SAO PAULO, Dec 14 (Reuters) - Brazil's Energy Ministry is canceling a licensing round for new solar and wind power projects scheduled for next week because of excess energy supply in the market.
The decision, announced on Wednesday by the ministry, is a blow to renewable energy equipment makers such as Brazil's WEG SA and Norway's Vestas Wind Systems A/S, which are already scaling back the use of their installed capacity in the country.
The canceled auction makes this the first year since 2008 that Brazil will not grant new licenses for wind farms.
An Energy Ministry spokeswoman told Reuters the decision resulted from power oversupply in Brazil, where the worst downturn in eight decades has cut electricity demand for two straight years.
Power distribution companies, bound by long-term supply contracts, are having problems paying generators for electricity that they cannot sell.
Brazil's wind power industry has already raised fears that the current situation could lead to plant closures. (Reporting by Marcelo Teixeira and Roberto Samora; Editing by Steve Orlofsky)