Wind power fominates Brazil auction

Wind developers are showing more confidence in Brazil, selling six times as much power through an energy auction Friday as they did in April.

Developers won contracts to sell power from 538.8 megawatts of wind farms for an average price of 181.14 reais ($51.90) per megawatt hour.

They’re betting there will be enough turbines available to finish construction by 2018 when the wind farms must go into operation. Brazil’s slumping currency is making imported components more expensive, and domestic suppliers are struggling to meet growing demand. Similar concerns kept some developers from bidding in a similar auction in April, when just 90 megawatts of capacity was sold, well short of the 500 megawatts expected by Bloomberg New Energy Finance.

“Developers who haven’t yet signed deals to buy turbines are running a risk,” Helena Chung, a Sao Paulo-based analyst for New Energy Finance, said in an interview Friday.

Prices were 2.1 percent more than the 177.47-real average in April, helping allay concerns about rising costs. That was only slightly below the ceiling set by the government of 184 reais, showing that costs are increasing and higher rates are needed, according to Elbia Silva Gannoum, president of Brazil’s wind power association known as Abeeolica.

Another concern is a lack of transmission capacity. The wind farms that won contracts are those that will be able to connect to the national power grid more easily, according to Gannoum.

“This was an auction for those projects with ease connecting,” Gannoum said in a phone interview from Peru.

The developers that won contracts included Grupo Votorantim, a relatively new participant in Brazil’s wind industry, and Tractebel Energia SA, which hasn’t participated in a government auction for a while, Gannoum said.

Wind projects accounted for about 80 percent of the 669.5 megawatts of capacity that sold in the auction. Small hydro, biomass and natural gas plants also won contracts to provide power. An auction for solar projects will be held next week.