Exciting news for the alternative energy industry has recently emerged from South America’s largest country, Brazil. Brazil is developing its economy at a rapid pace, lifting many of its citizens out of poverty and into a fast growing middle class. To provide electricity to what is expected to be a 60% growth in power consumption in the next 10 years, the Brazilian government held an auction to gather bids to supply electrical power to its utilities. Bids were accepted from traditional natural gas providers, as well as wind, hydro and biomass developers. Due to the falling cost of wind turbines, a collective of 44 wind projects came in with a bid at a lower cost than the natural gas power plants could provide.
The wind farms won over a third of the total electric capacity that was contracted, offering a price of 99.58 Brazilian Reals (about $60 US dollars) per megawatt hour. This beat out the price for natural gas projects, which came in at 103 Brazilian Reals per megawatt hour. The President of Brazil’s Energy Research Company (NYSE:EPE) affirmed the importance of this landmark for renewable electric generation:
“That wind power plants have been contracted at two digit prices, below R$ 100/MWh, showcases the energy market competition through auctions. That wind power could reach these lows vs. natural gas was unimaginable until recently.” - Mauricio Tolmasquim
Alternative energy companies that are involved in the wind projects include GE, Siemens and Vestas. Of these, GE and Seimens are both components of the Roen Financial Report’s Paradigm Portfolio. Though both of these companies are major players in supplying wind turbine components and services, they are large conglomerates with wind being only a small part of their overall business. Still, both companies have done well since their addition to the portfolio in May 2009 (click here for a sample company report). Also, it is evident that both clearly see a future in alternative energy.
As the price of building wind turbine projects continues to drop, we should be seeing more good news like this in the future.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.