In recent years, Brazil has witnessed various debates highlighting the need to diversify its energy matrix. Today, this debate has become a consensus: diversifying the matrix is a key issue for the energy sector and the country's energy security. The EPE (National Energy Agency) points out that energy demand will have tripled by 2050, and working with diverse sources is undoubtedly one of the measures to ensure supply.
GE, through its vast energy portfolio, seeks to optimize the productivity of the Brazilian electrical system. The company's equipment generates 33% of all the energy produced in the country, exceeding 47 GW. This energy is more than enough to power a country the size of Argentina.
A large portion of GE's investments in Brazil are focused on wind energy. We've been in this market since 2009, and today we're the largest wind turbine manufacturer in the market.
Brazil has just reached the iconic milestone of 10 GW of installed wind capacity, distributed across 400 wind farms and more than 5,200 wind turbines. The country boasts some of the best wind conditions in the world. In addition to its sustainable potential, wind power is also among the most cost-effective energy sources compared to solar and biomass.
Scheduled for December 19th, the Reserve Auction (2nd LER 2016) for wind and solar energy procurement was canceled just days before it was scheduled to take place. This auction was expected to significantly boost the supply chain, with an estimated R$8 billion in investment and the creation of at least 15,000 jobs. In 2016, the wind industry generated 35,000 jobs. In 2015, it generated 41,000 jobs. Without new energy procurement, the sector cannot sustain itself.
We have a very important point to discuss here. Considering the characteristics of Brazilian wind, which complements the hydroelectric regime, the tariff for the end consumer tends to be lower due to the shift in thermal power plant dispatch. Therefore, the calculation should be made to ensure that the non-execution of the LER does not burden the tariff, but rather alleviates it. The sector does not yet have these figures ready, but it would be essential to address this issue to ensure better-informed decisions.
GE, like other companies in the sector, is committed to investments that involve the entire production chain. However, equipment suppliers for the wind power generation industry need predictability when government contracts for projects. The energy auction must not only address immediate demand but also efficiently plan future supply.
This early cancellation damages the image of Brazil and the sector on the international stage, in addition to compromising the country's attractiveness. We believe a new auction is essential and, in our view, should take place in the first half of 2017. Sector planning requires security and reliability so that all stakeholders can develop the best projects for the country.
*This content was originally published on LinkedIn.
