Offshore wind power generation: An economic analysis on the Brazilian coast from the stochastic LCOE

The interest in offshore wind energy in Brazil is recent, and are scarce investigations about the real competitiveness of the source in the country. In this way, this study proposes a stochastic approach to compare the LCOE for offshore wind farms at five different points on the Brazilian coast, and considering different possibilities of corporate tax, and Tradable Green Certificates (TGC) commercialization. To compare the different scenarios, initially is sized the offshore wind potential of the evaluated locations, modeling the uncertainties related to wind speed in the monthly horizon, in addition to the economic uncertainties associated with the Capital Expenditure (CAPEX), Operational Expenditure (OPEX), and Decommissioning Expenditure (DECEX). Then, are performed 10,000 iterations of the Monte Carlo Simulation to calculate the LCOE, for scenarios with taxation based on Actual Profit Method (APM) and Presumed Profit Method (PPM), and with and without the possibility of TGC. The results reveal that the possibility of taxation by the PPM and the mapping of the best place to exploit wind generation are the factors that most affect the reduction of LCOE and the financial risk of investing in an offshore wind farm in Brazil. In turn, the possibility of negotiating TGC contributes to reducing the LCOE of projects but is not a factor that significantly favors the reduction of financial risk. In addition, the results reveal that the coast region close to the Northeast is where the greatest potential offshore wind in Brazil, and the points located in Rio Grande do Sul and Rio de Janeiro showed some competitiveness, although they are lower than the Northeast.