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Brazil Wind Developers Win Contracts for 1.5 Gigawatts

Aug. 23 (Bloomberg) -- Developers of wind farms in Brazil agreed to build 1.5 gigawatts of power plants for a 25.6 percent higher price compared to the last offer in a government-organized auction for contracts to sell power from new facilities.

The 66 projects will sell electricity at an average rate of 110.51 reais ($46.57) a megawatt-hour and must go into operation by Sept. 1, 2015, the country’s electricity trading board Camara de Comercializacao de Energia Eletrica said today on its website.

“This result is marvelous, as we usually add 2 gigawatts per year in wind power and we got almost that in one single auction,” Elbia Melo, president of the Sao Paulo based trade group Associacao Brasileira de Energia Eolica, said in a phone interview. “And we have more auctions this year.”

Wind developers in Brazil’s last auction, in December, won contracts to build 281.9 megawatts of capacity, or 49 percent of the contracts for sale, the country’s energy agency Empresa de Pesquisa Energetica said on its website. The average price for electricity from the plants was 87.94 reais a megawatt hour, 26 percent less than the average price agreed upon today. Two hydroelectric projects won the remaining contracts.

“The market is clearly placing wind energy power prices at a new level now,” Melo said. “This auction shows that wind energy has an increasingly part in Brazil’s power supply.”

In Brazil’s energy auctions, developers bid down from a preset ceiling price the rate they’re willing to sell electricity. The lowest bidders win contracts to sell power to distributors and move forward with their planned projects. The ceiling price for this auction was 117 reais.

Brazil will hold another energy auction Aug. 29 for developers planning power projects that run on biomass, coal and natural gas.

The country gets 81 percent of its power from hydro plants.

To contact the reporters on this story: Stephan Nielsen in Sao Paulo at snielsen8@bloomberg.net; Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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