How China’s SPIC plans to become a top 3 private generation player in Brazil

The Brazilian subsidiary of China’s State Power Investment Corporation aims to become one of the top three private power generation players in the country by 2025.

By that year, the company will have more than 5GW of installed capacity, including gas-fired thermal plants and wind farms. 

With a focus on the non-regulated or free energy market, SPIC Brasil is also developing a green hydrogen project and does not rule out future investments in solar and offshore wind ventures, CFO Paulo Dutra tells BNamericas in this email interview.

BNamericas: What are SPIC's main electric power projects in Brazil? 

Dutra: SPIC Brasil has started the negotiations for the installation of two new wind power generation plants in the municipality of Touros, in Rio Grande do Norte [state], which are greenfield projects and will have approximately 105MW of installed capacity. 

We’re also working on two solar parks in the municipalities of Brasileira, in Piauí, and Jaguaretama, in Ceará, in partnership with Canadian Solar, in a project with a generating capacity of 738MW.  

And we’re a partner in the Gás Natural Açu (GNA) consortium, in Rio de Janeiro, together with Prumo Logística, Siemens A.G., and BP, which is working on the construction of the GNA II thermoelectric plant, a natural gas-fired plant that will have 1,672 MW of installed capacity.

BNamericas: What’s the total installed capacity of the company? And how much is it expected to grow in the coming years?

Dutra: SPIC has 3.1GW of installed capacity from the assets in operation and more than 2GW under construction, totaling over 5GW of capacity in the coming years when those projects are in operation. 

BNamericas: Do you have any plans for new investments in Brazil? If so, what will be the focus of these investments?

Dutra: We intend to be among the three main private power generation players in Brazil by 2025. One of SPIC's main growth areas is in renewable energy. Wind and solar projects are aligned with our strategy of secure power generation, which creates value for communities and the planet. 

Our challenge is to continue to grow in a sustainable way and with a focus on M&A. We’re concerned with valuing diversity, based on safety, a theme that involves care for employees, the community, and the energy security of the Brazilian matrix. 

BNamericas: How may the liberalization of the gas and power markets in Brazil contribute to the company's operations? And what is your overall business outlook? 

Dutra: The free market has played an important role for the growth of the energy matrix. And projects like Panati and Marangatu, which are the solar plants in Piauí and Ceará, are an example of this as they have most of their energy contracted in the free market, at about 75%. 

With support from our trading company, it will be possible to evaluate alternatives in the market to make the best decisions for the stakeholders of the projects. 

In November 2021, SPIC Brasil Comercializadora was created to manage the portfolio of SPIC’s generation assets to position ourselves strategically in the free market, and to offer products that add value to our customers and business partners. 

BNamericas: Are solar, offshore wind, hydrogen, and green and blue projects part of your plans?

Dutra: Brazil has excellent areas for the development of wind and solar projects in the northeast and northern regions of Minas Gerais, where the highest levels of solar radiation are found in the country. It has one of the most competitive renewable energies in the world, and solar energy is growing strongly here. Its use in innovation projects represents a potential for the near future, as well as green hydrogen, which is a strategic renewable fuel for the decarbonization process and the energy transition. 

Since 2018, we have invested more than 10mn reais [US$2mn] in research and development projects that are focused on energy efficiency, sustainability, commercialization, and energy regulation. 

We’re undertaking studies to develop a green hydrogen production plant from PV solar power that will be installed at the São Simão hydroelectric plant [on the border of Minas Gerais and Goiás]. The initiative is being developed in partnership with Eletrobras' Centro de Pesquisa de Energia Elétrica (Cepel) and SPIC Global's State Power Institute (Isest). The cooperation was started via a MOU that was signed in 2020, aiming to foster smart energy study and research between Brazil and China.

Regarding offshore wind, we can say that discussions are taking place but governance details between the agencies are lacking. This is an industry that’s already highly developed in the world, and SPIC is one of the largest offshore implementation players on the planet. Once there is local competitiveness in relation to other sources, this will be a new area of interest. Brazil has a coastline with very good winds, and offshore can be the next option in terms of competitive auctions.

BNamericas: Brazil saw a change of government this month. Do you expect this change to affect your business in any way?

Dutra: Brazil is an investment destination for the largest groups in the world, and this is due to the stability of the energy sector and clear rules that work well. This is always the challenge of any administration: to attract investors. 

For our part, we want to transform SPIC Brasil into one of the biggest national players and become one of the three largest private players in the next few years. We’re working towards this.