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Brazil

Brazil

Brazil cancels reserve power auction

BRAZIL: The reserve power auction, scheduled for 19 December, has been cancelled after the energy ministry said there was a surplus of energy.

Abeolica has criticised the government's decision
Abeolica has criticised the government's decision

The aucion had already been postponed once, having originally been due to take place on 16 December.

Brazilian wind association Abeolica said the government was at risk of a "great contradiction", having hinted at package of measures to stimulate investment in the market. 

"There are big international companies that came to Brazil, set up factories and brought jobs. It is important to understand that, in the wind energy market, energy contracted today will generate contracts and jobs for the factories in the next two years," said Abeolica executive chairman Elbia Gannoum.

"Since we had a low contracting in 2015, we will have more idle factories by 2017. With zero contracting in 2016, we will have factories practically stationary in 2018. Big companies will not continue in Brazil with empty factories," Gannoum added. 

"We run a serious risk of demobilisation of the production chain and this is a near-mortal blow in a promising young industry that today generates the most competitive energy in the country, obviously not counting the large hydroelectric plants that have a restriction on new projects.

"It is a decision that is not coherent with other moves by the government to ensure resumption of investments and the economy," Gannoum said. 

In Brazil's A5 auction in April, wind projects received no contracts, either. The five-year lead-time caused a high level of risk resulting in wind's poor performance then. It was the first time wind did not play a major role in an auction since being admitted in 2009.

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