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Latin America wind power, cheaper than ever in Brazil, almost as low as Mexico

Adriano Machado/Bloomberg

EDF had winning wind-power bid for $20.23 a megawatt-hour. Auction expected to spur 5.3 billion reais of investment.

By Vanessa Dezem

SAO PAULO
Petroleumworld 04 05 2018

Pent-up demand and cheaper equipment helped drag down wind-power prices to the lowest ever in Brazil, and almost reaching the Latin America record.

Electricite de France SA won contracts to sell power for 67.6 reais ($20.23) a megawatt-hour from four wind projects, according to results posted online Wednesday by Brazil's Electric Energy Trading Board. That came close to a bid from rival Enel SpA of $18.14 a megawatt-hour in a Mexican auction in November.

With Brazil's economy recovering from its worst recession ever, demand for energy is on the rise. The government canceled two energy auctions in 2016, putting the brakes on new power plants, and developers are now eager to get their projects moving. That helped drive bidding in the auction, and with turbine prices continuing to slide, participants were ready to go low. The winners are expected to drive about 5.3 billion reais of investment.

“From an international point of view, we've seen really competitive prices, mainly for wind and solar,” Tiago Correia, director at Brazil's Electricity Regulatory Agency, known as Aneel, told reporters after the auction.

Ceiling Prices

There were 39 projects in the auction that won deals for 1,024 megawatts of new power capacity. The wind, solar, small hydroelectric and biomass-fueled projects must be completed within four years. EDF's wind farms will have total capacity of 114.4 megawatts.

In Brazil's energy auctions, organizers set a maximum price and developers bid down the amount for which they're willing to sell power, with the lowest offers winning contracts. EDF's bid was 73 percent below the ceiling price of 255 reais per megawatt-hour.

  • Solar dominated the auction, with 29 projects winning contracts for 806.6 megawatts. The average price was 118.07 reais a megawatt-hour, 62 percent below the ceiling price set by regulators

  • Solar developers flocked to the event because they can't participate in the next auction, set for the second half of this year

  • Biomass developers won contracts for 61.8 megawatts of capacity at an average price of 198.94 reais a megawatt-hour, below the ceiling price of 329 reais.

  • Hydropower plants were awarded deals for 41.6 megawatts at an average price of 198.12 reais, less than the ceiling of 291 reais


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Story by Vanessa Dezem from Bloomberg.

bloomberg.com /
04 04 2018

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