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Wind farms for centralized energy generation

Photo by Shutterstock

Wind farms for centralized energy generation

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Renewable Resources and Alternative Energy
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Alternative Energy
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Short Term (0–5 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Brazil's wind energy potential is 500 MW, of which only 11 GW is currently installed
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Responsible Consumption and Production (SDG 12) Climate Action (SDG 13) Life Below Water (SDG 14)

Business Model Description

Provide project financing for large-scale wind generation in farms equipped with advanced turbines, to provide either local power (e.g. for adjacent factories or households) or sell into the national energy grid

Expected Impact

This IOA will generate new sources of income and employment for women Contribute to energy security in Brazil through renewable sources

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Rio Grande do Sul
  • Brazil: Bahia
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Renewable Resources and Alternative Energy

Development need
Sustainability Development Report 2019 gives a score of 91.7 on SDG 13 (Climate Action) for Brazil, with 'Significant challenges remaining' subscores prevalent across indicators. (1) Brazil faces the risk of an energy blackout over the next decade due to increased energy demand driven by population and economic growth (2)

Policy priority
Brazil's National Energy Plan (PNE 2030) stresses the need to meet the increased energy demand over the next years and to diversify the electricity mix, favoring renewable energy (3) (4)

Gender inequalities and marginalization issues
Research in Brazil demonstrates that in rural areas, girls are 59% more likely to complete primary education by the age of 18 if they have access to electricity, and that rural women & men are 10.2% more likely to be employed if they have access to electricity in comparison to their counterparts without access. (20)

Investment opportunities introduction
Increased policy momentum creates a strong context for new and enhanced investment, with the contribution of solar and wind towards the Brazilian energy matrix expected to grow to 44% by 2040, up from 4.4% in 2015 (5)

Key bottlenecks introduction
The key bottlenecks include small-scale illegal commercialization in forestry management, the large amount of capital required to set up businesses, bureaucratic decision making durations, the immediate profit motive encouraging short-term exploitation over long-term sustainability and the reduction of existing subsidies.

Sub Sector

Alternative Energy

Development need
Sustainability Development Report 2019 gives a score of 91.7 on SDG 13 (Climate Action) for Brazil, with 'Significant challenges remaining' subscores prevalent across indicators. (1) Brazil faces the risk of an energy blackout over the next decade due to increased energy demand driven by population and economic growth (2)

Policy priority
PNE 2030 and the 2030 National Determined Contribution (NDC) require Brazil to cut down its emissions by 43% until 2030, and increase the share of renewables in its energy portfolio. (5)

Industry

Wind Technology and Project Developers

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Wind farms for centralized energy generation

Business Model

Provide project financing for large-scale wind generation in farms equipped with advanced turbines, to provide either local power (e.g. for adjacent factories or households) or sell into the national energy grid

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Brazil's wind energy potential is 500 MW, of which only 11 GW is currently installed

Brazil's installed wind energy operations have capacity to power 22 million households (6)

Brazil's currently installed capacity is 11GW, but there is potential for the country to generate almost 50X that amount (500MW) (7)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

5% - 10%

Average IRR for projects in the subsector is ~9% (7)

JP Morgan found estimated IRRs for projects winning public contracts for wind energy generation in Brazil to be ~9% (7)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Short Term (0–5 years)

Windfields in Brazil have typically taken two years to set up and become active (7)

Technology is readily available and market is mature and ready to absorb cheap wind energy

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Market - Highly Regulated

Price controls by regulators (8)
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Meeting NDC targets requires increased investment in renewables in order to achieve a 45% share of renewable energies in the composition of the energy matrix by 2030, up from 40% in 2016 (9)

Reducing greenhouse gas emissions by 76% by 2030 requires the integration of lower-footprint generation into the energy mix (10) (2)

Gender & Marginalisation

Research in Brazil demonstrates that in rural areas, girls are 59% more likely to complete primary education by the age of 18 if they have access to electricity (20)

Rural women & men are 10.2% more likely to be employed if they have access to electricity in comparison to their counterparts without access. (20)

Expected Development Outcome

Increase provision of clean energy to households and commercial operations through centralized high-tech wind farms

Lower the country's carbon footprint from electricity production by increasing the share made up by wind

Make electricity more affordable for millions of Brazilians - wind energy is the cheapest in the country (7)

Gender & Marginalisation

New sources of income and employment for women

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.2 Proportion of population with primary reliance on clean fuels and technology

7.2.1 Renewable energy share in the total final energy consumption

Current Value

95.59% (19)

43.79% (19)

Target Value

100%

Secondary SDGs addressed

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Climate Action (SDG 13)
13 - Climate Action
Life Below Water (SDG 14)
14 - Life Below Water

Directly impacted stakeholders

People

Brazilian households and small business operations

Indirectly impacted stakeholders

Public sector

National electricity grid: Diversification of electricity production (both in terms of increased wind generation units as well as diversity of energy sources) reduces risk in the overall grid (7)

Outcome Risks

Interference with landscape aesthetics, which may as a result negatively interfere with monetary valuation of properties in neighboring areas to wind farms (11)

Gender inequality and/or marginalization risk: Low income communities might find their properties devalued due to proximity to wind farms

Impact Risks

Unexpected impact risk: The risk of producing unexpected negative impact for local communities over noise and the degradation of natural habitat (i.e. birds)

Gender inequality and/or marginalization risk: Stakeholder participation risk if the experience and the expectations of local communities are not taken into account

Impact Classification

B—Benefit Stakeholders

What

The outcome is likely to be positive and important and intended because this investment could provide clean energy and make it more affordable

Who

The environment and energy consumers are underserved due to a lack of sufficient cheap and clean energy

Risk

While the model is based on good evidence, the wind energy sector is highly regulated and price controls can make it uncompetitive, limiting the breadth of impact

Impact Thesis

This IOA will generate new sources of income and employment for women Contribute to energy security in Brazil through renewable sources

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

(Brazilian National Energy Plan, PNE 2030): PNE 2030 and the 2030 National Determined Contribution (NDC) require Brazil to cut down its emissions by 43% until 2030, and increase the share of renewables in its energy portfolio. (5)

The new administration is prioritizing the Northeast for clean and renewable energy generation (12)

Financial Environment

Financial incentives: PROINFA program granted a 50% discount in the use of electric distribution for wind energy (TUSD) (7)

Regulatory Environment

(PROINFA): was established to encourage the contracting of wind power projects in Brazil, with national component requirements (7)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Corporations such as Electrobras Electronorte, Electrobras Chesf, Electrobras Fumas, Electrobras Eletrosul, Renova Energia and Desenvix. (13) Investors such as GE, Vestas, WEG, Wobben / Enercon, Siemens / Gamesa and Acciona. GE Renewable Energy (2)

Government

ANEEL is the Brazilian Electricity Regulatory Agency

Non-Profit

Abeeolica is the Brazilian Association for Wind Energy

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Rio Grande do Sul

The regions with highest potential for production are Rio Grande do Sul (103K MW, or nearly 40% of the country's potential), and Bahia (70K MW, or 26%). Potential is measured by measuring wind speeds higher than 7 m/s at three different elevation points, 50, 75 and 100m (1)

Brazil: Bahia

The regions with highest potential for production are Rio Grande do Sul (103K MW, or nearly 40% of the country's potential), and Bahia (70K MW, or 26%). Potential is measured by measuring wind speeds higher than 7 m/s at three different elevation points, 50, 75 and 100m (1)
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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