Wind developers in Brazil won contracts to sell 90 megawatts capacity, far below the 500 megawatts expected by Bloomberg New Energy Finance, as developers face higher costs for financing and equipment.

Developers were competing in an energy auction Monday for deals to sell power from planned wind farms that must be completed by July 2017.

With a potential shortage of wind turbines for the next few years, that may not be enough time to finish construction, according to Helena Chung, a Sao Paulo-based analyst for New Energy Finance. 

“Brazil’s government wanted more energy to be contracted in the auction,” Thais Prandini, director of the energy consulting company Thymos Energia, said in a telephone interview from Sao Paulo.

Developers also competed in the auction to sell power from biomass plants. They won contracts for 389.43 megawatts of capacity from existing power plants, with delivery set to begin in January, the Sao Paulo-based electricity trading board CCEE said Monday on its website.

The average price for wind power was 177.47 reais a megawatt-hour and for biomass it was 209.91 reais.

No developers bid Monday to provide power from new biomass projects because another auction set for Thursday will offer a higher ceiling rate, said Prandini. In Brazil’s energy auctions the government sets a ceiling price and developers bid down the price at which they are willing to sell power. The lowest bids win contracts.

Financing Hurdles

Developers in Brazil are becoming skittish because the falling real is making imported components more expensive. At the same time, Brazil’s development bank BNDES is raising interest rates, making it harder to finance new power projects.

To compensate, the government raised the ceiling prices. For wind, it was 179 reais a megawatt-hour, compared to 144 reais in a similar auction in October. The top price for biomass power was 215 reais.

“Prices for the auction were adjusted to attract investors,” Jose Carlos de Miranda Farias, a director at Brazil’s energy research agency EPE, said Friday in a telephone interview from Recife. “Exchange-rate fluctuations, the lower availability of BNDES loans and the pursuit of increasing returns on equity were motivations for increasing cap prices.”