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Brazil's auction of wind, hydroelectric and biomass energy will lead to 9.7 billion Brazilian reals ($5.5 billion) of investments in renewable energy, the state-controlled energy research company said Friday.

The auction of alternative energy, negotiated between electricity generators and distributors, and the auction of reserve energy, negotiated between generators and Brazil's electricity clearinghouse CCEE, led to the contracting of 2,892 megawatts of new installed capacity, energy research company EPE said in a statement. The auction ended after markets closed Thursday.

Fifty wind farms agreed to sell electricity in the alternative-energy auction. In the reserve auction, another 20 wind projects were contracted to supply energy to CCEE, which in turn will sell the energy to consumers as needed.

The average price of wind power at both auctions was BRL130.86 per megawatt/hour. That is 11.8% less than the price generators agreed to sell for during last year's auction of wind energy.

"If, in the evaluation of Iberdrola, the biggest producer of wind energy, the return on investment was good enough, then our association sees that as a good result," said Pedro Perrelli, president of industry group ABEEolica in Sao Paulo.

Spain's Iberdrola SA (IBDRY, IBE.MC) was the big winner in Thursday's alternative-energy auction, with nine of its projects being selected. The controller of Brazil's Neoenergia SA (GNAN3B.SM) agreed to sell energy for an average of BRL134.15 per MWh.

Renova Energia SA (RNEW11.BR), meanwhile, accounted for more than one-fourth of wind power sold at the reserve energy auction. Brazil's Renova sold energy from six wind farms at a price of BRL121.25.

Industry players say cheap financing, localized production and economies of scale mean prices will likely fall further as Brazil seeks more renewable resources to supplant its dependence on hydroelectric power.

In addition to wind-generated power, which will provide 2,048MW of the total capacity, 12 sugarcane bagasse-burning plants and seven small hydroelectric dams were contracted at the auction of reserve and alternative energy.

The biomass plants sold energy for an average of BRL144.20, while the small hydropower dams--those with capacity below 30MW each--sold energy for BRL141.93.

The auction represents a "breaking of paradigms in the Brazilian electric sector" because "wind power was among the cheapest energy negotiated," EPE President Mauricio Tolmasquim said in the statement.

The total amount of wind power contracted is an increase from the 1,805 MW hired in a December auction. Future auctions will likely add 2,000MW to 2,500MW of capacity a year, accounting for one-third of the roughly 6,000MW Brazil will need to add in capacity annually over the next decade, Perrelli said.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073; paulo.winterstein@dowjones.com