890 MW of solar PV clears in Brazil's reserve auction

On Friday, Brazil’s National Electric Energy Agency (ANEEL) and Electricity Trading Chamber (CCEE) held an auction for reserve electric capacity, which included a portion limited to solar projects.

This is the first federal auction specifically for solar, following on a solar-only auction in the state of Pernambuco at the end of 2013. 31 solar PV projects totaling 890 MW which cleared the federal auction will be awarded 20-year power purchase agreements at an average price of US$0.087/kWh.

Developers have until October 2017 to begin supplying power. GTM Research Solar Analyst Adam James told pv magazine that while he believes that prices are too low for projects to be built today, a lot can change in three years.

“Given the current taxes on PV equipment, those levels are too low,” James explained. “And how high prices are on the spot market, it also seems unnecessary for prices to be that low.”

A major factor in project economics is the cost of capital, and Brazilian development bank BNDES has made available low-cost financing for PV projects which utilize local modules.

And while there is currently little PV manufacturing capacity available to meet this need, James estimates that there have been four or five announcements of PV module factories planned for Brazil.

James cautions casual observers from assuming that all of these projects will come to fruition, and he expects that even with three years some of the 31 will not make it. “There is just a lot of uncertainty here,” observed James. “This is the first step in a long process.”

Many of the projects are planned for the state of Bahia, however official statements were unclear as to exact capacities and locations.