Brazil to drive South American offshore wind growth despite Bolsonaro's 'mixed signals'

Brazil is set to rapidly gain momentum as a major offshore wind province in the coming decade, underpinned by growing government support and an industrial supply chain “revving up” for business, with as much as 1.3TW of technically harnessable resource up for grabs, according to a new sector report from Aegir Insights delving into the potential of the sector off South America.

The Danish analyst group said the country, which has a history of onshore wind and solar development, could see bottom-fixed offshore projects producing at a levellised cost of energy (LCOE) as low as €54/MWh ($63/MWh) in its gusty northern waters and both fixed and floating arrays off its central Atlantic coast operating at a pricier LCOE made economic by demand from urban centres such as Rio de Janeiro.

Brazil’s north-eastern region, where winds travel at 8-10 metres per second (m/s) over waters of under 50 metres, would be “well-suited” to bottom-fixed developments, she noted, while its central and southern areas have similar wind velocities and depths that would be a fit for both bottom-fixed and floating arrays, though the latter at LCOEs of closer to €100/MWh.

Nørgaard notes while “the [Jair] Bolsonaro government has sent mixed signals [so far], offshore wind development still looks like a priority”, spotlighting seven projects, including developer Eólica do Brasil’s 5GW Asa Branca, which are in the environmental licensing phase.

Aegir calculates 580GW of bottom-fixed wind capacity potential and 812GW of floating off Brazil, with first projects reaching construction start in 2028.

“Argentina has low fixed-bottom LCOE-levels making it attractive to explore further in the northern and central part… and its sites [in deeper water] are generally competitive with other [international floating wind] markets at around €86-89/MWh.

“The former president, Mauricio Macri, was pro-renewables and during his term many onshore wind projects were initiated,” said Nørgaard, “But though Argentina has a goal of 20% renewable energy by 2025 and 35% by 2030, current president Alberto Fernandez hasn’t furthered the energy transition notably. This could be because of Covid-19 and financial issues taking focus.”

While the country has yet to announce development of a first offshore wind farm there are “plenty” of onshore projects are in the pipeline including the in-development 354MW Loma Blanca complex, she said, and “if Fernandez starts boosting renewables, offshore wind interest will likely grow regardless”.

“Pending build-out of other renewables, financial uncertainty and a lack of port and grid infrastructure push an offshore wind build-out to the mid-2030s,” Nørgaard added.

The Aegir report picks out Colombia as a possible surprise package in the continent’s offshore wind evolution, given its “strong wind resources and a need to wean the country off hydro-power”, highlighting technical potentials of 43GW of bottom-fixed and 111GW floating wind.

Nørgaard said that while “no target for offshore wind [has been set by the Colombian government”, its targets for non-hydro renewables and the mention of offshore wind in the country’s energy plan send a positive signal” for the country, which has a first 200MW bottom-fixed project in pre-feasibility study stage.

“After a late start in the non-hydro renewables race, Colombia could overtake Argentina and see offshore wind build-out in ten years’ time,” she noted.

“Offshore wind offers an extensive potential in South America as several countries have a vast technical potential,which could help meet the rising energy demands in many countries,” said Nørgaard. “The annual growth rate is estimated at 2% until 2040 providing a basis for long-term investments.“Several countries have high wind speeds and long coastlines enabling high technical potential for offshore wind to satisfy rising energy demands.”

The continent’s burgeoning onshore wind industry,” she added, could “enable dynamic spill-over effects in offshore wind as developers have local know-how and suppliers have begun establishing themselves” in the region.

“The foundations for an emerging offshore wind industry are present, namely wind resources and a growing electricity demand, and investors and developers should pay close attention to policy developments, as this is the missing piece in a clear route-to-market for offshore wind in the region.”

Nørgaard noted that beyond the accelerant effect of any South American governments’ “initiatives for supply diversification”, there were three other key potential drivers to bring offshore wind to market, namely, hydrogen – where “the ‘molecular’ route which could ship globally – hydrogen, ammonia – given that some regions have amongst the highest accessible wind speeds in the world, oil sector decarbonisation, and a desire to find future use of related industrial infrastructure and services”.