Brazil Offshore Wind wants industrial policy to guarantee demand

(epbr) As of July 14, IBAMA had applications for licensing for 78 offshore wind projects, adding up to 189 GW of capacity with the installation of around 13,000 turbines on the Brazilian coast – this is almost the total power of energy installed in the entire country (194 GW).

To get the projects off the ground, the market awaits the approval of regulatory frameworks capable of guaranteeing legal certainty for investments.

One of them is bill 576/2021 passed in the Senate and now in the House. Among the main rules that need to be defined are the model for assigning areas, charging for grants and the criteria for holding auctions.

But beyond these definitions, businessmen defend an industrial policy that helps to establish a low-carbon production chain in the country and, with it, the demand for energy generated on the high seas.

“Brazil needs to create incentive mechanisms for new industries”, argues Elbia Gannoum, CEO of Abeeólica.

“This is an incentive package. Regulation is one of them. The long-term logic is another. And the willingness to pay for technology for what it is worth is another”, she adds.

That’s where green hydrogen comes in, as a potential anchor consumer of offshore electricity.

According to the executive, what worries the industry the most today is the pipeline. “What we need is to have a logic for future hiring. This is how we are going to bring a new industry. And we can only do that in the concept of green industrial policy”.

Low Carbon Industry

Citing the Lula government’s agenda for neo-industrialization, Gannoum believes that the creation of a new decarbonized industry for Brazil will attract demand.

For this, it will be necessary to regulate the carbon market, green hydrogen, offshore wind and approve the tax reform.

“That big package is our IRA (the US Inflation Reduction Act) from an energy point of view. If we go along with all that, the other questions come. We don’t need to worry about demand, because hydrogen will be the demand answer for Brazil and the various economies of the world”.

In the United States, Joe Biden’s government package is allocating US$ 430 billion in subsidies to stimulate the energy transition on different fronts: new energies, electrification, carbon capture, efficiency, among others.

Around here, the Ministry of Finance is preparing a package with more than 100 actions, integrating other Government portfolios to encourage the ecological transition and green neo-industrialization.

Regionalizing Hydrogen Production

Analysis by consultancy Wood Mackenzie projects nearly US$ 1 trillion in investments for the offshore wind industry in the next decade, with capacity reaching 330 GW, almost ten times the 34 GW registered in 2020.

In addition to falling costs and gaining competitiveness – the first contract for an entirely subsidy-free offshore wind project was signed in December 2021 in Denmark – projects are partnering with hydrogen hubs to finance themselves.

Ricardo de Luca, director of Corio Brasil, observes that offshore wind tends to regionalize hydrogen production, by allowing the use of energy independent of the expansion of transmission lines.

An arm of the green investment fund Green Investment Group (GIG), owned by Australia’s Macquarie, Corio plans to build, in partnership with Brazil’s Servtec Energia, five offshore wind farms in Brazil. The developments total 5 GW of installed capacity.

The portfolio includes the Northeast Coast (CE) projects, with a minimum capacity of 1.2 GW; Vitória (ES) with 500 MW, and Rio Grande (RS), with around 1.2 GW each of the three parks.

In addition to generating electricity through offshore generation, Corio is also looking at green hydrogen and ammonia production and export hubs.

The company already has 20 GW in offshore wind projects under development around the world, in countries such as South Korea, Taiwan, Japan, Ireland and the United Kingdom.

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