Brazilian government cancels PPAs for 249.7 MW of solar

The Brazilian Ministry of Mines and Energy (MME) announced it has cancelled PPAs for 557.4 MW of renewable energy generation capacity contracted in the three reserve energy auctions (Leilão de reserva) held between 2014 and 2015.

These contracts were cancelled through an auction, launched in April, which was intended to cancel power projects selected in the reserve energy auctions that were not being implemented. Under this new type of auction, developers awarded projects in the reserve energy auctions had the chance to bid for their projects to be cancelled, with winning bidders avoiding fines for non-completion and retaining their project guarantees. The auction rules also establish that winners will not have the right to claim for compensation, or to participate in the two future reserve energy auctions, which will be held after this tender is completed.

The MME said that through the auction it cancelled contracts for 25 wind power projects totaling 307.7 MW and for 9 solar projects with a combined capacity of 249.7 MW, without disclosing further detail.

The cancellation of these projects was mainly due to Brazil’s difficult economic situation and an expected excess energy supply, as the country suffered deep recession in 2015 and 2016. As a result, the Brazilian government had also cancelled the two reserve energy auctions planned for 2016. As for 2017, the MME has recently announced it will hold two energy auctions in December, the Leilão de Energia Nova “A-4” and the Leilão de Energia Nova “A-6”. Only the first of these two auctions, however, will include solar energy projects. The A-4 tender will award 30-year PPAs to hydropower projects and 20-year PPAs to wind, solar and biomass power plants. 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.

In the three auctions held by the Brazilian government between 2014 and 2015, 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.