Brazil solar auction price cap ‘well received’ by market

03/08/15 | São Paulo

PV Tech

Brazil’s energy regulator National Electric Energy Agency (ANEEL) has set a cap price of BRL349 (US$104)/MWh for its solar-only auction to be held on 28 August.

The cap is around 33% higher than for the country's first solar-exclusive auction held in October 2014, which had a fixed price of BRL262/MWh. During the auction, this fell to a final average price of BRL215/MWh.

Brazilian Photovoltaic Solar Energy Association (Absolar) said the higher cap has been well received in the market, and chief executive Rodrigo Sauaia said: "The price gives a positive signal of the federal government's interest in developing PV solar. We are confident for the auction […] for sure the competition will be very fierce.”

Executive director of sustainability at Ernst Young, Mário Lima, said the price came in well above expectations giving scope for the market to absorb the rise of the dollar, and higher financing difficulties in the Brazil.

He added: "The rate of return will be interesting. I think it will be better than in some projects that were presented at the first auction.”

The Brazilian real has lost around 38% against the dollar since last October, sparking concern in the solar  market because most PV equipment will be imported, according to Absolar. However PV Tech reported this month that the Brazilian senate has passed a bill toreducethetaxburdenonimportsofcertain components and machinery used in the production of PV equipment, which is set to aid companies looking to set up PV equipment manufacturing in the country.

Wining projects of this year’s auction will need to start supplying energy to the grid in 2017 under 20-year power purchase agreements (PPAs).

Brazil's Energy Research Company (EPE) received 382 applications from solar projects totalling 12.5GW in capacity.

According to EPE, the majority of the projects are located in the North-East of Brazil, with 140 projects with a total 4.4GW of capacity in the states of Bahia. ANEEL director Reive Barros said this was due to the region’s vocation for solar initiatives and the economic potential for th region’s development.

The states of Piaui (2.1GW) and Minas Gerais(1.3GW) had the next highest amount of applications. Electric Energy Trading Chamber (CCEE) will operate the online auction while based in São Paulo. Meanwhile, earlier this month, EPE registered 649 solar projects totalling 20.9GW capacity for its second ReserveEnergyAuction, which is scheduled for 13 November this year.