Brazil’s Wind Energy Development and Trends

Brazil’s Wind Energy Development and Trends


Wind energy in Brazil is growing through competition and attracting foreign companies interested in investing in a low carbon future. Major companies, such as EDF, EDP and Stategrid (via CPFL) were amongst the successful bidders in the latest energy auction, which will add 2.1 GW of new installed capacity to the grid as disclosed by the Electricity Regulatory Agency (ANEEL). In 2017, Brazil was ranked the 2nd country by Bloomberg’s Climatescope, which compares the environment for clean energy and climate investment worldwide.

In Brazil, distribution companies contract energy through auctions held by the Government, which grants generators with long-term contracts (20 to 30 years depending on the source). Each auction has a specific energy amount target and the type of contract may vary according to source. Prior to August 2018, wind farms’ revenue was fixed in the auction. However, the type of contract adopted in the August 31 auction sets a generation target, putting the risk of under supply on the generator, who will have to offset the balance in the short-term market. More than half of the energy contracted in this auction came from wind with an average price of USD 22 MWh, which was 60% lower than the set price cap. This was contrary to the market expectations that predicted a price increase, in comparison to a similar auction held in 2017.

Increasing Wind Generation

The increase of wind energy generation in Brazil was a result of policies, subsidized by consumers, which aimed at diversifying the country’s mix after the 2001 shortage crisis. The first mechanism introduced for this purpose was the Brazilian Programme for the Promotion of Renewable Energy Sources (PROINFA), which was launched in 2002, with the intention of contracting 3.3 GW from renewable energy sources (wind, biomass and small hydro), and stimulating the creation of a local supply chain. The program was operationalized by Eletrobras (Electricity State Owned Enterprise) and resulted in 1.4 GW of wind energy.

In 2004, another important scheme to increase the capacity of renewable energy was introduced that provided a discount on the transmission and distribution tariffs for biomass, wind, solar and small hydro plants. Later in 2007, another step forward was taken with the promotion of exclusive renewable energy auctions, causing prices to drop even lower. After several rounds during subsequent years, renewable energy projects became more competitive and now participate in regular auctions. These policies were successful in fostering investments and increasing the installed capacity from a little over 300 MW in 2008 to over 13GW in 2018. However, subsidies to the wind and solar sectors are costing consumers US$ 2.3 billion a year and tend to increase as the free market expands. Because of that, the Brazilian Electricity Regulatory Agency (ANEEL) suggested a cut in subsidies for wind energy based on the argument that the sector is consolidated in the country.

Brazil’s Large Onshore Wind Capacity

The Global Wind Energy Association (GWEC), ranks Brazil 8th in onshore accumulated wind capacity (12.7 GW), making it the largest wind energy market in Latin America. It is clear that the market is no longer in an early phase of development. The subsidies to the sector combined with competitive credit offered by the National Development Bank (BNDES) were fundamental to develop the local industry; companies like Vestas, Acciona, Siemens Gamesa and GE are already manufacturing in Brazil. In addition, the Brazilian wind energy market has one of the highest capacity factors in the world, 41% against 25% global average, making it much more competitive than that of other countries. Even offshore wind projects are being assessed by oil companies interested in investing in a low carbon future. Petrobras has announced a pilot project in the Northeast region, which should start operating in 2022.

Perhaps, this is the right time to decrease subsidies for onshore wind and start thinking about mechanisms that will support the development of offshore wind projects using the lessons learned by the previous experiences. Keep posted to see how winds will change in Brazil.


Lara Baptista is an energy economy and policy specialist who worked for over 10 years providing advice for foreign companies in Brazil. She worked for the UK Department for International trade leading on the Power and Low Carbon portfolios. She advised the Prosperity Fund panel in Brazil and coordinated the delivery of project activities related to energy efficiency, smart grids and energy storage. She holds a master’s degree in Global Energy Transition and Governance by the Centre International de Formation Européenne, and an MBA in Energy Economy by COPPEAD (Rio de Janeiro’s Federal University – Business School).

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.