GE Expands Energy Presence in Brazil

General Electric Co. (NYSE:GE), the world’s leading producer of power-generation equipment, which already has significant interests in Brazil, plans to invest an additional $118 million in the South American nation this year.

GE's plans include an building a Research and Development center that will serve all of Latin America, $50 million on a medical and diagnostic equipment factory in the state of Minas Gerais, a $35 million on an airplane engine maintenance plant in the capital Rio de Janeiro, a $12 million locomotive factory, and a $21 million deep-sea oil equipment plant.

The American energy giant recently signed a deal with Sao Paolo-based Cosan Combustiveis e Lubrificantes, a division of sugar cane ethanol producer Cosan Ltd. (NYSE:CZZ), to supply the company with 50 freight locomotives, which will be built by its affiliate GE Transportation South America, at a plant in Contagem, Brazil. Also, GE has announced plans to participate in wind, solar and nuclear energy auctions sponsored by the Brazilian government.

Last month, General Electric reached a milestone in Brazil: working with the federal energy company, Petrobras Energia SA (NYSE: PZE), at the Juiz de Fora Power Plant, it achieved the world's first use of sugarcane-based ethanol in a natural gas turbine system to produce electricity on a full commercial scale.

Brazil, which is the world's largest exporter and second-largest producer of ethanol (after the U.S.), will benefit greatly from incorporating the alternative fuel into its thermal generation capabilities. Brazil's climate and soil is ideal for growing sugarcane (about half of the country's total crop is used for ethanol production). Ethanol derived from sugarcane is one of the most efficient biofuels in terms of carbon emissions and energy balance.

Additionally, this spring, GE will begin supplying Brazilian power producer Breitener Energética SA with natural gas engines to replace older power generators that currently run off of oil. Breitener will install 46 of GE's low-emission Jenbacher gas engine generator sets, which will generate a total of 120 megawatts of cleaner, more reliable power for the fast-growing city of Manaus, the second-largest metropolis in northern Brazil's Amazon region. The financial terms of the agreement were not disclosed.

The former Portuguese colony has a goal of reducing greenhouse gas emissions by between 36.1 and 38.9 percent by 2020.

Brazil accounted for roughly 40 percent, or $3 billion, of GE's Latin American revenue in 2009.