Brazil's blustery coastlines and booming electricity demand have spurred a wind-power gold rush as investors flock to build turbines and set up wind farms.

As wind projects slowly shed government protection to compete head-to-head with traditionally cheaper fossil fuel energy, government power auctions this week are hinting at the sector's potential strength, writes Reuters.

Developers of natural gas power plants, biomass thermoelectric plants and wind farms competed in an auction on Wednesday to offer the lowest prices for the electricity their facilities will sell in the coming years.

Wind projects won 39 percent of the total capacity contracted, offering an average price of 99.58 reais (USD62.91) per megawatt hour. That was not only below the auction's overall average of 102.07 reais, but also below the average price for natural gas projects of 103.26 reais.

Forty-four wind power projects won in Wednesday's auction, offering 1,067 megawatts of capacity, compared to two natural gas projects offering 1,029 megawatts of capacity. One hydroelectric project and a group of biomass thermoelectric plants, which generally burn bagasse leftover from sugar and ethanol production, also won in the auction.

The results signaled that Brazil's wind industry can continue lowering generation costs, a trend that has spurred investment in wind farms and equipment factories - and could help diversify Brazil's hydro-dependent energy system.

Some skeptics still say wind power has gotten ahead of itself, noting it remains roughly double the cost of power produced by the large hydroelectric dams that provide most of the country's electricity.

Brazil's current 1,400 megawatts of installed wind power represent only around 1 percent of its total capacity. Nonetheless, it is slated to grow almost eight-fold between 2010 and 2014 to reach 4.2 percent, according to Brazilian Wind Energy Association ABE Eolica.

EPE, government-run energy research group, expects Brazil's total power consumption to rise 60 percent between 2010 and 2020, reflecting Brazil's brisk economic growth and expansion of its middle class.

ABE Eolica expects 25 billion reais (USD15.8 billion) in wind investments between 2009 and the end of 2013.

Spain's Gamesa and France's Alstom have invested in manufacturing facilities to build wind equipment in Brazil, while General Electric and India's Suzlon Energy are studying similar projects.