Brazil schedules tenders for December to end two-year hiatus

Brazil has scheduled two tenders for December to contract wind, PV and other technologies – ending two years without new contracts in the country.

The new regulated-market tenders are denominated A-4 – foreseeing a start of operations by January 2021 – and A-6, with starting date seen in January 2023. Wind and solar will be offered 20-year PPAs from the start-up date.

Further details of contracts and tender rules will be defined by power regulator Aneel in the coming weeks.

By scheduling the new auctions, the government has signalled a restart of tenders for the first time since 2015, looking past 2021 when most analysts expect Brazil’s economy to be fully recovered, and reversing a trend of declining power demand seen in the past three years.

It is also the first time that the government has scheduled regulated-market tenders four and six years before start of operations. Up to now they were either two, three and five years before start-up.

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Wind and solar investors have around 20GW of each technology ready for tenders, but how much will be contracted is unknown, as the government will first de-contract wind and solar projects that weren’t built via a tender on 28 August, and because the new regulated-market tenders will depend on the future demand of power distributors that claim to be over-contracted.

Under the government’s draft 10-year energy expansion plan, wind power is seen reaching 28.5GW by 2026 from just over 11GW now.

The registration deadline for both tenders is on 6 September. The government will allow fast-track registration for projects that had been qualified for the 2016 reserve tender that was cancelled, as long as no changes have been made to the project.

The A-4 process will include wind, solar PV, large- and small-hydro, and biomass, including waste-to-energy projects.

The A-6 tender will contract wind, hydro, biomass and combined-cycle natural gas and coal projects. This tender, however, will depend upon the projected demand of power distributors, the government said.

Among changes made for wind and PV projects, the power producer will have to pay the off-taker if average yearly power production is below 90% of what was contracted, as well as an additional fine of 15% of the contract.

The announcement of the new tenders comes as a relief for both investors and the six wind turbine suppliers active in the country.

Most of the turbine makers in Brazil are seeing a trough in orders from mid-2018 onwards, as the remaining 6GW of capacity being built under previous tenders will be mostly assembled by then.

“The valley in orders that we will see from 2018 until the delivery of the machines contracted for this year’s tenders is manageable,” Rogério Zampronha, Brazil manager for Danish turbine maker Vestas, told Recharge

“I think the tenders will happen – lets hope the government doesn’t cancel them.”

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