Brazil to hold another auction including solar in April

Brazil’s Ministry of Energy and Mines (MME) has announced that it will hold a new auction for thermoelectric, wind, solar and hydro large-scale power projects on April 4, 2018.

The new A-4 auction, the MME said, will be structured on the model of the upcoming A-4 auction to be held on December 18, and is expected to allocate around 1 GW of PV capacity.

The MME said that the scheduling of this auction in the first part of 2018 will give selected developers more time to develop their projects, thus lowering the risk for buyers of the plants’ power output. Projects selected in the auction must start delivering power on January 1, 2022.

The A-4 tender will award 30-year PPAs to hydropower projects and 20-year PPAs to wind, solar and biomass power plants. The MME added that projects that prequalified for December's A-4 auction could also prequalify for April’s contest.

In a statement provided to pv magazine, the Brazilian solar association ABSOLAR welcomed the announcement of the new auction, but it also said the government must plan another auction with delivery date on mid or end of 2020. “Otherwise,” said ABSOLAR's president Rodrigo Sauaia, “there is a significant risk of damage to the development of the local value chain, which already invested hundreds of millions in manufacturing capacity and believed in the government plans for the sector.” The association has urged the government to act propmtly on the matter, “as time is running short for such a decision.”

April’s auction will be the fifth to be held at a national level that includes solar. In the three auctions held by Brazil’s energy agency Empresa de Pesquisa Energetica (EPE) between 2014 and 2015, around 3 GW of large-scale PV capacity was allocated. Of the 2014 auction, however, around 249.7 MW of contracts for solar power projects were recently cancelled in a specific auction held by the Brazilian government.

According to a recent report published by Brazilian consultancy company Greener, 1,748 MW from the three auctions have a high probability of success, while 544.3 MW have a medium probability of completion, and 110 MW have a low probability of becoming operational. Greener also finds that, on top of the 880 MW that will be operational by the end of this year, another 1.29 GW of capacity has high or medium probability of seeing the light of day by the end of next year.

In 2016, the planned auction, including solar, was initially postponed and then cancelled at the last minute. The Brazilian government said at the time that the expected power demand for 2019, the year in which the projects selected in the 2016 auction had to come online, had to be revised down.