Brazil's booming wind sector faces auction test

Reuters) - Brazil's blustery coastlines and booming electricity demand have spurred a wind-power gold rush as investors flock to build turbines and set up wind farms.

Yet, as wind projects slowly shed government protection to compete head-to-head with traditionally cheaper fossil fuel energy, government power auctions this week may reveal whether the wind-power investment euphoria is overblown.

Developers of natural gas power plants, biomass thermoelectric plants and wind farms will compete in an auction on Wednesday to offer the lowest prices for the electricity their facilities will sell in the coming years. A second auction on Thursday will not include natural gas projects.

The results will show whether Brazil's wind industry can continue lowering generation costs, a trend that has spurred investment in wind farms and equipment factories -- and could help diversify Brazil's hydro-dependent energy system.

A strong showing by natural gas projects may validate some skeptics' claims that the wind boom has gotten ahead of itself, possibly cooling investor interest or requiring new government efforts to support the industry.

http://www.reuters.com/article/2011/08/17/us-brazil-wind-idUSTRE77G47E20110817?feedType=RSS&feedName=environmentNews