Development Banks and Capital Markets in Wind Energy Financing in Brazil: Substitution or Complementarity?

Abstract This paper aims to analyze the dynamics and characteristics of wind energy financing in Brazil, highlighting the role of its main actors and seeking to evaluate the controversial hypothesis of the replacement of development banks (DBs) by the capital markets. A qualitative analysis supported by empirical data of sustainable energy financing, focusing on the wind sector, supports the prevalence of DBs in the climate transition financing system, particularly in renewable energy. In Brazil, DBs lead the financing of low-carbon activities, especially sustainable infrastructure and renewable energy. The article provides evidence that, although the capital market has recently gained prominence in financing the wind sector in Brazil, the hypotheses advocating for the superiority of private financing over DBs and the replacement of the latter by the former do not hold up. Overall, the profile of the financing and the target audience served by BNDES, Banco do Nordeste do Brasil, and the capital markets are different, showing a complementary relationship between these funding sources.