Two successful new auctions will further boost wind energy supply from 2013 onwards.
The country clocked up a total of 930MW of installed wind capacity at the end of 2010. More than 325MW of wind projects came online across 14 wind farms as part of Proinfa - the government's renewable energy programme - according to Brazil's electricity regulatory agency Aneel. This year could be even better, with experts forecasting more than 500MW resulting from Proinfa, as well as the construction of projects that were commissioned via auctions in 2009 and 2010.
Auctions involving wind were the highlight of the year, showing that wind can be an important contributor to the grid - which is dominated by energy from hydroelectric power. The two auctions in August, which allow generators to secure 20-year power-purchase agreements, notched up 70 wind projects - or 2GW of new capacity - to come online in 2013.
The auctions saw a frenzy of bidders that drove the average price of the two auctions for wind down to BRL130.86/MWh ($77.8/MWh), almost 12% lower than at the country's first-ever wind auction in December 2009. Average auction prices for wind energy in 2011 should remain at around the same level as those in August, says Pedro Perrelli, executive director of Brazil's wind energy association, Abeeolica. "Of course, if many projects are submitted for future auctions, you will see a few companies that bid at very low prices," Perrelli adds.
The government has already indicated it is likely to hold new auctions for renewable energy this year, which should include wind.
Indeed, a large number of companies are waiting in the wings. Santiago Miles, corporate communications manager at Impsa, an Argentine renewable energy equipment manufacturer and developer, estimates that more than 340 wind projects that did not win bids in August are waiting for new auctions.
Miles is optimistic following the success of the auction. The auction's low prices were a direct result of the industry's maturity and regular auctions will continue to stimulate the development not only of the industry itself, but also of suppliers of items such as electrical equipment, logistics, manpower and civil engineering, he says. Impsa plans to install 222MW of wind this year.
The success of the auctions has convinced a number of companies to set up factories in Brazil, spanning from the industrial heartland of Sao Paulo to the windy north-east of the country. International names such as French infrastructure and power group Alstom, US turbine giant GE Energy and Indian turbine maker Suzlon are betting on further growth based on the government's commitment to hold auctions.
These companies were joined in December by Spain's Gamesa, which announced plans to build a factory in Bahia state. Gamesa expects to begin production at the factory by mid-2011. Impsa and Wobben Windpower, a subsidiary of German turbine manufacturer Enercon, are expected to start local production even sooner.
Lauro Fiuza, president and founder of local wind energy firm Grupo Servtec, says wind projects contracted at the auctions are already in the initial phase of construction.
Not to be overshadowed by the auctions, the government's Proinfa programme was steadily notching up new projects last year, including power group Multiner's 51MW Parque Eolico Alegria I in the north-eastern state of Rio Grande do Norte, which came online in December.
Some approved wind farms are still earmarked to be built in 2011. "We see 404MW of Proinfa projects that still need to be built this year," Fiuza says. A handful of big Proinfa projects will come online in 2011 after securing extensions from the original deadline of 31 December 2010, such as Multiner's Alegria II, and a ten-wind farm complex owned by Impsa in the southern state of Santa Catarina. According to Perrelli, most of the remaining projects already have the financing, equipment, licenses and some have even started building.
Industry analysts believe the financing of wind projects continued to become easier last year. Developers and manufacturers were able to obtain credit from national development bank BNDES and its regional counterparts. In January BNDES and the Banco do Nordeste approved BRL 905 million ($543 million) in loans to local energy company Renova Energia. Although private financing still remains relatively limited, new players such as Spanish bank Santander are increasingly eyeing up this expanding market.
New wind under Proinfa programme
* Brazil also installed 30MW of small private wind prior to Proinfa