Brazilian renewable energy auctions continue to attract impressive amounts of capacity from project developers. Following an overwhelming interest shown by project developers earlier this year, the government has received a great response for a reserve auction as well.
Project developers have offered to sell electricity from a total of 1,034 projects with a cumulative capacity of almost 26,300 MW. These include 626 wind energy projects with total capacity of about 15,350 MW, 400 solar power projects with total capacity of 10,790 MW, and eight projects of biogas/municipal solid waste-based power with total capacity of about 150 MW.
Projects will be chosen on the basis of the lowest tariffs offered by the developers. The project developers will be required to sign medium- to long-term power sale agreements, and will have to supply power from 2017 onwards.
This reverse auctioning scheme has yielded impressive results, and has led to significant reduction in power costs. During the feed-in tariff regime in place between 2002 and 2006, the tariffs for wind energy projects was $150 per MWh. About 1,100 MW capacity from wind, small hydro and biomass power was contracted through this feed-in tariff scheme.
Following the launch of reverse auctions for power projects, which also includes fossil-fuel based technologies, the cost of wind energy dropped drastically. From $150 per MWh under the feed-in tariff regime, the tariff dropped to $53 per MWh in 2011 auctions. During the auctions in 2009, 2010 and 2011, a total of 6.73 GW of wind energy capacity has been contracted.
The government had also invited developers to participate in an auction in February. Although the auction has been postponed to September 30, it received tremendous response. A total of 1,041 power projects with cumulative capacity of about 50,900 MW had offered to sell their electricity. These included over 700 wind projects with about 17,400 MW capacity, and over 230 solar power projects with about 6,300 MW capacity.