Brazil's A-3: 1GW of new wind tipped

Elbia Melo expects more than 1GW of wind projects to be commissioned at next month's A-3 auction.

The executive president of the Brazilian Wind Power Association, Abeeólica, says the price cap came in a little lower than the R$140/MWh ($63) that developers had sought, but admits that there will still be ample competition.

More than 12GW of wind projects shortlisted for the 6 June auction will have a ceiling of R$133/MWh, up from last year's R$126/MWh. Power regulator Aneel says the 2014 cap is enough to make up losses due to inflation.

Melo says the higher price sought by Abeeólica would have covered inflation, foreign-exchange variations, tougher gird connection rules and 90% annual energy yields guarantees.

“The government should not be scared of setting a higher price, because ample competition that will reduce the price,” she adds.

Under rules introduced last year, projects that sell power in this year's auctions have to guarantee not only a minimum production of power 90% of the time, but also connection to the grid.

“These rules raise the risk for investors,” Melo comments. Still, she believes that they may help elimiminate connection problems that affect about 1GW of completed projects that cannot come on line because they lack grid connections. According to Melo, wind farms contracted since 2013 will not face such problems.

The government is expected to announce the projects qualified for the auction in the coming days, and developers will have to deposit guarantees by 28 May. Projects sold at next month's auction will sign 20-year power-purchase agreements starting on 1 January 2017.

Last year, 4.7GW of wind projects were commissioned in three auctions.