Wind players pull out of auction -- Brazil renewables contracts

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As feared, no wind bids were submitted in Brazil's auction of power purchase contracts for renewable energy on June 18. Federal energy company EPE had otherwise short-listed nine wind projects to participate in the auction (Windpower Monthly, June 2007). But all the wind players backed out after the government tightened up power price parameters to what were considered unrealistic levels.

Marco Stacke of Australian Pacific Hydro, which entered Brazil's market through its acquisition of Soluções de Energia Sustentáveis, originally submitted two projects with a combined capacity of 153 MW, fully expecting to bid them into the auction. But, like others, he decided not to proceed.

"The decision was due to the auction's conditions," he says. The BRL 140/MWh ($71.3/MWh) price cap was too low and the contract demands, particularly on availability of generation, ruled out wind projects, says Stacke. Under market conditions in Brazil, Stacke has previously said, wind needs BRL 190-200/MWh ($96.7-101.8/MWh).

Of the 18 selected projects, with a combined capacity of 638 MW, 12 (542 MW) are sugarcane bagasse-burning thermo plants and six are small-scale hydroelectric plants (97 MW), says EPE. The winning bids came in at an average BRL 138.85/MWh for bagasse and BRL 134.99/MWh for hydro.

Hopes remain for a new and separate auction specifically geared to wind power. Brazilian wind power association Abee is banking on it. "We plan a specific auction for wind power projects in partnership with the Mines and Energy Ministry by the end of the year. Wind power companies felt a separate auction was necessary," local news agency BNamericas reported Abee president Adão Linhares Muniz as saying. While talks between the two may be set to continue, EPE refuses to comment on the likelihood for wind auctions. "We don't have any date or plans for wind auctions at the moment," it says.

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