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Conceptual Project and Analysis of the Economic Viability of the Wind Energy Electric Unit at Lagoa dos Patos – RS





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Conceptual Project and Analysis of the Economic Viability of the Wind Energy Electric Unit at Lagoa dos Patos – RS

Ernesto Augusto Garbe [1];

Renato de Mello [2];

Ivan Tomaselli [3]


This study evaluates the operational and economic feasibility of an wind energy power plant at the Lagoa dos Patos, Rio Grande do Sul. The economic indicators found were: IRR-22%; PAYBACK- 5 years; IBC- 1,65; NPV- R$ 45MI based on a discount rate of 15%.This initiative will not only help to diversify the energy matrix but will also help to develop a self-reliant energy  generation facility and facilitate investments of other companies in similar units in Brazil.

Key-words: Wind Energy; Economic Feasibility; Energy Sustainability.


The object of the present study is to analyze the economic viability of an electric energy power plant using wind energy. The economic viability study is essential to minimize the risk of any type of investment, specially those high value ones

The Lagoa dos Patos, Rio Grande do Sul, was chosen as the site for the project. This site presents favorable wind conditions. Following the proposed methodology, positive results were found regarding the construction of an electric energy power plant using wind energy. This generating unit was called “Lagoa dos Patos Wind Park”.

Wind energy generation has been expanding in the world in an accelerated form along the last decades, reaching the gigawatts scale. One of the facts that limit investment in wind energy undertakings in Brazil is the lack of consistent and reliable data regarding the technical and economic viability of each project. An important part of the available anemometric records is masked by noise from aerodynamic obstacles, rugosity and elevations. The availability of representative data is fundamental in the Brazilian case that has not yet explored this abundant and sustainable source in a significant form.   

The geographic complementary characteristics of the Brazilian wind and hydraulic energies potentials indicate that the best areas for wind energy exploitation are in the borders of the electric distribution system, far from the hydroelectric generation. Therefore, the insertion of wind energy in the electric system improves its performance, decreasing transmission lines and permitting a better distributed system.

This study was carried out for investments in the range of R$ 200 million, considered a high value which requires detailed economic viability studies, based on accurate information with details of initial investments, markets, fabrication processes, construction site, forms and sources of financing, production costs, manpower, maintenance and taxing. These aspects were analyzed in the present work.


According to Gonçalves (2007), Brazil has a significant share of renewable energy in its energy matrix mainly due to the large hydroelectric plants. The use of alternative energy sources, for example wind energy, small hydroelectric plants (PHC) and biomass is small in spite of the big existing potential.

An important milestone for the Brazilian electric sector happened in 2002 when the 10,438 law, revised by the 10,762 law in 2003 has created the Program for Incentive to Electric Energy Alternative Sources - PROINFA (PROINFA, 2004) which defines the obligations of the electric energy concessionaires for participating in this program. PROINFA aims at increasing the share of alternative energies in the interconnected system and diversify the Brazilian energy matrix. Acquisition of this energy will be performed through public tender and the supply contracts signed with ELETROBRAS for 20 years. Furthermore, there are financing values up to 70% of the investment with resources administered by BNDES (GONÇALVES, 2007).

For Gonçalves (2007), a fast growth of electric wind energy has taken place and several countries have opted to invest in this energy source and its use is the one that has had the most rapid growth. In Europe, for example, the introduction of wind energy has occurred not only because of issues related with environmental licensing for new power plants projects but mainly because it permits the generation of electric energy in a clean and sustainable way and as proposed by the Kyoto Protocol. So, in countries of the European Community there is a growing investment in electric energy using aero-generators. The area required for implementing a wind energy generation unit and the low cost per MW relative to other new renewable power plants, such as biomass and solar, make this type of project a highly attractive business.

According to Gonçalves (2007), taking into account the minimum attractiveness rate of 16.75% represented by the SELIC rate in that year, it was concluded that it is not recommendable to invest 100% of the equity capital in this project, considering that the TIR obtained is lower than the minimum attractiveness and consequently the calculated VPL value has a negative value. When the project is viable, it is recommended levering the resources through BNDES considering 70% of financed resources and then the value of TIR is 23.71% and that of VPL is positive.

2.1 Geographic Site and Characteristics of the Study

Being the largest Brazilian lagoon and the second one in Latin America, Lagoa dos Patos is situated in the Rio Grande do Sul State. It has 265 km of length and an area of 10,144 km², it is parallel to the Atlantic Ocean and is the object of the present study (Figure 01).

Figure 1 Aerial Photograph of Lagoa dos Patos – Rio Grande Do Sul


Source: Google Earth (2010)

It should be noted that in 80% of the Lagoa of Patos areas depths are lower than two meters (FETTER FILHO, 1999). Since it is used for navigation, irrigation, tourism, leisure and other activities, connection with the sea and its large dimension makes Lagoa dos Patos a considerable hydraulic resource. Since it is a plane local, the characteristics of wind propagation are favorable and this fact contributes to make viable wind energy investments in this site.

2.2 Relief, Rugosity and Form Factor

The Coastal Plains was formed in the Quaternary period of the Cenozoic era, the most recent one relative to the earth formation. It corresponds to a sandy extent of 622 km with many lagoons among which Lagoa dos Patos e Mirim is situated. The process of formation of this region has an evolution character, constantly changing, due to marine and river sedimentation (ATLAS SOCIOECONÔMICO DO RIO GRANDE DO SUL, 2006).

According to Figure 02, it can be noticed that the altitude of the relief does not exceed 100 meters and this facilitates the occurrence of winds with laminar flow. Since the surface of Lagoa dos Patos has no undulations, we don’t have to consider the negative influence of the terrain’s rugosity that would occur in this case.

 Figure 2 - Map of Rio Grande State Relief


Source: Atlas Eólico (2001)

The “k” factor is the Weibull form factor and higher “k” values indicate higher constant winds and lower occurrence of extreme values. The annual “k” values vary typically between 2 and 3. Exceptionally, during some months of the year in regions of trade winds as the Brazilian Northeast region, the form factor can reach monthly values higher than six and there is a record of k = 10.78 (AMARANTE, 2001).

According to AMARANTE, 2001, the regional Weibull form factor close to Lagoa dos Patos is situated between 2 and 2.5 (Figure 03).

Figure 3 - Mapping of the "K" Factor in Rio Grande do Sul


Source: Atlas Eólico (2001)

2.3 Wind Direction

Figure 04 shows that the predominant wind direction is northeast between September and May. Between June and August there is no predominant direction that can be perfectly visible (AMARANTE, 2001).

 Figure 4 - Wind Direction Seasonally Distributed









Source: Atlas Eólico (2001)

In terms of annual average, it is noticed that the wind predominant direction follows the northeast regime presented in Figure 05.

Figure 5 - Annual Average of Wind in Rio Grande do Sul


Source: Atlas Eólico (2001)

2.4. principles, Technology and Regional Potential

Part of the wind kinetic energy that goes through the rotor area is captured by a wind turbine and transformed into electric energy. The electric power is a function of the power of the wind velocity “v” (Figure 06).

 Figure 6 - Power Calculation Formula


Where: “ρ” is the air density in kg/m3; “Ar” is calculated by π.D2/4, where D is the rotor diameter; “Cp” is the power aerodynamic coefficient of the rotor and “η” is the efficiency of the generator/transmission set.

According to Amarante (2001), the absorption of the wind kinetic energy gradually reduces the wind velocity downstream the rotor disc and this velocity is recovered when it is mixed with the predominant masses of free flow air. From the aerodynamic sustaining forces of the rotor blades results a helicoidal vortex wake which also is gradually dissipated. After some distance downstream the turbine, the flow practically recovers the original velocity conditions and additional turbines can be installed, minimizing the performance loses caused by interference of the previous turbine. In practice, this distance varies with the wind velocity, operation conditions of the turbine, rugosity of the terrain and vertical thermal stability of the atmosphere.

In general, a distance considered safe for the installation of new turbines is about 10 times the “D” diameter if installed downstream and 5 times the “D” diameter if installed at the side relative to the predominant wind (Figure 07).

Figure 7 - Safe Distance for Installation of Aerogenerators 


Source: Atlas Eólico (2001)

The diameter “D” is inversely proportional to the angular velocity of the rotor. In order to minimize the emission of aerodynamic noise from the blades, the rotation is usually optimized in the project. In Figure 8 the practical formula to evaluate the nominal operation rotation of a wind turbine is described.

 Figure 8 - Formula for Calculations Rotations per Minute


Where: “RPM” are rotations per minute; and “D” is the diameter of the rotor. As long as the technology permits, large turbine dimensions rotation is reduced: present rotor diameters in the market vary from 30m to 100m, and consequently rotations are from 35rpm to 12rpm, respectively. Low rotations make the blades visible and avoidable to flying birds.

Concerning the noise level, wind turbines satisfy the environmental requirements (about 45 decibels – dB) even when installed at a distance of 300 m from residential areas (American Wind Energy Association– AWEA). These aspects contribute to a minimum environmental impact of the electrical wind energy among the generation sources of the same gigawatts magnitude.

Figure 9 represents the wind potential in Rio Grande do Sul, and the area on Lagoa dos Patos has a predominant red color, which means an average velocity higher than 7.5 m/s.

Figure 9 - Wind Potential of Rio Grande do Sul

figura9 Source: Atlas Eólico (2001)


According to the historical variation of wind velocities in the Lagoa dos Patos region, the wind energy produced will be available on the average 85% along the 365 days of the year. In the performance calculation it was also considered an available factor of 98% and plant efficiency (aerodynamic interference among rotors) of 97% and the local Weibull (k) form factors.

Table 01 presents the result of map integration per velocity range according to the  SEINFRA estimation do Rio Grande do Sul, adapted to Lagoa dos Patos by the author.

 Table 1 - Offshore wind Potential over
 Lagos dos Patos


Source: SEINFRA adapted by the author.


Figure 10 shows graphically the influence of height on the regional wind velocity.

 Figure 10 - Influence of Height on the wind Velocity in the Lagoon Region


Source: Atlas Eólico (2001)

The maps suggest that the wind velocity at 50m high is 1 m/s less than at 100m. Figure 11 shows the wind intensity along the year at 50 meters.

 Figure 11 - Wind Intensity along the
Year at 50 Meters


Source: Atlas Eólico (2001)

Wind incidence is more intense in the spring period, time of the year when the reservoirs for hydroelectric generation have a low level and therefore there is the possibility of electric energy rationing.

For the present project it was used the value of 7.5 m/s for the Lagoa dos Patos wind and the aero-generators will be 100 meters high. For this aero-generators height, the average annual velocity will be above 8 m/s as shown in Figure 10.

 2.5. Necessary Equipments

The necessary equipment, considering the more advisable possibilities for this investment, is aero-generators with 70 meters high and rotor diameter above 60 meters. According to the item previously analyzed, it is proposed for the present study the use of aero-generators with 100 m high and rotor diameter of 71 m. Figure 12 shows the evolution of the aero-generators.

 Figure 12 - Power as a Function of
the Rotor Diameter


Source: CRESESB (2010)

For study purposes, considering the existing technology, it was chosen the E-70 family equipment with installed power in the 1,500 to 2,300 kW range and 71 m of rotor diameter (about 5,550 units are installed in 28 countries). These aero-generators are of the Wobben trade mark and satisfy a nationalization index above 60%. In the present study it is proposed an installed power of 50MW in the wind park, therefore about 25 aero-generators will be necessary.

The generation equipment will be installed in a tower of 100 meters high and this will increase by 15% the electric potential of the 50 meters high. Figure 13 shows the image of a real wind park operating in the sea.

 Figure 13 - Real Image of a Maritime Wind Park


Source: Reuters (2010)

The main components of a wind generating unit is described in Figure 14 and they are: tower; rotor blades; shaft; nacelle; gears box; generator; controller; brakes; electronic control unit and electric equipment.

 Figure 14 - Components of a Large
 Aero-generator Unit


Source: Aneel (2007)

The function of each component of a large aero-generator unit is specified in Table 2.

Tabela 2 - Funcion of Components


Source: Aneel (2007)

2.5.1. equipments Prices

According to the manufacturer (Wobben), the average value of the initial investment for medium and large plants (above 30 MW) is R$4,200,000 per installed MW. This value includes the aero-generator, civil and electric infrastructure, depending on the characteristics of each undertaking and so it should be analyzed case by case.

2.5.2. Financing

Incentives that the federal government has given to wind energy has decisively influenced most of the capacity installed in the country. Administered by the National Bank of Economic and Social Development (BNDES), the Program of incentive to Alternative Sources of Electric Energy – PROINFA, has made available a special credit line that finances up to 70% of investment. The financing considers a grace period of six months after the commercial operation of the undertaking and a payment period of ten years. During the construction of the undertaking no interests are paid. The financing conditions are 1.5% of risk spread plus 2% annually relative to TJLP.

2.5.3. Time for Installing the Wind Energy Park

Gonçalves (2007) observes that the installation of a wind energy plant demands 18 months and this makes this energy generation modality a highly competitive one relative to other electric energy production projects, both alternative and conventional, that on the average demands 24 months for their installation. Figure 15 shows the installation of a large offshore wind energy generation unit.

Figure 15 - Real Installation of a Large
Offshore Aero-generation Unit

figure 15

Source: Google Imagens (2010)

2.6. Production costs

One of the disadvantages of wind energy generation pointed out by specialists is the production cost. In order to solve the problem it is suggested the reduction of taxes and generation growth. As this source does not need fuel, the energy price depends only on the installation cost of the generation stations. The head of the Impsa Wind Power, Luis Perscamona, has declared that 10% of the generation cost is due to the transport of components for the installation of the stations (CÂMARA, 2009).

According to the American Association of Wind Energy the wind energy cost in public scale has been drastically reduced in the last two decades due to technological progress and projects relative to production and installation of turbines. At the beginning of the 1980s wind energy cost was US$300 per MWh. In 2006, wind energy cost varied from US$30 to 50 per MWh in areas of abundant wind. The more regular the winds in a determined area, the lower cost of the electricity generated. On the average, the wind energy cost is from US$40 to 100 per MWh in the United States (Table 03).

 Table 3 - comparative Costs of Energy Generation


Sources: American Association of Wind Energy, Wind Blog, Stanford School of Earth Sciences.

According to the Brazilian Energy Matrix (2007), the Brazilian wind energy potential has caught the interest of different manufactures and representatives of the main developed countries involved with this technology. Presently there are about 5,300 MW in wind energy projects authorized by ANEEL. In spite of the decrease of unit cost investment due to the rapid evolution in the learning curve, the low capacity factor of these plants makes the average cost to be in the 75 US$/MWh range, even considering the investment per MW as US$1.200.000,00.

2.6.1. Manpower and Mintenance

For calculating the manpower cost for this investment, it was taken into account the information supplied by the manufacturer of equipment (WOBBEN), that is, the value of 1% of the initial equipment investment (R$42,000,00 per MW installed per year).

2.7. Electric Energy Market and their Prices

Due to the fact that wind energy is 100% renewable, there are governmental incentives that favor the increase of its commercialization value. While for common energy the value is around R$134.00 per MWh, energy from wind energy parks reaches the R$200.00 per MWh plateau (2009).

The project for establishing a wind energy park can be made with the support of PROINFA, and the primary consumer is ELETROBRÁS which will buy the energy and will commercialize it through a 20 year contract, time necessary to amortize the investment.

2.7.1. Taxes 

According to PIZETA (2007), the final consumers are responsible for paying all taxes due along the chain (Figure 17).

Figure 17 - Electric Energy Taxes


Source: ANEEL (2006)

According to ANEEL (2006), taxes relative to PIS/PASEP and COFINS, considering the present legislation and taxes is shown in Table 4.

Table 4 - calculation of the Net Tax-free Revenue


Source: ANEEL (2006)

Therefore, annual tax-free invoicing for this project was calculated to be R$84,887,028,00,

1.7.2. Electric Energy Consumption per Inhabitant

The average electric energy monthly consumption in Brazil per residence is 147 kWh, In 1997 consumption was 18% higher: 179 kWh monthly. This value will be reached again in 2015 or 2016, that is, energy consumption will increase and we need to generate it,

Considering that for the present project 37 GWh will be generated per month, it will supply about 200 thousand residences, that is, 1 million inhabitants,

Considering that our energy matrix has now 103,000 MW, it can be said that this undertaking will be responsible for about 0.05% of the (electric) national energy matrix, But the existing potential in the region under study (Lagoa do Patos) can reach the plateau of more than 10% of the matrix based on the values presented in Table 1 of the present study, This will mean an investment 200 times higher than foreseen in this study (R$ 42 billion),


To carry out the present study, it was used information from literature, contacts with equipment manufacturers as well as discussions with those responsible for electric energy distribution and generation.

The decision regarding the localization of the undertaking in Lagoa dos Patos, Rio Grande do Sul was made based on a pre-analysis that verified the high potential of the region,

From manufactures, the necessary equipment were identified as well as prices and financing forms, The foreseen time for installing the unit was also estimated. Revision of the existing bibliography helped to calculate the foreseen production costs considering the necessary investments, manpower and maintenance. The electric energy market was analyzed through actual prices and corresponding taxes,

The adopted method considers a cash flow, necessary tool for analyzing the economic viability of the undertaking, The TIR (internal return tax), the VPL (net present value), the IBC (cost benefit index) and the PAYBACK (time necessary for paying investment) were calculated, Based on this information, the economic viability of the project was evaluated,

An investment project involves a set of human material and financial resources that should be adjusted to the process in order to prevent failures that may hinder its adequate development,

In this sense, investment decisions should be based on carefully analyzed information, or else there is the possibility that its resources might be committed along time, Table 5 presents the input data used in this project,

Tabela 5 - Input Data for Cash Flow


Source: the Author (2010)

The sensitivity of the economic viability vis-à-vis the variation of the main factors was evaluated for a better precision and for risk minimization, The electric energy prices and the wind velocity were selected for recalculating the economic indexes, The electric energy values have varied between R$ 160 and R$ 240 per MWh and the wind velocity between 7.1 m/s and 7.9 m/s,


A foreseen cash flow for a 10 year horizon, compatible with the financing period, was considered for analyzing the economic viability.

4.1. Economic Viability 

The VPL and TIR values were calculated for analyzing the economic viability taking into account the projection of the result and the cash flow simulation presented in Table 06, It was considered a minimum attractiveness rate of 15% annually, calculated as a function of the opportunity cost, undertaking risk and the undertaking liquidity.

 Tabela 6 - Cash Flow for a 10 Year Period in Thousand (000)


Source: the Author (2010)

Considering the value of 15% for the minimum attractiveness (TMA), the net present value (VPL) is R$45,038,980; the Cost Benefit Index (IBC) is 1,65 (a measure of what is expected to gain per unit of invested capital) the PAYBACK is 5 years (period for return of investment) and the internal return rate is 22%,

The calculated values indicate that the project is economically viable and they are close to the values calculated by Gonçalves (2007),

4,2, Sensivity Analysis

Considering that the two main influencing factors are wind velocity and electric energy sale price, one can carry out the Sensitivity Analysis shown in  Table 08,

Table 07 - Sensitivity Analysis


Source: the Author (2010)

Considering that the electric energy sale value is R$200/MWh, in case we have a wind velocity reduction from 7.5 m/s to 7.1 m/s, the present project is not attractive, as shown in the grey area of the table, the same happens when the electric energy value is lower than R$170/MW and the wind velocity is 7.5 m/s,


The relief is a favorable one and the studied region has a high potential concerning electric energy generation, Furthermore, the region has influent rugosity on the water surface, the Weibull form factor is sufficient for an ideal conversion of wind energy into electric energy and it is close to the large consuming centers, with low transmission costs as well as close to transmission lines,

The unit installation times are compatible with the needed starting time of activities, it does not hinder the cash flow and the grace time is sufficient for the amortization of financing, For the present study, the foreseen initial investment is R$210,000,000,00 for paying the suppliers of which 30% are equity capital, that is, R$63,000,000,00.

The production cost plus the necessary manpower and maintenance has an average value of 2% annually of the initial investment.

 Policies established by the government favor the commercialization of energy from alternative sources, considered 100% renewable, The prices paid are about R$200,00 per MWh, about 50% higher than the price paid for common energy. Taxes are 5% of production costs,

The project for the installation of the PARQUE EÓLICO LAGOA DOS PATOS, with equity investments of R$ 63 million and R$147 million financed by BNDES through PROINFA makes the project viable. The economic indexes calculated were: TIR - 22%; PAYBACK - 5 years; IBC – 1.65; VPL ‑ R$ 45MI (base TMA of 15%).

The sensitivity analysis has shown a strong influence of the wind velocity on the economic result of the project but based on the Weibull form factor and that in more than 80% of the time the plant will be in activity (with winds with velocities above 7.5 m/s), it can be concluded that this factor will not limit the viability of the project.


AMARANTE, O,A,C,, ZACK, M,B,E,J, SÁ, A,L,, Atlas do Potencial Eólico Brasileiro, Brasília, 2001, 45p.

ATLAS SOCIOECONÔMICO DO RIO GRANDE DO SUL, www,seplag,rs,gov,br/atlas/ Acessado em 13/10/2010.

CÂMARA, O, B, Energia Eólica – Brasil detém mais da metade da geração de Energia Elétrica por Fonte Eólica na América do Sul, mas ocupa a 24ª posição mundial, A Matriz Hidrelétrica esgotará em 2045, Disponível em: <http://camaraecamara,wordpress,com/2009/10/16/energia-eolica-brasil-detem-mais-da-metade-da-geracao-de-energia-eletrica-por-fonte-eolica-na-america-do-sul-mas-ocupa-a-24%C2%AA-posicao-mundial-a-matriz-hidreletrica-esgotara-em-2045/> Acessado 30/09/2010.

FETTER FILHO, A,F,H, Estudo da circulação e processos de mistura da Lagoa dos Patos através do modelo de circulação oceânica da Universidade de Princeton (POM), Curso de Pós graduação em Oceanografia Física, Química e Geológica, Fundação Universidade Federal do Rio Grande, Tese de mestrado, 150p,1999.

GONÇALVES, M, J, Q,, SALLES, J, A, C,, PIZOLATTO, N, D, Implantação de uma Usina Eólica – Avaliação Estratégica e Análise da Viabilidade Operacional e Econômica do Projeto, Rio de Janeiro, 2007, 15p.

MATRIZ ENERGÉTICA NACIONAL 2030, Ministério das Minas de Energias, 2007, 254p,

PIZETA, E, G, Estratégias para a Comercialização da Energia Eólica, Andrade & Canellas Consult, e Eng, São Paulo – SP, 2007.

WAGNER, R, Projeto do parque eólico piloto do Farol de São Tomé, mimeo: LabCAD - Laboratório de Concepção e Análise do Design – CNPq/EBA, Rio de Janeiro: UFRJ, 1997.

[1]  Director of EAGARBE – Planejamento, Engenharia, Gerenciamento e Inovações.  Rua Jorge Zipperer, 720, Centro - São Bento do Sul – SC - CEP: 89.280-499. Telefone +55 (47) 3635-5404 / 8448-3099.

[2]  Professor. Universidade do Estado de Santa Catarina (UDESC). Centro de Educação do Planalto Norte (CEPLAN).  Rua Luiz Fernando Hastreiter, 180 - Centenário – CEP: 89283-081 - São Bento do Sul - SC - Telefone +55 (47) 3634-0988.

[3]    President of STCP – Projetos de Engenharia. Rua Euzébio da Motta, 450, Juvevê, Curitiba - PR – Brasil, CEP: 80.530-260, Fone: +55 (41) 3252-5861, Fax: +55 (41) 3252-5871.



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