Vestas is among the losers in Brazilian wind power auction - report

Sep 12, 2011 - Danish wind turbine maker Vestas Wind Systems A/S (CPH:VWS) is among the big losers in the most recent auction of wind power projects in Brazil, according to Bloomberg New Energy Finance (BNEF), cited by Danish newswire Ritzau Finans.

Vestas has not yet received any contracts under the bidding round for 1,929 MW, half of which has already been distributed to other wind turbine makers.

So far, the main losers have been Vestas, Suzlon (BOM:532667) and Wobben, a subsidiary of Enercon GmbH, as very few of their customers managed to secure contracts under the bidding round, BNEF said, adding, however, that it still expects news regarding these players in the next months.

The biggest winner in the auction until now is General Electric Co (NYSE:GE), which has secured orders for a total 310 MW out of the 1,000 MW that have been distributed. It is followed by Gamesa (MCE:GAM), IMPSA and French Alstom SA (EPA:ALO).

BNEF noted that the contracts for wind turbines usually include so-called break clauses, giving producers the chance to terminate the contract if their customers offer prices under certain levels, typically USD 70 (EUR 51.45) per MWh during an auction.

Considering the fact that the average winning bid in the auction was USD 63 per MWh, many of the already signed contracts will be renegotiated and probably with different suppliers, BNEF said. This means that wind turbine prices will drop by a further 15% to USD 1.2 million per MW. This additional price fall will be difficult to handle, especially by local producers, which buy steel at a lot higher prices than in the global market. BNEF also notes that transport and installation costs are also higher in Brazil.

All this could open the doors for Chinese wind turbine makers, which could theoretically sell their products at some USD 1.12 million per MW in Brazil.

(USD 1.0 = EUR 0.735)

Choose your newsletter by Renewables Now. Join for free!