President and CEO of Brazil’s Energy Research Company (EPE), Mauricio Tolmasquim, has announced that for the first time ever in Brazil, wind power prices are less expensive than natural gas prices.  This announcement follows the results of energy auctions held last week by Brazil’s National Electric Power Agency (Aneel).

The auctions resulted in contracts for 78 wind power projects capable of generating 1,928 MW, and priced at approximately R$ 99.5/MWh.  This cost per MWh is approximately 19 percent lower than the average price for wind power traded in Brazil last year, demonstrating that wind power is becoming a more competitive and viable option in the Brazilian market.

By comparison, the average price for power generated with natural gas is currently R$ 103/MWh in Brazil.

In addition to wind power, Aneel auctions last week featured biomass, hydro-electric, and natural gas, for a total of 92 energy projects with investments amounting to R$ 11.2 billion.  These projects include a total of 3,962 MW to be generated beginning in 2014.

These energy auctions were the first in Brazil for 2011.  Tolmasquim noted that they were significant for two key reasons:  they reflect a new feasibility of market competition between wind and natural gas sources – something unheard of internationally; and they demonstrate that wind prices continue to fall in Brazil.

“That wind power plants have been contracted at two digit prices, below R$ 100 /MWh, showcases the energy market competition through auctions.  That wind power could reach these lows vs. natural gas was unimaginable until recently,” said Mr. Tolmasquim.

Brazil has wind power potential estimated at 143,000 MW, which may rise to 300,000 MW with use of state-of-the-art generators, according to EPE estimates.  Wind power generation increased 50.5 percent in Brazil from 2009 to 2010, and while growing, represented just 0.4 percent of the electricity generated domestically as of 2010.

The increasing use of wind power will help Brazil maintain an energy matrix among the cleanest in the industrialized world, with 45.4 percent of energy coming from renewable sources. Specifically among electricity generation in Brazil, 87.1 percent is generated from renewable sources.