Nordex to Start Brazil Wind Factory in Bid to Boost Market Share

(Bloomberg) -- Nordex SE, a German turbine supplier, plans to build a wind-tower factory in Brazil in a bid to boost market share as demand grows in the wake of the country's economic crisis.

The new production plant -- the company's fifth in Brazil -- will have capacity to construct 80 towers a year able to support 250 megawatts of wind turbines, according to Daniel Berridi, head of Nordex's Brazil unit. Located in the northeastern state of Piaui, it's intended to make the company more competitive, with a goal of 25 percent market share.

“Nordex is well-positioned in Brazil, with a market share of 15 percent,” Berridi said in a telephone interview from Sao Paulo. “We want our share to grow and it is possible after two new power auctions the Brazilian government is planning for this year.”

Brazil's economy is starting to recover and electricity consumption is rising, spurring interest in new power plants. The government organized two power auctions in December and developers won contracts to sell power from 51 planned wind farms, which will add a total of 1,450 megawatts of capacity to the country's grid. Brazil is planning other two power auctions this year as it seeks to increase installed clean-energy capacity by 19 gigawatts by 2026 to diversify the local grid.

Nordex is investing about 30 million reais ($9 million) to build the factory, which can also be used to supply towers for other projects and companies. The production unit will initially support 65 wind turbines that the company manufactures close by, in another factory in Bahia state, and will add to a new wind complex of 195 megawatts capacity. The Lagoa do Barro project, planned to begin operating in January, is owned by Atlantic Energias Renovaveis SA, a unit of the London-based private equity investor Actis LLP, and is estimated at 1.3 billion reais.

Tough Competition

“Our competitors in Brazil are really tough,” Berridi said. “The fight is basically for price.”

In the last two power auctions, Brazil saw its wind prices reach record lows. Wind companies won contracts to sell power at an average price of 98.62 reais a megawatt-hour -- 64 percent below the ceiling price.

The auctions were the first in two years for wind companies, after the government canceled two auctions in 2016 as the recession curbed electricity demand. That stifled the supply chain for turbine manufacturing in Brazil, and the new deals reflect the pent-up demand for wind power.

“I guess the environment is now better, with new auctions in the horizon,” Berridi said. “We are also growing in other parts of Latin America, but Brazil's volume is really relevant for the company.”

To contact the reporter on this story: Vanessa Dezem in Sao Paulo at vdezem@bloomberg.net.

To contact the editors responsible for this story: Joe Ryan at jryan173@bloomberg.net, Margot Habiby, Will Wade

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