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BNDES Raises Local-Content Requirement for Brazil Wind Turbines

Banco Nacional de Desenvolvimento Economico e Social, Brazil’s development bank, is increasing the local-content requirements for wind-turbine manufacturers as part of an effort to spur its domestic industry.

Companies now must source 60 percent of the components in their turbines locally, and beginning in January will have to be producing or assembling in Brazil at least three of the four main wind-farm elements -- towers, blades, nacelles and hubs.

BNDES stopped offering loans this year to developers to buy turbines from five companies that weren’t meeting the requirements, hindering the suppliers’ ability to close sales. As many as three of the 11 wind manufacturers operating in Brazil may be unable to comply with the new rules, Antonio Tovar, head of renewable energy for BNDES, as the lender is known, said today in a telephone interview.

The turbine companies may not “have enough capital to invest in Brazil right now because they’re facing problems outside Brazil,” he said. “To fulfill all these requirements you have to buy new equipment, contract new employees.”

BNDES determined in June that Vestas Wind Systems A/S, Suzlon Energy Ltd., Siemens AG, Acciona SA and Fuhrlaender AG weren’t meeting the local-content rules. None of them responded to e-mails seeking comment on the new requirements. Fuhrlaender filed for insolvency in September.

The government is seeking to boost local production of the more complicated elements of wind-power systems, Joao Paulo Gualberto Silva, commercial manager for Jaragua Do Sul, Brazil-based turbine supplier WEG SA, said in a telephone interview.

“The idea here is to create jobs that aren’t just cutting and welding,” he said.

Increasing Requirements

The local-content requirements will be ratcheted up incrementally through Jan. 1 2016, BNDES said yesterday in a statement. Manufacturers will meet regularly with the lender to show progress toward meeting these targets.

BNDES is studying the possibility of offering cheaper financing for turbines from suppliers that meet their milestones quicker, Tovar said.

Developing a cost-competitive supply chain in Brazil will be a challenge, Jean-Claude Robert, Latin America director for General Electric Co.’s renewable-energy business, said today in an e-mail.

“Today there is still a shortage of some key components,” he said. The “local supply chain will need to mature quickly in order to avoid fulfillment risk.”

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