Early this decade, a drought in Brazil that cut water to the country’s hydroelectric dams prompted severe energy shortages. The crisis, which ravaged the country’s economy and led to electricity rationing, underscored Brazil’s pressing need to diversify away from water power. One result of that introspection will climax on Dec. 14, when the Brazilian government conducts its first wind-only energy auction. The bidding is expected to lead to the construction of two gigawatts of wind production with an investment of about $6 billion over the next two years.
The auction has attracted a number of international players, including the local units of Energias de Portugal, Electricité de France, Spain’s Iberdrola, EnerFin of the United States and several Brazilian companies, among others. Interest has been so great, in fact, that the Ministry of Mines and Energy, which is conducting the auction, postponed it by three weeks to allow extra time to evaluate the preliminary bids.
The number of projects proposed were much greater than expected by everyone. Industry and the government had anticipated proposals for 4.5 gigawatts to 6 gigawatts of projects. From 441 proposals, the number became 13.3 gigawatts. The Brazilian government plans to release the auction’s technical manual, allowing participants to refine their bids. The winners will get a 20-year power-purchase agreement from the state.
Brazil counts on hydroelectricity for more than three-quarters of its electricity, but authorities are pushing biomass and wind as primary alternatives. Wind energy’s greatest potential in Brazil is during the dry season, so it is considered a hedge against low rainfall and the geographical spread of existing hydro resources. It’s clear that Brazil need to open up minds beyond hydro as wind is very complimentary to hydro.
Brazil’s technical potential for wind energy is 143 gigawatts due to the country’s blustery 4,600-mile coastline, where most projects are based. The Brazilian Wind Energy Association and the government have set a goal of achieving 10 gigawatts of wind energy capacity by 2020 from the current 605 megawatts, with another 450 megawatts under construction. The industry hopes the auction will help kick-start the wind-energy sector, which already accounts for 70 percent of the total in all of Latin America.
Brazil is already a renewable energy leader in the field of ethanol. Hydropower’s growth is increasingly held up over environmental concerns. Due to the growing concerns about Brazil’s deforestation, the effects of climate change and pressure to reduce the country’s carbon emissions also work in wind’s favor. Now, one concern is the uncertainty surrounding the financing and profitability of wind projects in Brazil. Does Brazil can reach its goals?