New Generation plans 500 MW São Paulo project

Chicago-based renewable energy company New Generation Power (NGP) and São Paulo’s Grupo Léros are planning to install a mega PV plant in the city of Taubaté, in São Paulo state.

Although the plan is to install 500 MW of capacity, the developers want to build the project sequentially in 30 MW modules – the maximum permitted capacity for a power plant to be eligible for an 80% discount on the electricity transmission tariff (TUST) in Brazil.

The estimated cost of the entire plant is around BRL2 billion (US$906 million), based on a price estimate of BRL4 million/MW, according to a press release from Investe São Paulo, the investment promotion agency of São Paulo state.

NGP wants to become the majority owner of the plant with an 85% stake and with Grupo Léros holding 15%.

Three of the first 30 MW modules have been entered for participation in Brazil’s upcoming A-5 federal energy auction scheduled for December 13, said Kleber Léros, director of Grupo Léros.

The A-5 auction, organized by Brazil’s national electricity agency ANEEL, will trade electricity from power plants due to come online in five years’ time.

Ceiling prices will be crucial

The ceiling prices set by the government for the auction and the offering prices from distribution companies will be of key importance for the success of solar energy development in Brazil.

"The auction will give the [pricing] signal," said Fernanda Augusto, NGP’s representative in Brazil, adding that foreign entrepreneurs are more reticent towards Brazil and could be less aggressive in the market.

The first three Taubaté parks were not ready in time to be entered in the first federal energy auction to include solar energy, the A-3 auction set for November 18. A-3 will take place just a month ahead of the A-5.

Solar developers have already submitted 109 applications totalling more than 2.7 GW for the A-3 auction.

In both auctions, solar will have to compete with ultra-competitive wind plants in Brazil that have already become as cheap as hydro, as well as with other generation sources. The volume of registered wind energy plants in A-3 amounts to 15 GW.

The buyers will be power distribution companies seeking 25-year supply contracts. The contracts are essential for the feasibility of solar plants, as they are key to securing favourable financial arrangements with commercial banks.