Wind power insertion through energy auctions in Brazil

Brazil has a large potential for wind: it is estimated that nearly 140,000 MW of wind energy generating capacity could be built in the country. In December 2009 a specific auction to contract wind power was carried out. The motivation of this auction was to take advantage of the 2008-2009 world financial crisis that has lowered equipment cost as well as to foster competition among the interested investors, thus starting the development of this technology in the country in a larger scale. The product offered - a 20 year energy contract - has particular characteristics that try to accommodate wind variability and mechanisms to penalize productions above/below a given annual energy threshold. The objective of this work is to discuss the wind power auction in Brazil. We describe the auction motivation, product, organization, procedure, results and present our critical analysis. The information presented in this work may be useful for other countries willing to adopt the same mechanism.