Brazil launches first solar auction with price ceiling of $109

The government of the state of Pernambuco has rescheduled the date for Brazil’s first solar auction to December 20 and set a ceiling price of BRL 250 ($109) per megawatt hour. Pernambuco will provide fiscal incentives as part of the auction. The auction was originally scheduled to take place in February 2014.

Participating in the auction are invited companies that will buy the electricity from the solar parks and firms that will sell it. The power purchase agreements (PPA) closed between them will last for 20 years and must have a price under the set ceiling price. The parks are to start operations in July 2015 or later if they fulfill a local content requirement.

The auction will be open to solar projects up to 30 MW located exclusively in the state of Pernambuco and will have had to obtain technical authorization. The deadline to apply for the authorization has been is December 13 at 12 pm.

The Pernambuco state Energy Department will coordinate the auction, which is taking place as part of the PE Sustentável program, which seeks to promote renewable energies, both in terms of renewable energy parks as well as a sustainable industry.

This is the first auction exclusively for solar energy projects in Brazil. At a national level, solar energy is also participating in auctions in the regulated market this year. However, in those auctions solar is competing with other energy sources and the maximum prices set at are about half of the ceiling price set for the Pernambuco auction.