next year. We’ll reach the middle of 2023 with 1.5GW, with another 200MW starting operations in 2024.
Besides the 1.7GW contracted, we have 4.5GW from the joint venture, of which 3GW we intend to put into operation in 2025. We’re negotiating machines, starting to work with potential PPA customers.
And in parallel, we’re working on structuring a 400MW stand-alone solar plant and a hybrid solar unit, combined with a wind project.
We see potential to reach 6.2GW with the joint venture in 2026 and 2027.
BNamericas: Besides [development bank] BNDES, has the company sought other sources of financing?
Araripe: It’s a mixture. We have BNDES as a possibility, and BNB in the northeast region. We’ve been working along the lines of a recent project that has resources from Sudene [superintendence for the development of the northeast] with Banco do Brasil, besides issues in the capital market, which, with TotalEnergies’ guarantee, reduce spreads and give more flexibility for the movement of resources.
BNamericas: How has Casa dos Ventos been dealing with the increase in the cost of the projects, in view of the rise in inflation and interest rates?
Araripe: In fact, the new projects for energy generation are more expensive than one or two years ago, but we’ve been selling a lot the solution of self-production of energy, in which the partner is involved in power generation, obtaining exemption from charges. We still see the self-production model as something optimized from the point of view of total energy cost.
And there are the commitments to reduce gas emissions on the part of the companies [which must, therefore, contract renewable energy].
Today we see the situation with a capex stabilization bias. We imagine that the biggest upswing has already passed.
BNamericas: What will be the position of Casa dos Ventos with the opening of the energy market?
Araripe: The strategy is to reach medium-sized clients, and then the retail market. We’ve structured a commercial front that has sought to participate in competitive processes of quotations with potential clients. We have a team in the northeast dedicated to prospecting customers, and we’re studying how to simplify, in a digital way, the sale of energy.
But considering our growth goals, we have to make structured partnerships with electro-intensive agents that anchor large plants, leaving part of our energy uncontracted to serve other customers, either with our own team or via partnerships with companies that already have a customer channel for us to sell energy and services.
BNamericas: Casa dos Ventos closed a partnership with Comerc in 2021 to develop green hydrogen projects. What’s the status of this initiative?
Araripe: It was an agreement to seek opportunities together, both offtakers and project development. We already have areas under study in Pecém [in Ceará], Aratu [Bahia], Suape [Pernambuco] and Açu [Rio de Janeiro] ports.
These are pilot projects to produce hydrogen to supply some industries in Brazil, not necessarily for export. It’s a market that is just beginning, and we’re mapping this market.
BNamericas: Does the company have plans for internationalization?
Araripe: We have many challenges here in Brazil, where we have a giant pipeline, including the potential for market opening. The JV has exclusivity for wind and solar, hydrogen, and green ammonia in Brazil. We have a very interesting competitive condition in Brazil, having already mapped out areas, with a team that understands the regulatory and environmental issues very well. We’d hardly have this condition in relation to the competition in other countries.
BNamericas: Is offshore wind on your radar?
Araripe: Offshore wind has a much higher cost. We have a lot of potential on land, so you don’t have to pay that extra cost, considering civil and electrical infrastructure. We don’t think it makes sense, unless it’s something with government subsidies and dedicated auctions. If there’s some kind of incentive, we can study it.
Source: bnamericas
