Brazil will hold wind energy auctions on 17-18 July 2011. Expectations are that the average final price in the auctions will be around 15% below the maximum price levels ('preco-teto') set by the energy regulator. The maximum for the 2011 auctions was established at R$139 / MW/h for the A-3 auction, almost 17% lower than in 2010, and at R$146 MW/h for the reserve energy auction. In previous years the average price achieved was more than 20% lower than the maximum price (in 2010 the median was 26.5% lower). An average price of 20% below R$139 would imply a price of R$111. However, expectations are that the average will be only around 15% below the maximum this time - or around R$118 - according to local media.

Prices in Brazil's Wind Energy Auctions

Pedro Perelli, director of the Brazilian Wind Energy Association, ABEEólica, believes that Brazil is approaching a 'base price' for wind energy. Quoted in the local media, Perelli stated recently that prices of around R$122 are sustainable. This level was seen in the last auction, in 2010, for projects in Rio Grande do Sul. According to Perelli, if prices slip much below R$122 there will be doubts about the ability of operators to deliver.

The 2011 Brazilian wind energy auctions will take place later this week.

Jean Paul Prates, former Secretary of State for Energy and Director of the Strategic Centre for Natural Resources and Energy (CERNE), is quoted in the Brazilian media as stating that Brazil is the world's most competitive wind energy market - a factor he attributes to the auction system, which has forced prices down over the years.

Data from the World Wind Energy Association (WWEA), based on statistics for 2010, indicate that the cost of wind in Brazil is US$74.6 per megawatt (or R$119.76 at today's exchange rate), compared to US$75.7 in India, US$168 in Spain, US$164 in South Africa and US$121 in Canada. Professor Everaldo Feitosa of the WWEA predicts that Brazil will have installed capacity in wind of 2GW by 2015, which will take its position in the rankings of world wind markets from the current level of number 21 to number 8.

The Brazilian government is targeting that wind should account for 7% of total energy by 2020 - at which point the country is expected to require a total of 171 GwH annually. Hydroelectricity is expected to decline in the mix from 76% today to 67%. Today, hydroelectricity can be generated at R$95 MwH - making it still much cheaper than wind. However, the two sources of power are considered to be complementary in the high wind areas of the north east of Brazil.

The results of Brazil's wind auctions will be released later this week.

The State of Rio Grande do Norte is understood to be leading again in the national ranking in the 2011 Brazilian wind energy auction, accounting for 27% of the total energy contracts bid. IDEMA (the Institute for Sustainable Development and Environment of Rio Grand do Norte) is understood to have conceded 82 licences for projects which participate in the A-3 auction and the Reserve, having received a total of 96 applications. The majority of the applications are believed to have been submitted by large companies with foreign capital and experience in wind energy, and which have already had projects approved elsewhere in Brazil. Fourteen projects in the state have been rejected on flawed fundamentals or a lack of appropriate documentation. There are currently three wind parks operational in Rio Grande do Norte, two in Guamaré and one in Rio do Fogo. A total of 60 parks are expected to be installed by 2013 with an investment of R$8 billion. Results of the auction are due later this week.

With the inauguration of the 70 MW Elebrás Cidreira wind project in Tramandaí, Rio Grande do Sul state, installed capacity of Brazilian wind reached the milestone of 1 GW. The project was the 50th to come online in Brazil. Projects contracted through the 2009 and 2010 auctions, when they are completed, will bring the total installed capacity to over 5 GW, according to  Abeeólica, the Brazilian wind energy association

At 1 GW, wind still accounts for less than 1% of Brazil's electricity generation capacity; the bulk of electricity in Brazil is sourced from hydro, which accounts for 67% of the total.

Light SA, part owned by Brazilian utility Companhia Energetica de Minas Gerais (Cemeg), is taking a controlling stake in BM&FBovespa listed Renova Energia, with a strategic investment of R$360 million for a 26.2% stake (new shares will be issued by Renova). Light has a shareholders agreement with RR Participações, which owns 35.1% of Renova -and other shareholders including InfraBrasil Fundo de Investimento em Participações, Banco Santander (Brasil) S.A., Fundo de Investimento em Participação Caixa Ambiental and Santa Barbara Fundo de Investimento em Cotas de Fundo de Investimento Multimercado.

Together, the partners will own 70.2% of the capital. Light and Renova have enterd a strategic partnership and Renova will become Light's vehicle to grow in alternative energy - with a particular focus on wind.

Renova was a major player in the 2009 and 2010 wind energy auctions in Brazil and has installed capcity of 456 MW in the state of Bahia. Renova has project portfolio of 3.503 MW in total. The portfolio comprises 1.461MW of mini hydro projects and 2.042 MW of wind projects.

The deal is subject to approval by the Brazilian electricity authority, ANEEL and the capital increase must be approved by the Renova shareholders.

View company presentation with details of the transaction (Portuguese language)

Vestas has been awarded a contract for turbines with total capacity of 90 MW for projects in the State of Bahia, Brazil, from Brennand Energia and Companhia Hidro Elétrica do São Francisco (CHESF). The Brennand Energia/CHESF consortium, which is working in the ‘semi-arid’ region, in areas surrounding the São Francisco River in Bahia, has confirmed orders for ten V90-3.0MW turbines and 30 V100-2.0MW turbines. The turbines will be deployed in projects in São Pedro do Lago, Pedra Branca and Sete Gameleiras.

Vestas will deliver, install and commission the turbines and a VestasOnline® Business SCADA system. It will subsequently undertake a ten year service contract, using its AOM 5000 solution, which optimises wind power plant output, ensuring that turbines are fully operational when the wind is blowing.

The turbines are expected to be delivered in early 2012 and the project will be operational by the end of the year. They will produce an estimated 332 GWh per year.

At the end of last year, Vestas had installed capacity in Brazil of over 200 MW.