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

Milton M. Herrera (), Mauricio Uriona Maldonado and Alberto Méndez-Morales
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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

Energies, 2024, vol. 17, issue 24, 1-19

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.

Keywords: renewable energy auctions; political legitimacy; technological innovation systems; wind power; system dynamics (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2024
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