Wind energy developers win biggest share of Brazil auction

Wind power developers including Casa dos Ventos Energias Renovaveis Ltda were the biggest winners in a Brazil power auction today after the government agreed to raise the starting bid.

Developers won contracts to sell 968 megawatts of capacity from 22 wind and large hydroelectric projects, with 551 megawatts coming from wind farms, Sao Paulo-based electricity trading board CCEE said today on its website. Biomass, small hydropower plants and thermoelectric plants weren’t included in the event.

Brazil gets more than 70 percent of its energy from hydroelectric dams, and is seeking to increase capacity and diversify its power sources as the worst drought in more than 40 years cuts output. The government raised the starting price after local-content regulations boosted the cost of equipment. Brazil had the world’s cheapest wind energy in 2012.

Casa dos Ventos and other wind farm developers agreed to sell electricity at an average of 129.97 reais ($57.89) a megawatt-hour, below a ceiling price of 133 reais. In Brazil’s energy auctions, the government sets a ceiling price and developers bid down the price at which they are willing to sell power. The lowest bids win contracts.

Santo Antonio Energia SA also won the rights to expand its Santo Antonio dam in the Amazon region, after bidding to sell 417 megawatts of capacity for 121 reais a megawatt-hour, the ceiling for hydropower. The company received an injunction yesterday blocking it from participating in the auction because of questions about its environmental licenses. The injunction was lifted today.

Solar power plants weren’t eligible to participate in the auction. The government will award 20-year contracts for photovoltaic plants larger than 5 megawatts in a so-called reserve energy auction that will take place on Oct. 10. It will be the first-ever national energy auction with a separate category for solar projects.