EDF Energies Nouvelles – EDF’s renewable energy unit – has bought a majority stake in an 800MW portfolio of Sowitec assets via a newly-created local unit, EDF EN do Brasil.

Sowitec, which has a total pipeline of 5GW in Brazil, will retain a 20% stake in the projects and will continue to be involved in development of the portfoilio, said a joint statement.

Already established as a significant player in the US and Canadian renewables sectors, the move marks the debut of EDF EN in South America.

EDF said that EDF EN do Brasil, as the local subsidiary will be called, could also at a later date invest in solar due to its trck record on the technology.

The Brazilian government's support for renewables and expected increases in power prices combined to make this the right moment to invest in the country, according to the company..

"The sector is becoming more mature and reasonable, prices of energy are expected to continue increasing. We believe that this context is now conducive to long-term expansion of wind power in Brazil", the company says in an e-mail reply to Recharge.

Parent group EDF Energies Nouvelles recently said it had ambitions to be a significant force in the global transition to clean energy.

Pledging to make EDF EN do Brasil a “major player” in the Brazilian market, the French company’s CEO Antoine Cahuzac said: “By expanding into Brazil, EDF Energies Nouvelles takes its initial step into the South American continent," he says in a statement.

“We are delighted especially since Brazil has a tremendous wind energy potential and a regulatory framework that is favourable to a massive expansion of renewables in the energy mix.”

EDF EN pointed to Brazil’s plans to increase its wind capacity to 22.5GW by 2023.

The acquisition includes three greenfield wind power projects being built by Sowitec with a total capacity of 72MW in the northeastern state of Bahia.

An EDF spokesperson told Recharge that the transaction does not include Sowitec's PV projects pipeline, which includes at least another 105MW with preliminary permits from power authorities.

EDF EN's entrance into the Brazilian market comes as wind and solar are seen as increasingly important to increase Brazil's power supply, as it strives to reduce dependence on hydroelectric dams and thermal power.

“Hydropower is becoming fragile with droughts and environmental restraints, so wind has strongly attracted investors in Brazil,” said José Ricardo Oliveira, partner and utilities and energy consultant at EY.

EDF EN will be one more player in highly competitive market chasing 2GW of new wind contracts every year.

Aside from a dozen local players, international power and renewables companies that have been investing in wind include Spain's Iberdrola and Gestamp, the US's ContourGlobal, Italy's Enel Green Power and France's Voltalia, as well as equity and pension funds that invest in stakes or control projects.

Brazil's growing power requirements – projected at 4% a year - and the country's increasing need for new power generation capacity that can be built fast combine with Brazil's long-term PPAs and cheap financing from the National Development Bank (BNDES) to allow double digit returns on investments.

“Return on investments in power in Brazil have reached as high as 20%," said EY's Oliveira.

Sowitec is one of the most active overseas investors in Latin America, and claimed its established local teams would be a big asset to the new partnership.

Although Sowitec has relatively few wind assets contracted, the German group develops and builds projects in Brazil, including several wind farms under a global agreement with Italy's EGP.

EDF EN do Brasil is EDF’s second Brazilian unit, joining EDF Norte Fluminense.