Developers rue variation rule – Melo

Bidding by wind developers in June's A-3 auction may be shyer this year because of regulations that limit variations to power supply guarantees – and consequently restrict technical changes – to projects, said Élbia Melo, executive president of Brazil's Wind Power Association (Abeeólica).

“Aneel [Brazil's regulator] has limited to 4% power supply changes after the auction, and this is not good for the wind sector,” she said.

Melo said the government agrees with Abeeolica's argument that this limit should be higher, but claimed that there is not enough time to change the rules without delaying the auction, scheduled for June 6.

According to Melo, wind developers need broader limits for changes to allow them to negotiate more effectively with turbine suppliers.

“It's a characteristic of the wind sector that changes are made in the machinery and layouts of the projects during the commercial negotiations with suppliers,” she said.

Nevertheless, Melo said that developers’ appetite remains strong and at least 16GW of wind power capacity should be registered for this auction – a level similar to the three held in 2013.

“The amount actually sold could be reduced compared to other years because of this rule, but wind power remains competitive,” she said, indicating that developers could wait for a change in the power supply guarantee regulation before implementing more aggressive strategies.

Another factor that will determine commitments by wind power companies is the ceiling price, which has not yet been set by the government.

At the last A-3 auction the top price for wind power was R$126/MWh ($53.8). Average wind power prices came in at R$124.43/MWh, 1.25% below the maximum.

Brazilian wind developers have a portfolio of projects that adds up to some 22GW throughout the country, Melo said.

At previous auctions about 16GW have been registered while projects commissioned averaged below 10% of the amount registered.

Brazil's wind power potential tops 140GW. Currently 3.4GW is in operation and by 2018 this should reach 13.5GW.