Brazil announces auction date -- Contracts for 1 GW on offer

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Companies have until the end of this month to submit all of the project documentation necessary to be eligible to participate in Brazil's first ever auction of power purchase contracts purely for wind energy. The auction, announced by Brazil's energy ministry at the end of March, will be held on November 25, 2009. Contracts for an expected combined capacity of up to 1 GW of projects will be up for grabs, with companies bidding the lowest prices expected to come out on top.

"Its success is really necessary for the long-term development of wind power in Brazil," says Pedro Perrelli from Brazil's wind association, Associação Brasileira de Energia Eólica. Argentina's Impsa, Spain's Iberdrola and Brazilian developer Siif are just some of the companies expected to be jockeying to win contracts, while Mark Argar of Australia's Pacific Hydro Energia do Brasil says his company is certain to participate, hoping to secure contracts for its Paraíso Farol and Paraíso Azul wind plants with a combined capacity of 150 MW. Successful bidders will receive 20-year power purchase contracts from the government power company.

No firm details about the maximum price the government will pay for wind energy are available. In previous all-renewables auctions, wind companies have repeatedly lost out to low-price biomass and small hydro. No wind bids were submitted in the most recent auction back in 2007 after the government set a price cap of BRL 140/MWh ($71.3/MWh).

The wind industry advocates a price around BRL 210-220/MWh ($94.6-$99.1/MWh). Siif's Marcel Picchi says it will be difficult for most wind projects to drop below this level. If the cap is any lower, contracts could be awarded to inexperienced developers that fail to build the projects in the long term, he warns.

Those wishing to bid for contracts must submit details of all environmental permits, wind studies, equipment purchase talks and financing options for their projects by May 29. The current program for granting wind power purchase contracts, now stalled, has required that 60% of a project's content is made in Brazil, but that has not been made a condition of bids in the new auction.

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