World Bank, DNV say offshore wind ‘could be Brazil’s next hydro’

The analysis also suggests that the year-on-year variability of offshore wind is expected to be much lower than hydro output in much of the country. As such, if deployed at scale then offshore wind could serve as an ‘energy hedge’ against unusually dry years such as those observed in the past decade.

The report notes that offshore wind is currently one of the most cost-competitive sources of new generation in developed markets such as Europe and China, but that in new markets, such as Brazil, the initial cost of the first projects is expected to be significantly higher.

Analysis in the report suggests that with high volume targets and appropriate conditions, the cost of offshore wind could fall from US$64/MWh for the first projects – roughly 50% higher than onshore wind and solar –  to US$52-US$40 per MWh by 2050, at which point it would be competitive with conventional forms of generation. This situation is not dissimilar to the historic case of onshore wind in Brazil. 

The report also notes that Brazil has announced ambitious targets for the production of green hydrogen, with a focus on major ports such as Pecém and Açu that may serve both domestic and international markets by creating hydrogen hubs.

To be eligible to participate in and be competitive with international green hydrogen markets, Brazil will require a substantial buildout of renewable power, particularly in the face of flat hydro capacity and limitations in onshore wind and solar expansion. Analysis in the report suggests that if Brazil wants to satisfy 5% of global green hydrogen demand by 2050, it would require close to 100 GW of new renewables, and offshore wind could satisfy a significant portion of this demand, particularly if built near designated GH2 hubs.

The report finds that Brazil’s offshore wind energy potential exceeds 1,200 GW, with 480 GW from fixed foundations and 748 GW from floating foundations and that this abundant resource, strategically located near demand centres, positions offshore wind as a pivotal player in Brazil’s future energy landscape. It provides a vision for a future under three different Growth Scenarios: a Base Case of 16 GW by 2050, representing 3% of Brazil’s generation capacity; Intermediate, 32 GW by 2050, accounting for 6% of the total generation capacity; and Ambitious, 96 GW by 2050, comprising nearly 20% of the generation mix.

DNV says whatever course policymakers and stakeholders choose to chart, they must act swiftly to capitalise on current interest, particularly amid waning investor enthusiasm for emerging markets. It notes that updates in transmission networks, port infrastructure and manufacturing capabilities, along with environmental and social sensitivity mapping – all prerequisites for offshore wind development – have lengthy timelines, and providing a clear market entry pathway, including seabed exclusivity and offtake arrangements in initial offshore wind auctions, is essential.

DNV executive vice-president and regional director Latin America energy systems Santiago Blanco said, “This report highlights the immense potential of offshore wind in Brazil and provides guidelines for its development. The country’s choice to embrace offshore wind hinges on balancing energy demands, climate goals, and economic growth. Our research offers insights, not directives, outlining the challenges and opportunities to inform strategic decisions.”

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