Brazil Wind Farms May Struggle to Deliver Power at Lowest Rates
Brazilian renewable energy developers may have trouble delivering electricity profitably after agreeing to sell power at the world’s cheapest rates for wind power, according to a research company.
Companies including the state-controlled utility Eletrosul Centrais Eletricas SA and Renova Energia SA (RNEW11) agreed to sell wind power at rates that are below the wholesale electricity prices in many Latin American markets, London-based Bloomberg New Energy Finance said today in a statement.
To fulfill those contracts, developers will need to buy turbines for about $1.2 million a megawatt, said Eduardo Tabbush, wind analyst at New Energy Finance. That’s 10 percent below the global average price and 15 percent less than prices in Brazil.
“These remarkably low bids have set the bar very high,” Tabbush said in the statement. “Now they must clear it by either getting exceptional performance from their wind turbines, or by sourcing equipment and capital much more inexpensively than we’ve seen to date.”
In two government-organized auctions in Brazil last month, developers agreed to sell power from wind farms with 1.9 gigawatts of capacity at an average price of 99.58 reais ($62.70) a megawatt-hour. That was lower than the average price for natural gas in Brazil and the cheapest price for wind anywhere in the world, Tabbush said.
To contact the editor responsible for this story: Reed Landberg at email@example.com