Brazil postpones the July solar auction

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Brazil’s Minister of Mines and Energy has postponed the reserve auction scheduled for July 29, in which it is expected that 9.2 GW of PV projects will participate, making up 90% of the capacity registered for the auction. Hydro projects represent the remainder of participating projects.

According to the regulations, the National Electric Energy Agency (ANEEL) was required to publish a notice in the Official Bulletin 30 days before the auction was held. This would have to be authorized by the board of Aneel on June 28 which was not on the agenda of the regulator and did not occur.

Brazilian solar association ABSolar has confirmed the postponement of the auction to pv magazine, although it expressed confidence that this does not mean that it will be cancelled. “The document that sets a new date has not yet been published, but we are confident that two solar auctions will be held this year,” indicates ABSolar Executive Director Rodrigo Lopes Sauaia.

More than the recent denial of a request to delay the timeline for placing in operation projects awarded in the first auction held in 2014, the change in Brazil’s government could be a cause for the delay.

Without exception, the new legislators have expressed their intent to continue the transition to solar begun by the previous government, according to statements by ABSolar, which is confident that the postponed election will still occur this quarter and cannot be cancelled.

“Brazil has to auction this two GW of solar projects, which have to be built by 2019 to meet the energy requirements,” states Sauaia. He estimates that this is the capacity of solar power which has to be auctioned annually to meet the nation’s energy targets, and emphasizes that there is still insufficient capacity for 2019, the date in which projects in the now-postponed auction should be operational.

Sauaia also indicates that the regulator could be contemplating other mechanisms beyond auctions, although he did not want to give more details as the government’s plans are not mature, and could be concerned with aspects such as transmission and variable output of solar projects.

Although the delay should not have a “significant impact”, Sauaia is aware of the importance that this could have to investors, and especially to those who have announced the establishment of manufacturing facilities in line with Brazilian development bank BNDES’ local content rules. “Continuity is essential for the continuing development of the sector,” he indicated.

The delay of this auction could also signify a potential delay in the auction called for October. The Brazilian solar sector is waiting for authority to be transferred to Luiz Barroso, who will replace Mauricio Tomasquin as director of Brazil’s Energy Planning Agency (EPE), with the hope that the October auction will proceed without complications.

In 2014, Brazil put in place an auction system for the purchase of energy with the participation of solar technology. The auction which has been postponed is the fourth national auction with a category specifically for solar PV and the first the two two PV auctions scheduled to be held this year in Brazil. The three auctions held to date have awarded contracts for a total of around 3 GW of solar PV.

This article was translated by Christian Roselund. For the original in Spanish, please see the pv magazine Latinoamérica website.