Siemens Gamesa Is Said to Be in Talks on 700-Megawatt Wind Deals

(Bloomberg) -- Siemens Gamesa Renewable Energy SA is in final negotiations to supply about 700 megawatts of wind turbines for power plants in Brazil, according to people familiar with the talks.

The deals are to supply equipment for projects that Voltalia SA, EDP Renovaveis SA, Enel Green Power SpA, and Neoenergia SA are developing in northeast Brazil, according to the people, who asked not to be identified because the negotiations aren't public. The orders are all for wind farms that won government-organized power auctions in December.

The orders may be worth as much as 2 billion reais ($619 million), according to estimates from Helena Chung, an analyst at Bloomberg New Energy Finance. Gamesa, Enel and Neoenergia declined to comment Friday. Voltalia said it has an agreement with a supplier and declined to provide additional information. EDP didn't reply to inquiries.

Brazil held two power auctions last month. The economy is starting to recover and electricity consumption is rising, spurring interest in new power plants. 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, according to Brazil's Electric Energy Trading Board. Brazil is seeking to to increase installed clean-energy capacity by 19 gigawatts by 2026 to diversify the local grid.

Competition at the auctions was stiff, with wind companies winning contracts to sell power at an average price of 98.62 reais ($30.53) a megawatt-hour -- 64 percent below the ceiling price and a record low in the country. In Brazil's energy auctions, organizers set a maximum price and developers bid down the amount for which they're willing to sell power, with the lowest offers winning contracts.

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 are reflect the pent-up demand for wind power.

Siemens-Gamesa has 2.7 gigawatts of turbines installed in Brazil and 83 gigawatts installed globally.

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

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Will Wade, Joe Ryan

©2018 Bloomberg L.P.