Brazil to hold energy auction including solar in December

Brazil’s Ministry of Mines and Energy (MME) announced it will hold two energy auctions in December, the Leilão de Energia Nova “A-4” and the Leilão de Energia Nova “A-6”.

The first of the two auctions (A-4) will award 30-year PPAs to hydropower projects and 20-year PPAs to wind, solar and biomass power plants. Wind and solar projects will sell energy in the Regulated Contracting Environment (Ambiente de Contratação Regulada), or ACR, which is aimed at the provision to distributors of the energy needed to service their captive market. Projects selected in this auction must start delivering power in January 2021.

The second auction (A-6) will be open to wind, biomass, hydro, coal and natural gas-fired combined cycle plants and will select power projects that must be operational starting from 2023.

The MME also said it will hold another auction of the A-4 type in the first quarter of 2018, without specifying which technologies will be accepted, and another of the A-6 type in an unspecified period of next year.

The inclusion of solar in one of the two auctions is undoubtedly a good sign for the Brazilian solar market, as rumors were spreading that the auction would have not taken place this year. The auction planned for 2016 was initially postponed from July to December, and then cancelled at the very last minute. Brazil, on the other hand, fell into a strong recession in 2015 and 2016, and the Brazilian energy agency EPE said the auction for 2016 was cancelled as the expected power demand for 2019, the year in which the projects selected in the 2016 auction had to come online, had to be revised down.

The Brazilian association AB Solar has issued a press release to urge the MME to include solar in the A-6 auction. The president of the association Rodrigo Sauaia, who previously told pv magazine that the announced 2017 auction including solar would be held despite negative rumors, said that the exclusion of solar from the A-6 auction is unfair and discriminating, especially now that solar is becoming competitive. “Leaving solar out of energy auctions,” Sauaia said, “is unfair and discriminating, and it is a step back.”

The A-4 auction will be the fourth one held at a national level including solar. In the three auctions held by the Brazilian energy agency EPE, around 3 GW of large-scale PV capacity was allocated. According to ABSOLAR, approximately 850 MW of PV power plants selected in these auctions will be operational by the end of 2017.