In Brazil’s latest power auction earlier this week — a process in which developers bid for contracts with the country’s national electricity agency — more than 80% of contracts were for wind projects. This follows an auction in August that brought in power contracts for wind that were below the bidding price of natural gas plants.
The National Electric Energy Agency (ANEEL) signed contracts with 42 new power plants worth 1,200 MW — including 39 wind projects totaling more than 976 MW that agreed to an average selling price of US $55 per megawatt-hour, or 5.5 cents per kilowatt-hour. That’s a 1.2 cent per kWh decrease over the average selling price in the August auction.
A combination of resources and policy have helped grow Brazil’s domestic wind market by more than 50% since 2009. With an import on foreign wind turbines, major manufacturers have set up operations within the country that have helped bring down the cost of developing projects. Brazil’s estimated exploitable wind resources are about 143,000 MW of capacity — far surpassing the roughly 100,000 MW of total installed electricity capacity today.
However, wind still only plays a small role in Brazil’s electricity mix, representing only 0.5% of generation. The country has historically focused on large hydropower projects, which make up roughly 80% of generation.
But things are picking up. After a slow start to Brazil’s wind procurement program, the country has proven itself as a reliable growth market in the last few years. The Global Wind Energy Council projects that an additional 3,300 MW of wind projects will be built in Brazil over the next two years.