Brazilian Wind Power Now Cheaper Than Natural Gas

Wind power in Brazil now costs less than natural gas. Brazil's National Electric Power Agency held a series of energy auctions last week. During the auctions, 78 wind power projects, out of 92 projects, nabbed contracts. The contracts totaled 1,928 megawatts (MW), and were priced at 99.5 Brazilian reals ($66.81) per megawatt hour (MWh). Natural gas is 103 reals ($64). Investments totaled 11.2 billion reals ($6.8 billion) for 3,962 MW of energy slated to begin generating in 2014.

Brazil's Energy Research Company (EPE) says wind power is trading about 19 cents less per MWh than last year. EPE president and chief executive Mauricio Tolmasquim said, "That wind power plants have been contracted at two digit prices, below 100 reals per MWh, showcases the energy market competition through auctions." Tolmasquim added, "That wind power could reach these lows versus natural gas was unimaginable until recently."

EPE predicts Brazil's wind power potential of 143 gigawatts (GW) could increase to 300 GW with better use of turbine technology. EPE also predicts that the Brazilian use of wind power will increase to 60 percent between 2010 and 2020.
In 2004, Brazil created incentive programs that offered to purchase wind power at higher rates than other types of energy. By 2010, wind farms were selling power at prices 50 percent lower than the average price during the incentive program.

Adriano Pires, an energy expert with the Brazilian Center for Infrastructure, is quoted by Reuters as expressing doubt about wind power rates.

"Brazil has a history of euphoria when it comes to power generation," he said. "Right now wind power is the darling of the government, but that doesn't mean it's going to be sustainable in the long run."

U.S. wind power became cost competitive with natural gas last year

By the end of last year, wind power in the U.S. was cost-competitive with natural gas, the American Wind Energy Association (AWEA) reported in January.

"Wind's costs have dropped over the past two years, with power purchase agreements being signed in the range of 5 to 6 cents per kilowatt-hour recently." said Elizabeth Salerno, AWEA Director of Industry Data & Analysis. "With uncertainty around natural gas and power prices as the economy recovers, wind's long-term price stability is even more valued. We expect that utilities will move to lock in more wind contracts, given the cost-competitive nature of wind in today's market."

Photo: Flickr user, 666ismoney