The bet of wind power investors in larger and more advanced equipment helped keep power plant prices down at an auction for new generation projects carried out by the Brazilian government last week, in a dynamic that should to be repeated in the next few years, the president of EDF Renewables in Brazil told Reuters.
The French company EDF made about 276 megawatts worth of wind turbines in the bidding process, which was one of the highlights, which led the portfolio of renewable electricity in Brazil to 1 gigawatt capacity, of which about 600 megawatts are wind farms and solar already in operation.
“This 1 gigawatt brand in Brazil is an important fact for us, and this auction allowed us to reach this goal … the expectation in Brazil is very good in the medium and long term,” said Paulo Abranches.
EDF has invested 3 billion reais in renewables in the country and is prepared to put more around 6 billion reais in the next four or five years, according to Abranches.
He said business would depend on market opportunities but stressed that the company is poised to continue a price-driven scenario in government bids for generation projects.
“This dynamic of low prices we are seeing in all parts of the world, not only in Brazil. In any region, both solar and wind are increasingly competitive, technology is evolving. of the auctions is also creating a lot of competition, “he said.
In the so-called A-6 auction last Friday, the government hired 2.1 gigawatts in new projects, with 1.25 gigawatt in wind power. The winning projects sign contracts for the sale of future production to energy distributors for terms of 20 to 30 years.
Strong competition between companies for the contracts led to the average price of contracting wind farms at 90.45 reais per megawatt-hour, about 60 percent below the ceiling set for the source.
The figure was below the lowest amount recorded for wind turbines at last year’s A-6 auction, at 97 reais, and some mills, owned by developer Casa dos Ventos, managed to trade power at 79 reais.
“There are new turbines that are coming to the market with a very competitive energy cost. They are ‘n’ factors. We do not see prices returning to what they were before in a short to medium term time horizon in the next one or two years, “the executive said.
Suppliers such as Nordex Acciona and GE have most recently offered investors in Brazil wind turbines with capacities of 3.4 megawatts and 4.8 megawatts against machines ranging from 1.5 megawatts to 3 megawatts that have dominated the country’s market for the past years.
According to the president of EDF, in addition to the technology, a still low demand for energy in Brazil due to the slowdown of the economy and a great interest of the investors by renewable ones in Brazil also should help to press the quotations.
Still, he said that the return of EDF’s developments “is compatible” with the group’s standards, even because of the company’s strategy for the auction to increase profitability.
EDF’s bidding strategy involved selling a slice of the production of its developments in the so-called free electricity market, where large customers like industries can negotiate power contracts directly with generators and can get higher prices.
This move had already been made by EDF at an A-4 auction in April, when the company was able to afford a wind farm at prices of 67.60 reais per megawatt hour, a record in Brazil.
“In the April auction, we have already opted for this, and in this auction we continued with this strategy. It is a mix of anticipation (of the conclusion of the mills) with free market, and the other players also did the same,” he explained.
He declined to comment, however, on how long it will be possible to advance the delivery of the plants, which allows the sale of extra energy generated in the free market.
Abranches also did not detail the company’s talks with turbine manufacturers. He said EDF had a pre-contract with a supplier, without disclosing a name, but said the talks involved large machines with more capacity.