What forces are shaping Brazil’s wind power sector?



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Latin American Energy Advisor

Brazil’s government announced in April that wind power prices fell to the lowest level ever in the country’s April 4 auction, nearly reaching the Latin American record set in Mexico
last November, Bloomberg News reported. What forces are shaping Brazil’s wind power sector? How well are other renewable sources of energy faring? Has Brazil become internationally competitive for low prices of renewables, and what could change that outlook?

Steve Sawyer, secretary general of the Global Wind Energy Council: “The very low prices for wind power contracted in Brazil’s latest auction reflect a growing trend worldwide.
In places as diverse as Mexico, India, Morocco, the United States, Canada and Brazil, we have prices around 3 cents per kilowatt-hour, with the most recent prices in Mexico breaking the 2-cent per kilowatt-hour barrier for the first time. Cratering prices for wind and solar have led energy analysts to look at a sustainable energy system of the
future as largely electrified, and largely powered by cheap wind and solar.
We can see this both in the energy planning of more advanced countries
in Europe as well as in Latin America, China and even India. Is the industry
cutting margins so thin that it is no longer sustainable? I don’t think so,
but if the situation persists, it will drive many or most of the small players
out of the markets where cost is the only consideration. The extremely
low prices raise a number of questions, particularly from the finance sector.
Given the numbers, many of these projects are not ‘bankable’ in the
sense of using debt finance in the traditional project finance model.