Brazil considers solar-only tender

The Brazilian government is considering holding a solar-only power auction by early next year, Recharge has learned.

The Energy and Mines Ministry is discussing the plan – which could put solar in the ring in four different Brazilian tenders over the next six months – in a bid to stimulate firm demand for the country’s fledgling PV industry.

“The subject is being discussed among government officials and I feel like this claim from the industry is going to be accepted,” an industry source told Recharge, adding that the ideal figure for contracts awarded in such a tender would be 250MW.

On 18 November solar will make its debut in Brazil’s A-3 tender, which looks to deliver output by January 2016. On 13 December solar projects will take part in the most eagerly-awaited national tender, the A-5 competition, which aims to contract new generation for 2018 onwards.

The national energy planning agency, EPE, has received registrations from about 3GW of solar projects willing to participate in those two tenders.

However, few believe any long-term power-purchase agreement (PPA) will be signed in those auctions due to the looming shadow of wind.

While solar projects would be viable at around R$160 ($73) per MWh or more, the wind plants can sell energy for R$110/MWh or less.

Beyond the three national competitions, local media has reported that the government of Pernambuco state is planning a 60MW solar tender to negotiate contracts in the unregulated market.

The goal is to develop a local solar supply chain and sell clean energy for big industries that operate in the Northeast state. However, that competition has not been scheduled yet.

EPE official Ricardo Gorini says solar project costs still need to shrink in order to become competitive in the procurement rounds. “We have to move towards turning the market cost-effective. And we will do it by producing equipment locally.”

President of renewable lobbying association Instituto Ideal, Mauro Passo, bets on a very specific sort of solar project to succeed in the competitions.“Maybe the projects located close by wind farms may sell something,”says Passo.

A group of major wind developers have also registered solar projects with EPE, including Bioenergy, CPFL Renováveis and Renova Energia – the biggest wind player in the Brazilian market. The idea is to build them on the same terrain that their wind assets occupy.