Misreporting in wind power contracts: Evidence from a feed-in tariff in Brazil

This executive summary analyzes the Incentive Program to Alternative Sources (PROINFA), a feed-in tariff (FiT) implemented in Brazil in the early 2000s. While the program successfully increased installed wind capacity from 29 MW in 2004 to 2,010 MW in 2012, the authors find that flaws in contract design led to systematic misreporting of capacity factors (CF) by project developers. This misreporting resulted in overpayments and a shortfall in delivered energy, suggesting that simple design changes, such as interest rate penalties on overpayments, could improve the cost-effectiveness of similar renewable energy policies.

• Project developers systematically misreported capacity factors (CF) under the PROINFA program, with reported values consistently exceeding realized values. The average reported CF was 35%, while the average realized value was 31%. This behavior was driven by a tiered price schedule and the absence of penalties for overpayments, creating incentives to either underreport CFs to secure higher prices per MWh or overreport them to increase the total quantity of energy contracted.
• The misreporting of capacity factors had two primary negative impacts: it reduced the actual energy delivered and increased the financial cost of the policy. Wind farms contracted under PROINFA produced 14% less energy than they were expected to deliver. Additionally, 12% of total payments made to wind farms during their first year of operation were overpayments for energy that was never delivered; although these were eventually returned to the government-owned utility, no interest was paid on those funds.
• Simulations suggest that a minor adjustment to contract design could eliminate misreporting. Specifically, implementing a 1% interest rate penalty on overpayments would cause misreporting to vanish entirely. The authors also noted that while Brazil's tiered payment scheme was intended to encourage geographic dispersion of wind farms, it was unsuccessful in that goal, though it did prevent the even more extreme misreporting (a 90% gap between expected and actual production) that would have occurred under a constant unit price.

APA

Assunção, J., Chiavari, J., & Szerman, D. (2014). Misreporting in wind power contracts: Evidence from a feed-in tariff in Brazil. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/05/Misreporting-in-Wind-Power-Contracts-Executive-Summary.pdf

Chicago

Assunção, Juliano, Joana Chiavari, and Dimitri Szerman. Misreporting in wind power contracts: Evidence from a feed-in tariff in Brazil. Climate Policy Initiative, 2014. https://www.climatepolicyinitiative.org/wp-content/uploads/2014/05/Misreporting-in-Wind-Power-Contracts-Executive-Summary.pdf.

Wikipedia

{{cite report |last1=Assunção |first1=Juliano |last2=Chiavari |first2=Joana |last3=Szerman |first3=Dimitri |title=Misreporting in wind power contracts: Evidence from a feed-in tariff in Brazil |publisher=Climate Policy Initiative |date=April 2014 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2014/05/Misreporting-in-Wind-Power-Contracts-Executive-Summary.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{assuno2014misreporting, author = {Assunção, Juliano and Chiavari, Joana and Szerman, Dimitri}, title = {{Misreporting in wind power contracts: Evidence from a feed-in tariff in Brazil}}, institution = {Climate Policy Initiative}, year = {2014}, month = apr, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2014/05/Misreporting-in-Wind-Power-Contracts-Executive-Summary.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }