company news about Auctions were crucial for expanding renewable energy in Brazil

Auctions were crucial for expanding renewable energy in Brazil

From PV Magzine

Between 2015 and 2022, a total of 14.1 GW of capacity was awarded through auction. Wind and solar photovoltaic energy were the favored technologies, representing 40.8% and 33.8%, respectively, of the total capacity granted in the period. The increase in costs and the reduction of maximum prices established by the government, however, have been weakening competition.

The development of renewable energy in recent years has mainly been due to the introduction of the government auction system in the context of increasing total electricity demand in the country, says GlobalData, a leading data and analytics company. Between 2015 and 2022, a total of 14.1 GW of capacity was awarded through the auction mechanism. Wind energy and photovoltaic solar energy were the two favored technologies, representing 40.8% and 33.8%, respectively, of the total capacity granted between 2015 and 2022.

As of 2022, wind energy capacity increased to 23.71 GW, bioenergy capacity to 16.91 GW and solar photovoltaic capacity to 23.24 GW, reflecting the success of the Brazilian renewable energy market.

GlobalData's latest report, “Brazil Power Market Size, Trends, Regulations, Competitive Landscape and Forecast, 2023-2035,” notes that during 2003-2004, the power sector underwent major reforms to enhance regulation in the sector through transparency and rule stability.

“Easy access and a fair return on investment for energy producers were considered key objectives. During this period, a decree was passed allowing the government to establish an auction mechanism and use it as the main method of developing renewable energy capacity. Auctions were introduced to bridge the supply and demand gap by attracting new generation capacity, ensuring supply adequacy and purchasing electricity based on load forecasts. Auctions are either technology-specific or technology-neutral,” said GlobalData energy analyst Attaurrahman Ojindaram Saibasan

In recent years, however, this scenario has changed. “There was a decline in capacity granted from 2018 to 2022 due to reduced interest from industry participants due to rising costs and the reduction of maximum prices set by the government, making it an unattractive investment option,” says the analyst.