New local content rules have had a negative impact on the businesses of Vestas Wind Systems (OMX: VWS) and Suzlon Energy (BSE: 532667) in Brazil.

Both companies have been unable to win contracts there in more than 18 months as their turbines do not meet the local content requirement. According to Bloomberg both may also e out of the running for two more bids in 2013 as they have not met the strict criteria.

As a result of their failure to adapt to the new regulations, producers such as Alstom (Euronext: ALO) and Acciona have stepped in, having met those criteria.

Wind turbines
The regulation, which is a prerequisite for qualifying for Banco Nacional de Desarrollo Economico y Social’s (BNDES) financing, requires manufacturers to use higher percentages of local equipment parts.

Under the regulation, wind turbines are required to be certified by BNDES, meeting at least three of the following four criteria: manufacturing of towers in Brazil, with at least 70 per cent of the local-made steel plates or domestically-reinforced concrete; manufacturing blades in the country in their own plant or that of a third party; as well as assembly of the nacelle in their own plant; and assembly of the hub with a domestic dye-cast in Brazil.

Alstom has secured contracts to cater for about 11 per cent of the turbines for the winning developers in the August auction, while Acciona is providing wind turbines totalling 290MW for Brazilian wind farms.

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