By By Alexandre Spatuzza in Sao Paolo
Friday, April 25 2014
The Rio de Janeiro based company foresees two PV plants – each with 30MW of installed capacity – located in the northeastern state of Rio Grande do Norte.
This week, power regulator Aneel approved their transfer to special purpose companies (SPC) named Luz I Energia Solar and Luz II Energia Solar that were created to participate in the auctions.
According to Muniz, Elements is in talks with several companies interested in investing in the projects. Elements is among several Brazilian companies that are getting ready to offer solar power at the A-5 Auction scheduled for September and at a special renewable power auction that the government is preparing for the second half of this year.
“We want to participate in the auctions but we will only have a chance to sell power if differentiated conditions and prices are created”, Muniz said. “Prices have to be around R$200 per MWh ($89.5/MWh)."
Brazilian power auctions work on a smallest bid basis, independently of technology, with little or no subsidies for renewables. The lowest prices offered win 20 to 30-year contracts with local distribution companies.
Wind power companies are selling power at around R$120/MWh, thermoelectric projects sell at around R$160/MWh and small-scale hydroelectric dams at around R$120/MWh. At a solar auction held by Pernambuco state in December 2013, contracts came in at an average price of R$229/MWh (the lowest price at the auction was R$193/MWh).
Solar power therefore cannot yet compete for contracts at regular auctions. This is one of the reasons why no solar power was sold last year, despite the listing of around 2GW of PV projects at two auctions.
PV power prices are higher mainly because of equipment costs and capacity factors, which are well below those of wind power, which in Brazil top 40%, said Muniz.
Aside from the price, Muniz also said that other issues also need to be better designed to boost the large-scale solar PV market in Brazil, especially the financing and local-content rules set by the government.
Although Elements is still deciding on which solar cell technology it will use, Muniz said that, currently, national content can reach up to 50%, including inverters that can be manufactured in Brazil.
She also said that construction costs of solar plants are similar to those of wind power farms, or around $2m/MW.
Elements was founded in 2012 to advise on, design and implant renewable energy projects. It has worked with local engineering firm Concremat in the construction of the Faísa I, III and IV wind power farms in the northeastern state of Ceará, with 25MW of installed capacity each.
Apart from Muniz, three other Brazilian and foreign partners own the privately-held company.
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