SPOTLIGHT | Brazil’s gigascale offshore wind boom looms – but will vision match reality?

September 22, 2023
4 min read
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Though regularly topping industry lists of markets to watch, policy uncertainties still facing the sector means Brasilia’s next move – a framework promised by December – will be key to getting steel in the water in Brazil soon, writes Signe Sørensen

Believers in Brazil’s future as a major offshore wind province have had reasons for cheer in the past fortnight, with the country’s Minister of Mines & Energy, Alexandre Silveira, announcing that a long-awaited policy framework for the sector will be ready ‘by December’, and state-owned petrogiant Petrobras declaring it was entering the market with plans for a whopping 23GW of solo-projects.

Brazil – one of the world’s most prolific offshore oil & gas basins – has emerged brightly on the global wind industry’s radar in recent years. Big hitters including Shell, TotalEnergies, Corio, OceanWinds and Equinor are among the developers which currently have licensing applications in with IBAMA, the national institute of environment and renewable natural resources. Including the ten projects now announced by Petrobras, IBAMA now contends with a queue of projects wanting environmental licenses tallying 88 projects with a total capacity of 207GW.

Visualization of Brazil's offshore wind project pipeline. Brazil’s offshore wind pipeline swells to more than 200 GW after national oil firm Petrobras announces ten giant projects across the three active offshore wind areas.
BRAZILIAN BONANZA: Brazil’s offshore wind pipeline has grown to more than 200GW after state-owned oil firm Petrobras announced ten giant projects across the three planned zones (MAP: Aegir Insights)

On the surface, all signs point to Brazil’s offshore wind market being about to boom. But it is important to keep in mind that most of these projects will never materialize due to:

  1. Acreage overlaps. By IBAMA’s mapping, 24 offshore wind developments currently overlap. Excise those development that fall into this category and the figure is closer to 140GW.
  2. Open-door opportunism. Brazil has so far functioned as an open-door market with very low entrance barriers. The large number of projects planned therefore partly stems from developers wagering early commitment off Brazil will pay dividends when the market does take off. And as it’s inexpensive to put in application to IBAMA, pulling out before cash bids for seabed rights or more firm project plans are required remains a low-cost out.
  3. Development will be pace-checked by limited offtake options. A route to market is key for offshore wind projects, but as of today it is unclear how power produced would be sold – into the regulated or the free power market? Via some type of government-supported auctions, or will power purchase agreements (PPAs) with private commercial buyers be the primary way to go? Clarity on this is needed.

Despite these uncertainties, bullish interest from international developers in the Brazilian play could mean that in the end seabed rights are eventually allocated through auctions instead of open-door award, to judge by a bill being reviewed by Brasilia that would make auctions with cash bids the allocation method for areas where two developers or more are interested.

Headshot Signe round

'Brazil – one of the world’s most prolific offshore oil & gas basins – has emerged brightly on the global wind industry’s radar in recent years.'

Signe Sørensen
Senior Research Analyst
Regional Lead Americas
Aegir Insights

This could make for risky business in an emerging market such as Brazil, where industry might be disinclined to put money on the table for unexplored development opportunities of unknown value due to unclear offtake options. That said, Petrobras’ entry into the race alongside Big Oil and Big Power developers might increase the chance of bidders having cash to splash on a seabed auction.

December will bring with it greater lucidity as to how this promising energy play will shape up – and how many of Brazil's 88 projects will double-down on this big offshore wind bet versus how many fold and walk away.

Interested in more information on Brazil's offshore wind market? At Aegir Insights, we recently updated our subscriber-access market reports on Brazil, including project overviews, estimated LCoE levels and insights into potential seabed allocation methods.​ Reach out to us to learn more about Aegir Insights’ market intelligence service including our Auction Intelligence.

This article was first published in Aegir Insights' offshore energy intelligence newsletter, Beaufort.

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