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 s...
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/06/19670593/promoting-renewable-energy-through-auctions-case-brazil http://hdl.handle.net/10986/18675 |
| Summary: | 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. |
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