SAO PAULO (Reuters) - The Brazilian unit of French gas and power group Engie SA is in negotiations to set up contracts forward-selling wind power that would allow it to build wind farms with 300 megawatts of capacity, its chief financial officer said on Friday.
Engie Brasil Energia is negotiating the contracts on the so-called free market that would allow it to build new wind farms without going through Brazilian government auctions, its CFO Carlos Freitas told Reuters in an interview.
“We are already closing contracts and aim to reach a critical mass that will make the investment viable,” Freitas said. “We hope to make an announcement soon.”
Fierce competition in Brazil’s regulated energy market depressed wind power contracts last year to record lows of 67.60 reais per MWh. But on the free market, medium-term contracts can be signed for 170 reais per MWh, according to the BBCE electronic trading platform.
“The prices from the auctions on the regulated market are not attractive for us, so we prefer to focus on the free market where we are have the advantage of being the biggest player in Brazil,” Freitas said.
Large wind farms that Engie is building already allow economies of scale that bring down costs but require heavy investments, he said.
The 360 MW Umburanas wind farm complex in the Brazilian state of Bahia, which has 70 percent of its future energy output already sold on the free market, involves investment budgeted at 1.8 billion reais.
Phase 1 of the Campo largo complex, also in Bahia, will cost 1.7 billion reais to build, with a 160 MW capacity, half of which has already been contracted, he said.
Reporting by Luciano Costa; Editing by Sandra Maler