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Brazil accounts for 10% of the world’s green jobs, mainly in hydropower and biofuels

11/07/2022


Ronaldo Ribeiro de Freitas Filho, 34, has always liked renewable power. A trained electrotechnician and engineer, he was 23 when he decided to “migrate” to the “green job” field. And, on his own initiative, he decided to search for qualification. The opportunity came when he joined Enel, an Italian multinational company that generates and distributes electricity and gas, in 2011. The company was signaling that it would join the renewable segment with the foundation of Enel Green Power, which manages and develops energy production activities from renewable sources, in 2008.

Over the years, the company offered him opportunities to specialize in this field, and Mr. Freitas Filho took the opportunity. “I was lining up both opportunities that Enel gave me, and those I sought out on my own,” he said. Today he is the manager of Enel Green Power’s operations center in Brazil, and is studying at the Politecnico di Milano university through a program offered by the company. “We have options in the market to seek [qualification],” he said. “But I feel that partnerships could be explored more [to raise supply in training in this field], between companies and universities.”

His feeling is shared by other experts in renewable power generation. They say Brazil has the potential to generate at least 2 million jobs in renewable projects over the next five years, nearly two times the current number of jobs: in the country, there are about 1.2 million workers in this field. And there is not enough training to qualify for such a future volume of new workers.

Brazil accounts for 10% of the world’s green jobs, mainly in hydropower and biofuels, according to the International Renewable Energy Agency (Irena). Experts say the country will strongly accelerate the pace of job generation.

The wave will be more directed to solar and wind power in the coming years, a perceptible conclusion in view of projects in these areas contracted in auctions. In practice, however, there is insufficient availability of training for new entrants to the sector’s job market, according to the ClimaInfo Institute, a non-profit organization focused on climate change studies; the Brazilian Association of Solar Power (Absolar); and the Brazilian Wind Power Association (Abeeólica).

These associations advocate partnerships between government, companies, and universities to increase qualification in renewable power. This would prevent a possible future hurdle in the expansion of the sector’s labor market.

In the country, there are about 1.2 million workers in renewable energy, said Aurélio Souza, an adviser with the ClimaInfo Institute, citing data from Irena. The engineer, CEO of Usinazul consultancy, and a researcher at the Photovoltaic Systems Laboratory of the Institute of Energy and Environment of the University of São Paulo, also helped to prepare a study on the Northeast region. Launched this year by Centro Brasil no Clima, Fundo Casa Socioambiental, Grupo Ambientalista da Bahia and ClimaInfo Institute, the work includes projections of power generation and jobs in the Northeast region through green projects.

The study estimates 2 million jobs more in five years. The calculations take into account concessions already granted for 66 gigawatts, more than 90% of which are solar and wind power. This is because, with well-consolidated biofuels and hydropower plants, there is more room for growth in generation and employment in these two other power sources. One gigawatt is equivalent to 1,000 megawatts. “Each megawatt installed [generates] 30 job positions per year in solar power and 15 in wind power,” he said.

The employment estimates in the study include only the Northeast region, he said. Thus, the pace of job openings may be even higher considering ventures in other regions. “Today, we have a lag in qualification according to what [future] demand needs,” he said.

As for solar power, there is no exact calculation of labor shortage at the moment, said Pedro Drumond, Absolar’s coordinator and a specialist in people management in the renewable power segment. Mr. Drumond said that, in the last 10 years, the offer of undergraduate and doctorate degrees related to energy has grown, as well as courses for panel builders, in the private and public sectors. “But the labor force is not yet qualified in the way we need,” he said.

Mr. Drumond suggested greater partnerships between companies and universities to meet the need for more and better qualification. In recent years, he said, companies have trained their own personnel – which would not be enough, he noted.

José Renato Colaferro — Foto: Divulgação

José Renato Colaferro — Foto: Divulgação

Blue Sol Energia Solar, which operates in the photovoltaic sector for 13 years, was one of them. José Renato Colaferro, the company’s founding partner, said that more than 18,000 students were trained in the so-called “Blue Sul University” launched in 2017.

Mr. Colaferro emphasized that it is not an easy task to train professionals for solar. This requires training in three pillars of knowledge. The first is regulatory knowledge of the power sector; the second is to understand the market, suppliers, and production costs; and the third is the technical part, to understand how the solar panel structure works.

To qualify such a worker, especially for future demand, more investment in training is needed today, said Mr. Colaferro. A qualified professional is not formed overnight, he noted.

In the wind power segment, there are qualified workers currently on the market to meet the demand, said Elbia Gannoum, head of Abeeólica. “Today we don’t have a lack of professionals,” she said. “But it is not enough for future demand. Every real invested in the wind sector generates 1.9 jobs in the sector’s production chain,” she said.

Abeeólica is aware of this, she said, and has held meetings with market players; and talked to research institutions and training professionals to expand courses and training. There are successful cases in this field, such as the Renewable Energy Engineering course at the Federal University of Ceará, she said.

But she acknowledged that it is necessary to expand more qualification supply. “What happens today is that those who want to enter the renewable segment seek training. They take courses, they adapt,” she said. “What I am seeing is an adaptation. But there is no coordinated action to focus on this [in professional qualification].”

By October 2022, solar energy had an installed capacity of 21 GW, in centralized generation (large plants) and in distributed generation (micro and mini plants), and generated 630,000 jobs, according to Absolar. The centralized solar generation alone is expected to reach 10.3 GW in 2026, the Brazilian grid operator ONS says. Wind power has 24 GW of installed capacity, according to Abeeólica, and, with contracts already closed so far, the forecast is to reach almost 40 GW by 2026.

*By Alessandra Saraiva — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
Renewables Power UK to New Carbon Emissions Record | ESGN Asia

French company Veolia and Brazilian Braskem, the largest producer of thermoplastic resins in the Americas, will invest R$400 million in the generation of thermal power from a renewable source in the Northeastern state of Alagoas.

By signing a 20-year contract, the petrochemical company has ensured the supply of steam produced with eucalyptus biomass for the industrial complex in Marechal Deodoro, where it makes PVC, replacing the use of natural gas and reducing greenhouse gas emissions.

Most of the resources, about 90%, will be provided by Veolia. Braskem will make investments to adapt the industrial complex to the new technology, increasing by 25% the participation of renewable power in its operations in the state. “This is a structuring project because it transforms the power generation mix in Alagoas,” Gustavo Checcucci, head of energy at the Brazilian petrochemical company, told Valor.

The project in Marechal Deodoro will generate 900,000 tonnes of steam per year, reducing CO2 emissions by about 150,000 tonnes per year. This is likely to accelerate the progress of Braskem towards the goal of reducing greenhouse gas emissions by 15% in scopes 1 and 2 and achieving carbon neutrality by 2050.

This is the first foray by Braskem, which already uses electricity from renewable sources in its operations in the country, into thermal power produced from biomass. On Veolia’s side, it is the second project of this nature in Brazil, but the first that starts from eucalyptus. In Rio Grande do Sul state, the French group was already operating a thermoelectric plant powered by rice husk.

To make the project possible, Veolia had to guarantee access to eucalyptus by leasing the land where the plantations will be made. There was already a planted base in the region, which was key for the investment – the talks between Braskem and the French multinational began over three years ago.

“We have 25 industrial units in Brazil, but this is the first agroforestry project,” said Pedro Prádanos, the chief executive of the Brazilian subsidiary of Veolia. The company will be responsible for managing 5,500 hectares of eucalyptus plantation, designing the engineering project, building the biomass processing and steam production plants, and operating the project over the 20-year contract period.

Another challenge, according to the executive, was to ensure the continuous supply of steam for the complex to operate uninterruptedly – a demand of the petrochemical operation in general. To this end, Veolia will put in place a proprietary digital solution, Hubgrade, which makes it possible to monitor and analyze operations in real time, with continuous improvement in performance and energy consumption.

During the construction phase, more than 400 direct jobs will be created. After the start of operation, there will be 100 new jobs. The operation is planned to start in 2023. Both Braskem and Veolia can use their own resources to finance the project, but they are also evaluating financing lines available in the market.

According to Mr. Checcucci, the eucalyptus biomass project adds a new source of renewable energy to the company’s generation mix and the company plans to expand its use. According to Mr. Prádanos, Veolia will also study opportunities of replicating the project in other states and may partner with Braskem in other efforts.

Since 2018, the Brazilian petrochemical company has already signed four partnerships for renewable power generation in the country and maintains its bet on the transformation of the power mix as one route to achieve carbon neutrality in 2050. This industry, in general, is engaged in energy transition initiatives because of the more competitive costs of renewable energy and the goals of reducing carbon footprint – which further down the road will represent costs to companies.

Source: Valor International

https://valorinternational.globo.com

Hybrid renewable power plants make a good business case but need clearer  legislation to become more widespread | WindEurope

At least four renewable power companies are for sale in Brazil, attracting the interest of groups and asset management companies, including from overseas. The two main assets — Ibitu and Rio Energy — are valued at R$12 billion, according to sources. Other businesses on the block are Renova Energia, which divested projects in 2021 and may sell others in the judicial recovery plan, and EDP Renováveis, with an open strategy of asset rotation.

With the increased global demand for clean energy, renewable companies in Brazil have become the target of interest from international investors. A survey by Itaú BBA, conducted at Valor’s request, shows that 22 deals were closed in the sector last year, with a business value of R$16 billion. For this year, the estimate is to reach R$20 billion.

Part of the recent investments made in the sector came from private equity funds (which buy stakes in companies) that now want to get out of the business. “Project development groups sell assets to recycle capital to invest in other projects,” said Gustavo Miranda, head of investment banking at Santander.

Put up for sale in the middle of last year, Ibitu, controlled by the American asset manager Castlelake, has wind and hydroelectric assets in Ceará, Rio Grande do Norte, Piauí, Santa Catarina, Mato Grosso and Minas Gerais — with more than 877 megawatts (MW) of installed capacity.

The renewable power company originated from the assets of Queiroz Galvão Energia, when the group went into financial crisis amid the now questioned anti-corruption task force Car Wash and put subsidiaries under judicial reorganization. The American private equity fund Castlelake bought the power subsidiary’s debt and took over the business.

With multibillion expansion plans for the business, Castlelake began to be harassed by funds and hired BTG Pactual and Credit Suisse to find an interested party for its assets, valued between $900 million and $1 billion.

Another target is Rio Energy. After giving up on making an IPO last year, the company controlled by U.S.-based private equity firm Denham Capital hired Bank of America (BofA) and Itaú BBA to sell its business, sources familiar with the matter say.

Rio Energy has three operational wind farms totaling nearly 485 MW in installed capacity in Bahia and Ceará, besides two wind farms in Bahia and one in Ceará expected to start in 2022. This is not the first time the company has negotiated the sale of its business. After dropping out of the IPO, the company is once again looking for a buyer. The assets are valued at around R$6 billion.

Another company that may sell assets in 2022 is Renova Energia. In judicial reorganization since 2020, the company sold Brasil PCH for R$1.1 billion and its stake in the Serra da Prata Hydroelectric Complex to settle part of its debt in the market. The power generating company still has a debt of around R$2 billion and is expected to continue divesting assets.

The Alto Sertão III wind farm, in Bahia, will remain with the company. However, the company still has 16 projects in development with leasing contracts, and 12 of these areas already have a previous environmental permit for the development of wind farms, which makes these areas eligible. The areas are located in Bahia, Paraíba, Pernambuco and Piauí, and have a generation potential of around 3.62 GW. The company is studying which one will be sold.

One of the main countries drawing investments in this segment, Brazil is on the radar of investors, since it has natural resources, lower costs and stable regulation. Furthermore, excluding the Unite States and Europe, funds from around the world do not find large platforms for investments in this sector.

“Brazil combines a large market and regulatory stability for renewable power generation,” said Alexandre Viana, a partner and head of consulting at Thymos. A practical example of this is that Brazil is once again on EDP’s radar. Last year, EDP Brasil acquired 100% of AES Inova and made partnerships in the viability of large-scale solar plants. CEO João Marques da Cruz often says that the company’s strategy involves the sale of operational assets to finance new investments.

The generation arm, EDP Renováveis, has Brazil in its 2021-2025 horizon. With global installed capacity of more than 12.6 GW, the goal is to reach 20 GW of capacity by 2025. The devaluation of the Brazilian currency is another point that made the assets cheaper and may draw the attention of international players. The already weakened real can fall even more and some analysts say the foreign exchange rate may reach R$6 to the dollar this quarter. The company put up for sale a hydroelectric plant in Espírito Santo and two others in Amapá. Pipeline, Valor’s business website, first reported last year that the assets of EDP, Ibitu and Rio Energy were put up for sale.

Consultants heard by Valor believe that wind and solar will remain as leaders of this business in 2022, because these sources are the pillar of growth in terms of profitability, scale and consolidated industry.

In addition, the ESG agenda linked to these sources and the learning curve that has cheapened the price of megawatt-hours has drawn the attention of players who want to diversify their operations, from companies seeking long-term risk management to oil companies.

The privatization drive has not progressed as the government says it wanted, but the Brazilian Development Bank (BNDES) announced that the stock offering of the state-owned company will be launched in mid-March. After that, the federal government will no longer hold 72.33% of the voting capital and will be diluted in the total capital of the company. The expectation is that the government’s stake will fall to 45% and that it will no longer be the majority shareholder in the power company. That situation would likely draw investors, from individuals to corporations.

Mr. Viana, with Thymos, added that the opening of the free energy market, a segment in which companies with high energy demand can negotiate directly with generation companies and traders, will probably drive mergers and acquisitions in Brazil. The BNDES and the Banco do Nordeste (BNB), major players that finance expansion projects in the electricity sector, want to develop projects in the free market and in renewable power.

Other operations have been going on since 2021 and are likely to materialize this year. One is the merger between the energy assets of Votorantim Energia and the Canadian pension fund CPPI, which is expected to create one of the largest energy groups, Nova VTRM, valued at R$15 billion and owner of a number of renewable generation assets and control of Cesp. The company received an investment of R$1.5 billion from CPPI for expansion that can be done in greenfield and acquisitions.

Denham Capital, EDP Renováveis, Ibitu, Renova and Rio Energy declined to comment. Castlelake did not immediately reply to a request for comment.

Source: Valor international

https://valorinternational.globo.com/

Substantial growth in renewable energy generation in Brazil’s North and Northeast, mainly from solar and wind sources, may create bottlenecks in the flow of energy to other regions. The mismatch between the new generation and transmission projects going online reveals how outlining plans for the electricity sector is increasingly complex amid the energy transition drive and the search for greener sources.

Brazil’s national grid operator ONS says that the great challenge to make feasible the use of all the potential of the Northeast region is the mismatch between the deadlines of the generation and transmission projects. While setting up transmission lines usually takes seven years, solar and wind farms need only two years.

The lack of synchrony between new transmission and generation projects may lead to a surplus of power of 5.5 GW in the North and Northeast until 2026, the ONS warned in the medium-term plan of the electrical operation of the National Interconnected System (SIN) released this week.

Luiz Barroso, CEO of the consultancy PSR and a former head of the Energy Research Company (EPE), said that the issue reflects the changes that the sector has undergone in recent years. Transmission projects used to come into operation faster than the hydroelectric and thermoelectric generation plants. Now that renewable power grabbed an increasing share in the generation mix, the opposite is true.

“Today, it is necessary to plan the transmission with greater uncertainty about generation. The interface between the projects has become more complex, due to the uncertainty in the location of the new plants and the greater speed in implementing the projects, as well as the difficulties to get environmental permits for transmission projects,” he said.

For him, the scenario will require more proactivity from the planning bodies to point out the transmission projects that will be auctioned in the next few years, as well as an effective action from the Brazilian Electricity Regulatory Agency (ANEEL) to guarantee the entry into operation within the deadlines.

According to Mr. Barroso, there is already an effort underway at EPE to improve the planning methodologies, considering the greater complexity of the sector. He recalled that Brazil is one of the most attractive countries for investments in this segment. Data from ANEEL indicate that the transmission projects auctioned between 1999 and 2021 total R$275.2 billion in investments, with values updated for inflation.

“It is important not only to build the transmission infrastructure but to build it in the right places, where the lines add value. The lack of transmission can prevent the development of renewable projects in areas that could have value for the system,” Mr. Barroso said.

Source: Valor international

https://valorinternational.globo.com/