Huge wind farm order in Brazil lost by Vestas

06/10/2014 10:38 Renewable


Wind turbine manufacturer Vestas Wind Energy lost an important deal in Brazil to Spanish competitor Gamesa since the Danish firm does not have the necessary local output to obtain cheap financial support for its client.

The order of 254 megawatts (MW) from CPFL Renováveis, division of CPFL Energia was annulled because of modifications in Brazil's regulations after the settlement of the agreement, as stated by Vestas on Friday - the day after Gamesa made known an order of 220 MW for the same wind farms in Rio Grande do Norte, the northeast Brazil. The shares of Vestas declined 5.5 percent on Thursday and 5.2 percent on Friday morning. According to Sydbank analyst Jacob Pedersen, the contract loss was a considerable misfortune for Vestas, but it would certainly not arouse a financial loss. Brazil has rigorous local rules whereby foreign firms are required to utilize locals, employ local contracting companies or produce locally. Emergent countries are likely to establish such rules to make sure they profit from resource expansions. But the latest changes in the rules, related to the so-called FINAME funding provided by Brazil's development bank, ruined Vestas' plans, as declared by a spokesman. Vestas mentioned in June it would make an investment of about 100 million Brazilian real ($40 million) in putting more manufacturing in the country to meet the tougher FINAME rules. Turbines with a total capacity of 686 megawatt (MW) have been installed by the Danish firm in Brazil. Gamesa, which has concentrated more on Latin America during a decline in its local market, has installed over 700 MW and signed orders for more than 2,000 MW in Brazil.

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