Promoting Renewable Energy through Auctions : The Case of Brazil

This knowledge note singles out auctions as an important mechanism that has been implemented in a growing number of countries in recent decades. It features a case study of auctions designed to promote the generation of electricity from renewable sources in Brazil. The Brazilian experience with wind energy auctions illustrates that even carefully designed policies often must be reconsidered in the light of a complex and changing environment. Many considerations need to be taken into account to ensure competitive prices while also delivering the required renewable energy supply. This case study is interesting, because Brazil's initial success with developing wind capacity had unforeseen consequences. Challenges introduced in the first stage of wind power development had to be solved in the second. The chief challenges were (i) the Brazilian system had to be able to balance supply and demand more accurately; (ii) investors were overoptimistic about the amount of electricity able to be generated; and (iii) the government's arrangements for coordinating the planning of generation and transmission left too little room for error. The benefits offered to the auctioned plants were reduced, as was government involvement in planning and coordinating transmission expansion. The key lesson from this case study is that existing policies should be challenged and revised in response to a changing environment.

Bibliographic Details

Main Authors:	Elizondo Azuela, Gabriela, Barroso, Luiz, Cunha, Gabriel
Format:	Brief biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2014-06-13
Subjects:	ALLOCATION, ALLOCATION OF RISK, APPROACH, AUCTION, AUCTION DESIGN, AUCTION MECHANISM, AUCTIONS, AVERAGE PRICE, BALANCE, BIOMASS, BLACK CARBON, BOTTOM LINE, BURNING COAL, CAPACITY FACTOR, CAPACITY FACTORS, CARBON, CARBON DIOXIDE, CLEANER ENERGY, CLIMATE, CLIMATE CHANGE, CLIMATE VARIABILITY, CO, CO2, COAL, COMBUSTION, COMPETITIVE PRICES, CONVENTIONAL ENERGY, CUSTOMER SERVICE, DEMAND FOR ELECTRICITY, DISTRIBUTION OF ENERGY, ECONOMIC DEVELOPMENT, ELECTRICITY, ELECTRICITY MARKET, EMISSIONS, ENERGY AUCTIONS, ENERGY CONSUMERS, ENERGY CONSUMPTION, ENERGY DATA, ENERGY GENERATION, ENERGY INDUSTRIES, ENERGY MIX, ENERGY POLICIES, ENERGY SHORTAGES, ENERGY SYSTEMS, FOSSIL, FOSSIL FUELS, GENERATION, GENERATION CAPACITY, GENERATORS, GREENHOUSE, GREENHOUSE GAS, GREENHOUSE GAS EMISSIONS, GREENHOUSE GAS INVENTORY, GREENHOUSE GASES, HEAT, HEAT GENERATION, HYDROPOWER, HYDROPOWER GENERATION, INCOME, INCREASE IN CAPACITY, INTERNATIONAL ENERGY, INVESTMENT CLIMATE, INVESTMENT COSTS, LOWER PRICE, LOWER PRICES, LOWER TARIFFS, MARGINAL PRICE, METHANE, MITIGATING CLIMATE CHANGE, OIL, PENALTIES, PETROLEUM, PIPELINE, POLICY MAKERS, PORTFOLIO, POWER CAPACITY, POWER INDUSTRY, POWER PURCHASE, POWER SECTOR, PRICE CEILING, PRICE REDUCTIONS, REGULATORY FRAMEWORK, RENEWABLE ENERGY, RENEWABLE ENERGY DEVELOPMENT, RENEWABLE ENERGY SUPPLY, RENEWABLE PORTFOLIO STANDARD, RENEWABLE SOURCES, RENEWABLE SOURCES OF ENERGY, SOURCE OF ENERGY, SPOT PRICES, TARIFF STRUCTURE, TOTAL GREENHOUSE, TOTAL GREENHOUSE GAS, TRANSMISSION INFRASTRUCTURE, TRANSMISSION LINES, TRANSMISSION SYSTEM, TURBINE COMPONENTS, UNCERTAINTIES, UTILITIES, WIND, WIND CAPACITY, WIND DEVELOPMENT, WIND ENERGY, WIND EQUIPMENT, WIND FARM, WIND FARMS, WIND GENERATION, WIND PLANTS, WIND POWER, WIND POWER CAPACITY, WIND POWER DEVELOPMENT, WIND POWER INDUSTRY, WIND POWER PLANTS, WIND PRODUCERS, WIND PROJECTS, WIND SECTOR, WIND SITES, WIND TURBINE,
Online Access:	http://documents.worldbank.org/curated/en/2014/06/19670593/promoting-renewable-energy-through-auctions-case-brazil http://hdl.handle.net/10986/18675
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