Elizondo Azuela, GabrielaBarroso, LuizCunha, Gabriel2014-06-172014-06-172014-06-13https://hdl.handle.net/10986/18675This 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.en-USCC BY 3.0 IGOALLOCATIONALLOCATION OF RISKAPPROACHAUCTIONAUCTION DESIGNAUCTION MECHANISMAUCTIONSAVERAGE PRICEBALANCEBIOMASSBLACK CARBONBOTTOM LINEBURNING COALCAPACITY FACTORCAPACITY FACTORSCARBONCARBON DIOXIDECLEANER ENERGYCLIMATECLIMATE CHANGECLIMATE VARIABILITYCOCO2COALCOMBUSTIONCOMPETITIVE PRICESCONVENTIONAL ENERGYCUSTOMER SERVICEDEMAND FOR ELECTRICITYDISTRIBUTION OF ENERGYECONOMIC DEVELOPMENTELECTRICITYELECTRICITY MARKETEMISSIONSENERGY AUCTIONSENERGY CONSUMERSENERGY CONSUMPTIONENERGY DATAENERGY GENERATIONENERGY INDUSTRIESENERGY MIXENERGY POLICIESENERGY SHORTAGESENERGY SYSTEMSFOSSILFOSSIL FUELSGENERATIONGENERATION CAPACITYGENERATORSGREENHOUSEGREENHOUSE GASGREENHOUSE GAS EMISSIONSGREENHOUSE GAS INVENTORYGREENHOUSE GASESHEATHEAT GENERATIONHYDROPOWERHYDROPOWER GENERATIONINCOMEINCREASE IN CAPACITYINTERNATIONAL ENERGYINVESTMENT CLIMATEINVESTMENT COSTSLOWER PRICELOWER PRICESLOWER TARIFFSMARGINAL PRICEMETHANEMITIGATING CLIMATE CHANGEOILPENALTIESPETROLEUMPIPELINEPOLICY MAKERSPORTFOLIOPOWER CAPACITYPOWER INDUSTRYPOWER PURCHASEPOWER SECTORPRICE CEILINGPRICE REDUCTIONSREGULATORY FRAMEWORKRENEWABLE ENERGYRENEWABLE ENERGY DEVELOPMENTRENEWABLE ENERGY SUPPLYRENEWABLE PORTFOLIO STANDARDRENEWABLE SOURCESRENEWABLE SOURCES OF ENERGYSOURCE OF ENERGYSPOT PRICESTARIFF STRUCTURETOTAL GREENHOUSETOTAL GREENHOUSE GASTRANSMISSION INFRASTRUCTURETRANSMISSION LINESTRANSMISSION SYSTEMTURBINE COMPONENTSUNCERTAINTIESUTILITIESWINDWIND CAPACITYWIND DEVELOPMENTWIND ENERGYWIND EQUIPMENTWIND FARMWIND FARMSWIND GENERATIONWIND PLANTSWIND POWERWIND POWER CAPACITYWIND POWER DEVELOPMENTWIND POWER INDUSTRYWIND POWER PLANTSWIND PRODUCERSWIND PROJECTSWIND SECTORWIND SITESWIND TURBINEBriefWorld Bank10.1596/18675