The last few years have been far from easy in the financial universe in Brazil. Brazil, which had the sixth largest economy in the world, entered a period of recession and witnessed a decline in the volume of direct foreign investments, also losing some space in the BRICs to India and the People’s Republic of China. Even so, the energy sector continues to attract the attention of multinational companies, mainly interested in the abundant renewable resources of the country and also in the Government incentives for the diversification of the Brazilian energy production, which is currently largely dependent on the hydraulic grid.
One of the segments which have most attracted investors is that of wind power, which currently stands fourth in the world, after Germany, the People’s Republic of China, and the United States. The industry has posted a growth of 50% this year, if compared to last year, while the number of energy installations in households has tripled. The growing demand, together with the devaluation of the Brazilian currency, caught the eye of companies such as American company Denham Capital, Gestamp from Spain, and Voltalia from France, companies that started to invest in the country.
Solar energy has also gained prominence in recent years. The Canadian company Canadian Solar alone has invested BRL 2.3 billion (USD 715.47 million) on projects for the generation of solar energy in Brazil, after obtaining concessions of lots in areas in the Brazilian states of São Paulo and Minas Gerais. Solar energy is also the focus of North American company SunEdison and Chinese company BYD. With the solar energy units installed in the country, the multinationals seek not only to meet the demand from inside Brazil, but also that of other countries in South America, such as Chile and Argentina.
Brazil also has significant potential in terms of smart grid technology. The market can generate some USD 18 billion (USD 5.60 billion) by 2025. It is also estimated that the country shall have about 49 million intelligent measuring devices up to this date. The industry already has some investments by Portuguese company EDP, which is a pioneer in the country, and has also recently announced a partnership with Innovate UK, from the United Kingdom.
Apart from being one of the largest energy markets in the world (demand has grown at about 4% per annum, in spite of the crisis), it is particularly attractive to invest in Brazil because the country has no restrictions on foreign investments in the electricity segment – much to the contrary. The country does not make any distinction between national or foreign capital and bets on foreign investors for their recurring tenders for concession of lots, especially in the transmission segment. In addition, the accumulation of assets brings prices down.
Foreign interest in the Brazilian electrical segment is one of Brazil’s main weapons in its attempt to break free from the crisis and resume its process of growth within the BRICs. According to UNCTAD, a group linked to the United Nations (UN), the country is seventh on the ranking of countries that are most interesting for multinational companies, behind two of Brazil’s companions in the block: India and the People’s Republic of China.