Why WEG sees growth prospects in Brazil and abroad

Why WEG sees growth prospects in Brazil and abroad

Brazil’s WEG has high hopes for growth in the local energy sector, which buys the motors, turbogenerators and frequency inverters it manufactures for FPSOs (floating, production, storage and offloading units), as well as generators for wind parks and potency transformers for hydropower.  

The company is also eyeing contracts in the hydrogen and low-voltage motor markets overseas.    

BNamericas spoke with WEG executive directors Paulo Leonardo da Silva Sinoti (pictured, left), who heads energy-related content; Elder Stringari, who leads oil and gas (center), and Carlos Grillo, in charge of the digital business.

BNamericas: In which niches does the company expect to grow the most?

Sinoti: We’ve good perspectives for the year in energy generation in several sources.

The wind power generation sector is booming, driven also by the March deadline for entrepreneurs to file applications and enjoy the benefits of exemption from the TUST and TUSD tariffs for the use of the energy transmission and distribution system. This has generated a great demand for applications, and these projects need to be implemented by 2026.

In thermal generation, with biomass, we have the continuity of projects in the sugar-energy sector with the focus on increasing the efficiency of plants and allowing the sale of surplus electricity and projects in the corn ethanol segment that follow the same trend.

In the pulp and paper sector, we have some expansions of industrial plants with the increase of self-energy generation, process steam, and electric power.

Also, in equipment recovery services, where the focus is on improving efficiency and performance, we have good growth prospects.

There are good expectations also for hydroelectric generation, where the next auctions are expected to follow the guidelines of law 14.182/21 [Eletrobras' privatization law], which requires the contracting of at least 50% of distributors’ declared demand from hydroelectric plants. This should increase the contracting volume of hydroelectric plants in the next A-5 and A-6 auctions, bringing new opportunities. 

With this, the sector remains heated, and the CGH segment is worth mentioning, small hydroelectric generation plants [with up to 5MW of installed capacity] in the distributed generation [DG] segment that, due to the simplification to obtain licenses and attractive prices of energy in the DG segment, enables constant investments in this sector.

So the expectation is for growth in these sectors where we have a very complete portfolio of solutions, products, and services.

Stringari: For the oil and gas sector we see a continuation of the high demand in the global market for FPSO-type offshore platforms, in which WEG has a well-consolidated product portfolio with 2- and 4-pole generators driven by gas turbines and large motors with low starting current.

We also expect growth for WEG in the liquefied natural gas sector, in the petrochemical sector mainly with the production of ethylene, and in projects to reduce emissions with carbon capture technology and scalable hydrogen projects, blue and green, mainly in Europe, the US, and Australia.

BNamericas: What are the main contracts?

Sinoti: There are several deals in different stages of schedule and process.

In the wind sector, we have built a good portfolio of projects in the northeast, in the states of Ceará and Bahia, with deliveries already scheduled by mid-2024, with these projects using the 4.2MW [wind generator] platform. For example, we recently signed a [2bn-real (US$400mn)] contract with Eletrosul to supply 72 wind turbines for the Coxilha Negra project in Rio Grande do Sul.

In hydropower, we delivered last February all the main components of São Roque [hydroelectric plant], which is the only hydro plant currently under construction in Brazil. There are three generators of 52.5MVA each, and the commissioning of the plant is scheduled for the beginning of the next half.

In thermal generation, I can mention the largest back-pressure turbine in the sugar-energy sector delivered in February for the Cerradão Mill, 60MW, expected to start generating in May 2022.

We also have a project with Westrock for two turbo generators, one of 49MW in the expansion of the plant already in operation and another of 6MW to increase efficiency in generation foreseen for October 2022.

The service area remains very busy with several projects in progress, both in recoveries at our [São Paulo state] facilities in Sertãozinho, where we recover steam turbines and large-sized reducers, as well as in São Bernardo do Campo, where we recover generators and large-sized motors.

Stringari: In the oil and gas sector, we have several platforms in Brazil with ongoing contracts for various applications, such as main compressors, VRU-type compressors, injection pumps, and main generation for several FPSOs, mainly off the Brazilian coast.

We also have important contracts with engineering and construction companies (EPC) for the exclusive supply of low voltage electric motors for Qatar, Nigeria, Canada and Egypt.

BNamericas: How are the expansion and investment plans going?

Sinoti: We always aim to invest in order to improve competitiveness with more efficient and safer production processes that consume fewer natural resources.

The investments are constant and accompany the growth in sales and the need to increase production capacity. Both the equipment needed for transformation within the industry as well as tools and software for project and laboratory analysis and for field diagnosis receive important investments.

Investments in training and preparation of the technical, manufacturing, and management teams are also a constant.

BNamericas: What are the main technological innovations being studied?

Sinoti: Our internationally recognized research, development, and technological innovation program seeks to develop new products, the continuous improvement of products already available, application engineering and adaptation of products and systems, including digital systems, and the development and improvement of industrial processes.

Focusing on the power generation sector, there are several development studies in practically the entire product portfolio, from complete new platforms, such as alternators used in generator sets and the new generation of wind turbines, to innovation work on specific components of the product lines.

We have ongoing development work in steam turbines and hydraulic turbines, large induction motors in medium voltage for the industrial, sanitation and mining segments, generators dedicated to CGH and PCH [small hydro plant with installed capacity of 5-30MW] applications, new generation planetary gearboxes above 650kNm, machine monitoring systems and diagnostic services in electrical machines integrating with our development laboratories for high voltage insulation systems and product engineering.

A lot of work is taking place with the participation of product and industrial engineering and, in some cases, with the collaboration of national and international research institutions.

Stringari: In the oil and gas sector are several initiatives for the development of technologies for the reduction of carbon and methane emissions, increase of yield from platforms and new technologies to scale up the production of new energies such as green hydrogen. As a practical example, we’re in the final stages of approval for the use of submerged engines in partnership with TechnipFMC for Petrobras' HISEP technology for separation and injection of carbon dioxide (CO2) in deep waters of the pre-salt.

Grillo: Technological innovations in digitization have been among WEG's main movements in recent years.

We have a dedicated structure, based on internal R&D and acquisitions of startups that should end the year with about 400 employees exclusively focused on business and digital solutions, including 5G private networks, software and sensors for diagnosing the health of assets, such as motors, generators, transformers, inverters, as well as management solutions for production activities, like manufacturing execution systems and electricity consumption, always using artificial intelligence and machine learning.

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