Brazil government approves 1.5 GW of new solar and wind power

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The construction of 53 new solar and wind farms has been approved by the Brazilian government in a clean energy push that will add around 1.5 GW of renewable power capacity to the nation’s energy mix over the next few years.

Hamstrung for more than a decade by a weak and unreliable power system – one that has been bedeviled by below-average rains depleting its hydropower resources – and embroiled in an ongoing economic crisis, Brazil’s government appears to be turning favorably towards solar and wind power to solve its energy crisis.

Contracts have been granted to clean energy developers to add 929.3 MW of solar PV capacity between now and November 2018, with 548.2 MW of wind power also in the offing. Early estimations by the government reveal that companies involved in this clean power push will have to find investment of 6.8 billion reais ($1.77 billion).

Brazil’s recent power auctions have been well received, and Friday’s auction saw contracts signed by many leading clean energy developers, including SunEdison and Portugal’s EDP Renovaveis. Solar power has been priced in the auction at between 290 Real ($75.36) to 302 Real ($78.48) per MW hour. The ceiling price set at auction for solar was 381 Real/MWh.

In August, the average winning price for solar projects at auction was 301.79 Real/MWh, which equated to $0.0842/kWh. This latest tender has lowered the price for solar once more, and is, according to officials, a realistic strike price.

"Competition was huge in this auction," Rafael Brandao of Rio Alto Energia told Bloomberg. "Payers were fighting for contracts and the prices were pressured at the end." The director at the Ministry of Mines and Energy, Igor Walter, added that the prices are realistic, explaining that the ceiling price was raised – up from 349 Real/MWh – in order to bring greater competitiveness to the auction.

The auction was the third of its kind for solar in Brazil since October last year, and has served to boost the PV sector drastically. There is now close to 3 GW of solar PV capacity either installed or in the Brazilian pipeline.

This latest auction will go some way towards Brazil meeting its clean power goal to install 7 GW of solar PV capacity by 2024.