Engie agrees wind PPA with Claro in Brazil

The Brazilian unit of Engie has signed a corporate PPA with the Claro group, the local arm of Mexican communications group America Movil – the longest of a series of contracts that will be supplied from a 360MW wind complex the French utility will build in northeastern Brazil.

Both companies said they could not reveal the length nor the value of the contract, but it will be equivalent to 30MW in capacity, or 8% of the whole complex that will be built to supply power to some 60 companies that signed with Engie this year.

“The contract … makes feasible the construction of the second stage of the Campo Largo Complex in the state of Bahia,” Engie said a statement.

Campo Largo stage 2, as the non-regulated market project is known, is an extension of the 326.7MW Campo Largo 1 complex that was contracted in several regulated-market tenders. The final GE Renewable Energy 2.7MW machines for the complex should start commercial operations by the end of 2018.

Claro said its decision to buy wind power is aligned with the group’s long-term strategy to reduce greenhouse gas emissions, which aims to contract more wind, solar and other renewable energy sources.

The deal with Claro confirms a growing shift in Brazil to the non-regulated market by renewable energy investors to escape declining prices and low demand in regulated market tenders.

Despite the higher prices in the non-regulated market, contracts are normally shorter than the 20-year PPAs signed in the regulated market tenders – the non-regulated contracts average some seven years.

However, local players have been saying that the non-regulated deals are getting longer amid rising demand for clean power to meet companies’ own commitments, and as large groups seek lower prices in the non-regulate market.

Although wholesale prices have been declining – with wind power reaching below $30/MWh in the last tender this year, down from a traditional $50/MWh – end consumer prices have been rising at a rate of around 15% a year.

Last month for example, French utility EDF Renewables announced a 20-year wind power corporate PPA with petrochemical group Braskem.

The Brazilian Wind Power Association (ABEEólica) said that it expects over 2GW of non-regulated market contracts to be signed this year. Brazil’s total wind power capacity is now at 14.3GW, of which around 2GW are destined to the non-regulated sector.

Campo Largo stage 2 will bring Engie in Brazil past the 1GW wind power capacity mark, said Eduardo Sattamini, CEO of Engie Brasil Energia, the power generation arm of the group’s Brazilian unit.