IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v17y2024i24p6450-d1549327.html
   My bibliography  Save this article

Auction-Based Policy of Brazil’s Wind Power Industry: Challenges for Legitimacy Creation

Author

Listed:
  • Milton M. Herrera

    (Faculty of Economics Sciences, Universidad Militar Nueva Granada, Bogotá 110111, Colombia)

  • Mauricio Uriona Maldonado

    (Department of Industrial and Systems Engineering, Federal University of Santa Catarina, Florianopolis 88040-900, Brazil)

  • Alberto Méndez-Morales

    (Tecnológico de Monterrey, EGADE Business School, Mexico City 01389, Mexico)

Abstract

Brazil’s wind power industry (WPI) has thrived since the early 2000s, driven by a successful auction-based expansion plan. However, the recent rise of cost-competitive solar power and policy shifts favoring other energy sources, such as natural gas, have created uncertainty about the future of wind energy in Brazil and reduced the wind sector’s legitimacy. Additionally, the cancellation of wind power auctions and support for other energy sources (evidenced by the new regulation for natural gas) has sent mixed signals to the market. These actions have sparked concerns regarding the future trajectory of the WPI. This paper focuses on the long-term effects of this energy policy decision on the so-called legitimacy function of the technological innovation systems (TIS) for the case of WPI in Brazil. The study aims to identify challenges arising from the growing appeal of solar power that may hinder wind energy adoption and to offer policy recommendations to strengthen the wind sector’s legitimacy. A system dynamics model is proposed to quantify such impacts in the long run, showing the interactions between the wind power capacity, wind generation costs, and the legitimacy function of the TIS. Results show the importance of policy consistency and institutional support in fostering a stable environment for renewable energy technologies like wind power to flourish.

Suggested Citation

  • Milton M. Herrera & Mauricio Uriona Maldonado & Alberto Méndez-Morales, 2024. "Auction-Based Policy of Brazil’s Wind Power Industry: Challenges for Legitimacy Creation," Energies, MDPI, vol. 17(24), pages 1-19, December.
  • Handle: RePEc:gam:jeners:v:17:y:2024:i:24:p:6450-:d:1549327
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/17/24/6450/pdf
    Download Restriction: no

    File URL: https://www.mdpi.com/1996-1073/17/24/6450/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fleck, Ann-Katrin & Anatolitis, Vasilios, 2023. "Achieving the objectives of renewable energy policy – Insights from renewable energy auction design in Europe," Energy Policy, Elsevier, vol. 173(C).
    2. Moreno, R. & Barroso, L.A. & Rudnick, H. & Mocarquer, S. & Bezerra, B., 2010. "Auction approaches of long-term contracts to ensure generation investment in electricity markets: Lessons from the Brazilian and Chilean experiences," Energy Policy, Elsevier, vol. 38(10), pages 5758-5769, October.
    3. Kieft, Alco & Harmsen, Robert & Hekkert, Marko P., 2020. "Toward ranking interventions for Technological Innovation Systems via the concept of Leverage Points," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    4. Zapata, Sebastian & Castaneda, Monica & Herrera, Milton M. & Dyner, Isaac, 2023. "Investigating the concurrence of transmission grid expansion and the dissemination of renewables," Energy, Elsevier, vol. 276(C).
    5. Diniz, Bruno Andrade & Szklo, Alexandre & Tolmasquim, Maurício T. & Schaeffer, Roberto, 2023. "Delays in the construction of power plants from electricity auctions in Brazil," Energy Policy, Elsevier, vol. 175(C).
    6. de Melo, Conrado Augustus & Jannuzzi, Gilberto de Martino & Bajay, Sergio Valdir, 2016. "Nonconventional renewable energy governance in Brazil: Lessons to learn from the German experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 222-234.
    7. de Jong, Pieter & Dargaville, Roger & Silver, Jeremy & Utembe, Steven & Kiperstok, Asher & Torres, Ednildo Andrade, 2017. "Forecasting high proportions of wind energy supplying the Brazilian Northeast electricity grid," Applied Energy, Elsevier, vol. 195(C), pages 538-555.
    8. Castaneda, Monica & Jimenez, Maritza & Zapata, Sebastian & Franco, Carlos J. & Dyner, Isaac, 2017. "Myths and facts of the utility death spiral," Energy Policy, Elsevier, vol. 110(C), pages 105-116.
    9. Zhen Yu & David Gibbs, 2018. "Sustainability transitions and leapfrogging in latecomer cities: the development of solar thermal energy in Dezhou, China," Regional Studies, Taylor & Francis Journals, vol. 52(1), pages 68-79, January.
    10. Mauricio Uriona & Sara S (Saartjie) Grobbelaar, 2019. "Innovation system policy analysis through system dynamics modelling: A systematic review," Science and Public Policy, Oxford University Press, vol. 46(1), pages 28-44.
    11. Leusin, Matheus Eduardo & Uriona Maldonado, Mauricio & Herrera, Milton M., 2024. "Exploring the influence of Brazilian project cancellation mechanisms on new wind power generation," Renewable Energy, Elsevier, vol. 221(C).
    12. Rigo, Paula D. & Siluk, Julio Cezar M. & Lacerda, Daniel P. & Spellmeier, Júlia P., 2022. "Competitive business model of photovoltaic solar energy installers in Brazil," Renewable Energy, Elsevier, vol. 181(C), pages 39-50.
    13. Silva, Neilton Fidelis da & Rosa, Luiz Pinguelli & Freitas, Marcos Aurélio Vasconcelos & Pereira, Marcio Giannini, 2013. "Wind energy in Brazil: From the power sector's expansion crisis model to the favorable environment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 686-697.
    14. Marko P. Hekkert & Simona O. Negro, 2008. "Functions of innovation systems as a framework to understand sustainable technological change: empirical evidence for earlier claims," Innovation Studies Utrecht (ISU) working paper series 08-10, Utrecht University, Department of Innovation Studies, revised Apr 2008.
    15. Isaac Dyner, 2000. "Energy modelling platforms for policy and strategy support," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 51(2), pages 136-144, February.
    16. Bayer, Benjamin & Berthold, Lennart & Moreno Rodrigo de Freitas, Bruno, 2018. "The Brazilian experience with auctions for wind power: An assessment of project delays and potential mitigation measures," Energy Policy, Elsevier, vol. 122(C), pages 97-117.
    17. Köhler, Jonathan & Braungardt, Sibylle & Hettesheimer, Tim & Lerch, Christian & Nabitz, Lisa & Sartorius, Christian & Walz, Rainer, 2016. "The dynamic simulation of TIS functions in transitions pathways," Discussion Papers "Innovation Systems and Policy Analysis" 48, Fraunhofer Institute for Systems and Innovation Research (ISI).
    18. Kiefer, Christoph P. & del Río, Pablo, 2024. "Analysing the impact of renewable energy auctions on market concentration," Renewable Energy, Elsevier, vol. 221(C).
    19. Carsten Gandenberger & Manuel Strauch, 2018. "Wind energy technology as opportunity for catching-up? A comparison of the TIS in Brazil and China," Innovation and Development, Taylor & Francis Journals, vol. 8(2), pages 287-308, July.
    20. Rangel, Richard & Arango-Manrique, Adriana & Corredor, Lesme & Sanjuan, Marco, 2024. "Assessment of Colombian renewable energy auctions policy: Enabler or barrier for concentrating solar power plants," Energy Policy, Elsevier, vol. 193(C).
    21. Raven, Rob & Walrave, Bob, 2020. "Overcoming transformational failures through policy mixes in the dynamics of technological innovation systems," Technological Forecasting and Social Change, Elsevier, vol. 153(C).
    22. Jonathan Köhler & Fjalar de Haan & Georg Holtz & Klaus Kubeczko & Enayat Moallemi & George Papachristos & Emile Chappin, 2018. "Modelling Sustainability Transitions: An Assessment of Approaches and Challenges," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 21(1), pages 1-8.
    23. Cardoso Júnior, Ricardo Abranches Felix & Magrini, Alessandra & da Hora, Antonio Ferreira, 2014. "Environmental licensing process of power transmission in Brazil update analysis: Case study of the Madeira transmission system," Energy Policy, Elsevier, vol. 67(C), pages 281-289.
    24. Kunz, Friedrich & Zerrahn, Alexander, 2015. "Benefits of coordinating congestion management in electricity transmission networks: Theory and application to Germany," Utilities Policy, Elsevier, vol. 37(C), pages 34-45.
    25. Ulrich Dewald & Bernhard Truffer, 2011. "Market Formation in Technological Innovation Systems—Diffusion of Photovoltaic Applications in Germany," Industry and Innovation, Taylor & Francis Journals, vol. 18(3), pages 285-300.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Herrera, Milton M. & Dyner, Isaac & Cosenz, Federico, 2019. "Assessing the effect of transmission constraints on wind power expansion in northeast Brazil," Utilities Policy, Elsevier, vol. 59(C), pages 1-1.
    2. Herrera, Milton M. & Dyner, Isaac & Cosenz, Federico, 2020. "Benefits from energy policy synchronisation of Brazil’s North-Northeast interconnection," Renewable Energy, Elsevier, vol. 162(C), pages 427-437.
    3. Leusin, Matheus Eduardo & Uriona Maldonado, Mauricio & Herrera, Milton M., 2024. "Exploring the influence of Brazilian project cancellation mechanisms on new wind power generation," Renewable Energy, Elsevier, vol. 221(C).
    4. Farkat Diógenes, Jamil Ramsi & Coelho Rodrigues, José & Farkat Diógenes, Maria Caroline & Claro, João, 2020. "Overcoming barriers to onshore wind farm implementation in Brazil," Energy Policy, Elsevier, vol. 138(C).
    5. Mirzadeh Phirouzabadi, Amir & Blackmore, Karen & Savage, David & Juniper, James, 2022. "Modelling and simulating a multi-modal and multi-dimensional technology interaction framework: The case of vehicle powertrain technologies in the US market," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    6. Gumber, Anurag & Zana, Riccardo & Steffen, Bjarne, 2024. "A global analysis of renewable energy project commissioning timelines," Applied Energy, Elsevier, vol. 358(C).
    7. Bose, A.S. & Sarkar, S., 2019. "India's e-reverse auctions (2017–2018) for allocating renewable energy capacity: An evaluation," Renewable and Sustainable Energy Reviews, Elsevier, vol. 112(C), pages 762-774.
    8. Bayer, Benjamin & Berthold, Lennart & Moreno Rodrigo de Freitas, Bruno, 2018. "The Brazilian experience with auctions for wind power: An assessment of project delays and potential mitigation measures," Energy Policy, Elsevier, vol. 122(C), pages 97-117.
    9. Aquila, Giancarlo & Nakamura, Wilson Toshiro & Junior, Paulo Rotella & Souza Rocha, Luiz Celio & de Oliveira Pamplona, Edson, 2021. "Perspectives under uncertainties and risk in wind farms investments based on Omega-LCOE approach: An analysis in São Paulo state, Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    10. Vanderson Aparecido Delapedra-Silva & Paula Ferreira & Jorge Cunha & Herbert Kimura, 2021. "Economic Evaluation of Wind Power Projects in a Mix of Free and Regulated Market Environments in Brazil," Energies, MDPI, vol. 14(11), pages 1-18, June.
    11. Zapata, Sebastian & Castaneda, Monica & Franco, Carlos Jaime & Dyner, Isaac, 2019. "Clean and secure power supply: A system dynamics based appraisal," Energy Policy, Elsevier, vol. 131(C), pages 9-21.
    12. Diógenes, Jamil Ramsi Farkat & Claro, João & Rodrigues, José Coelho, 2019. "Barriers to onshore wind farm implementation in Brazil," Energy Policy, Elsevier, vol. 128(C), pages 253-266.
    13. Cardoso, Ricardo Abranches Felix & Hoffmann, Alessandra Schwertner, 2019. "Environmental licensing for transmission systems and electricity sector planning in Brazil," Energy Policy, Elsevier, vol. 132(C), pages 1155-1162.
    14. Vermunt, D.A. & Wojtynia, N. & Hekkert, M.P. & Van Dijk, J. & Verburg, R. & Verweij, P.A. & Wassen, M. & Runhaar, H., 2022. "Five mechanisms blocking the transition towards ‘nature-inclusive’ agriculture: A systemic analysis of Dutch dairy farming," Agricultural Systems, Elsevier, vol. 195(C).
    15. Zapata, Sebastian & Castaneda, Monica & Aristizabal, Andres J. & Dyner, Isaac, 2022. "Renewables for supporting supply adequacy in Colombia," Energy, Elsevier, vol. 239(PC).
    16. Jonas Heiberg & Bernhard Truffer, 2021. "The emergence of a global innovation system – a case study from the water sector," GEIST - Geography of Innovation and Sustainability Transitions 2021(09), GEIST Working Paper Series.
    17. Bucksteeg, Michael & Voswinkel, Simon & Blumberg, Gerald, 2023. "Improving flow-based market coupling by integrating redispatch potential - Evidence from a large-scale model," EconStor Preprints 270878, ZBW - Leibniz Information Centre for Economics.
    18. Neij, Lena & Heiskanen, Eva & Strupeit, Lars, 2017. "The deployment of new energy technologies and the need for local learning," Energy Policy, Elsevier, vol. 101(C), pages 274-283.
    19. Wirth, Steffen, 2014. "Communities matter: Institutional preconditions for community renewable energy," Energy Policy, Elsevier, vol. 70(C), pages 236-246.
    20. Gucciardi Garcez, Catherine, 2017. "Distributed electricity generation in Brazil: An analysis of policy context, design and impact," Utilities Policy, Elsevier, vol. 49(C), pages 104-115.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:17:y:2024:i:24:p:6450-:d:1549327. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.