Brazil is expected to launch the first offshore wind auction in 2023 and the winning projects are slated to be operational in 2027.
Brazil is expected to add 76.9GW of solar PV capacity and onshore wind capacity of around 17.8GW between 2023-2035.
As of 2022, wind power capacity has increased to 23.71GW, biopower capacity to 16.91GW, and solar PV capacity to 23.24GW, reflecting the success of Brazil’s renewable power market.
Brazil has added 14.1GW capacity through the auction mechanism between 2015 and 2022. Wind power and solar PV are accounting for 40.8 percent and 33.8 percent respectively of the total awarded capacity between 2015-2022.
“There has been a decline in awarded capacity from 2018 to 2022 due to reduced interest from industry participants because of rising costs and reduction in ceiling prices set by the government, making it an unattractive investment option,” Attaurrahman Ojindaram Saibasan, Power Analyst at GlobalData, said in a report.
Brazil has set a target to achieve 45 percent renewable power in the energy mix and 23 percent renewable power in electricity generation by 2030.
Brazil should look for ways to manoeuvre around the current challenges and make the auction scheme more attractive. Brazil may look at floating price schemes or contracts for difference (CfD) schemes to protect renewable power developers from rising costs as well as protect itself from overcompensating once the global energy crisis subdues.