Brazil's A-3 energy auction, a competitive tender between several energy sources, took place yesterday (17 August) and saw an average price for wind energy projects of below R$100  / Mwh (or less than US$63/EUR44/£38). 1,532MW of energy was contracted in the auction at a total price of R$29.14 billion. The overall average price was R$102.07.

The bulk of the energy on offer in yesterday's auction was either wind or natural gas. Of a total of 2,744,6MW of potential capacity approved to participate, wind represented 39% and natural gas 38%. In total there were 51 successful participants, of which the large majority (44) were wind projects. Four biomass projects and two natural gas projects were successful. Mini hydro was not represented in this auction.

The largest individual projects were for natural gas, where the successful bidders were Petrobras and MPX, the company of Brazilian entrepreneur Eike Batista.

The key electricity utilities contracting to buy the energy included Companhia Energetica de Minas Gerais (Cemig), which will buy 25.2% of the total, CPFL Piratininga (11.07%) and Amazonas Energia (10.81%).

The 44 successful wind projects have committed to supply a total of 1,068MW of energy to the Brazilian electricy grid under the terms of the auction, at an average price of R$99.58 / Mwh - below the expected price. The average wind energy price was 23.1% below the average in 2010's auction (R$130.86) and 28.36% below the maximum stipulated price. A total of 31 wind farms have contracted to deliver energy in the future at two digit Brazilian Real prices (i.e. below US$63, EUR44 or £38 at today's exchange rates).

The low prices for wind energy are being held up as a success for the Brazilian auction model by Mauricio Tolmasquim, President of Empresa de Pesquisa Energética (EPE). Quoted in Jornal da Energia, Tolmasquim claims that the arrival of wind equipment manufacturers in Brazil has made the market more competitive - because the manufacturers, who often work in partnership with project developers, need markets for their turbines.

Tolmasquim argues that Brazil's auction model serves to "stimulate efficiency and innovation". His view is that in Europe, where feed-in tariffs are the norm, developers don't necessarily think creatively to work towards the lowest cost solutions. Tolmasquim considers the European model to be flawed.

According to Tolmasquim (quoted in Reuters) the auction process overall helps achieve an equilibrium between the different energy sources and the different regions in Brazil.

The Reserve Auction (for wind only) takes place today (18 August).