The Brazilian solar sector expects that in December’s next power auction Nº 04/2017 (auction A-4), which will be held on Dec. 18 and will also include solar among other energy sources, around 1 GW of new PV capacity could be contracted, according to the report “Estudo Estratégico – Mercado Fotovoltaico de Geração Centralizada 2017,” published by Brazilian consultancy company, Greener.
The report provides extensive data on all three previous power auctions, including solar, which were held between 2014 and 2015 – in 2016 the two planned auctions were cancelled due to lack of energy demand and Brazil’s economic crisis. It reveals that all the 249.7 MW of solar projects whose PPAs were cancelled by the Brazilian government through a specific auction held in August, which was intended to cancel projects that were not being implemented, are related exclusively to the first auction held in 2014, in which 889 MW (AC) of solar was contracted. Of this capacity, 570 MW has high probability of becoming operational, while the remaining 70 MW, according to Greener, has a low probability of being deployed.
As for the first auction held in 2015, in which 883.7 MW (AC) of solar capacity was assigned, Greener believes that, except for 5 MW that has a low probability of being installed, all of it has a high probability of seeing completion and grid connection. On the other hand, the president of the Brazilian solar association ABSOLAR, Rodrigo Lopes Sauaia, told PV magazine in October, that the projects selected in auctions held in 2015 were better positioned than those selected in 2014, in order to reach completion.
According to Greener, the projects selected in the second auction held in 2015, in which 929.3 MW (AC) of PV projects were contracted, are being developed under better conditions. The report, in fact, reveals that of these projects 350 MW have a very good chance of becoming operational, as developers are on process to contract equipments and EPC; around 544.3 MW have a medium probability of coming online; and just 35 MW have a low probability of being constructed.
Overall, 1,748 MW from the three auctions have a high probability of success, while 249.7 MW were cancelled, 544.3 MW have a medium probability of completion, and 110 MW have a low probability of becoming operational. Greener also finds that, on top of the 880 MW that will be operational by the end of this year, another 1.29 GW has high or medium probability of seeing the light of day by the end of next year.
Of the 880 MW expected to become operation this year, 150 MW are located in the state of Minas Gerais, 430 MW in Bahia, 270 MW in Piauí, and 30 MW in Rio Grande do Norte. Of the capacity forecast to come online in 2018 and is currently under construction, another 300 MW will be located in Minas Gerais, 150 MW in Sao Paulo, 89.7 MW in Bahia, 80 MW in Rio Grande do Norte, and 90 MW in Paraiba.
The report further reveals that in 2017, total investment volume in large-scale solar selected in Brazil’s auctions held between 2014 and 2015 will reach around 3,654 million BRL (around US$1.12 billion), while investments in 2018 and 2019 are expected to reach 5,391 million BRL and 934 million BRL, respectively.
The authors of the report stress that modules produced in Brazil are currently between 35% and 55% more expensive than imported solar panels, and that the current capacity of the Brazilian solar module industry cannot satisfy demand. According to the report, Chinese manufacturer Jinko is currently the largest provider (and importer) in Brazil, accounting for 29% of demand, followed by other two Chinese manufacturers, Canadian Solar and BYD, which have both opened panel factories in the country, and have reached a share of 25.5% and 21.2%, respectively. JA Solar is the fourth provider, with a market share of 12.9%, followed by GCL (5.6%), First Solar (3.8%), and Trina (1.3%). These data relate to projects that operational and under construction.
In terms of inverter shipments, which also relate to projects that online or under construction, GE is the largest provider with a 40.2% market share, while Fimer and SMA are the second and the third suppliers with a percentage of 25.7% and 13.2%, respectively.
The report also simulates energy prices for projects that will compete in next December auction. Greener experts believe that the auction’s solar energy prices will be below R$ 220/MWh (US$ 69/MWh), thus showing that solar energy is becoming really competitive in the country.
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