Sao Paulo gears up for RE auction

São Paulo, Brazil’s most industrialised state, should announce in the coming weeks an extension of tax incentives for all renewable technologies – including PV – in preparation for the first state renewable power auction in the second half of 2014, a senior official told Recharge.

The state’s renewable energy sub-secretary Milton Lautenschlager also revealed that secretariat officials are currently preparing auction rules, which should be ready by the beginning of the second half.

In recent years São Paulo state has reduced value-added tax (VAT) and offered competitive conditions for the production and acquisition of equipment for the biomass, solar heating and wind sectors.

It now wants to extend the reduction of VAT to PV inverter production and sale, and to power bought from renewable sources.

“We need to make conditions equal for all renewable technologies to put São Paulo in a more favorable standing,” Lautenschlager said.

Despite being Brazil’s largest state and home to wind turbine and blade plants for Wobben (Enercon), Tecsis, Siemens, GE and Engebasa, São Paulo only has 2kW of wind power in operation and 1.1MW of PV, according to data from power regulator Aneel.

This is mainly because more favorable wind conditions are found in the country’s northeastern or southern regions.

São Paulo has an installed capacity of 25.2GW, 70% of which comes from large hydroelectric dams. The rest is made up of biomass generation using its large supply of sugar cane bagasse, and small-scale hydroelectric plants of less than 30MW.

“The auction aims to increase the participation of renewables in our [total] energy matrix to 69% by 2020, which is part of our plan to reduce CO2 emissions by 20% from 2005 levels,” he said. The figure for the total energy matrix includes fuels.

With no more room for new hydroelectric power, São Paulo is now looking at other renewables which includes waste-to-energy projects, more biomass and biogás projects, solar PV and wind, based on the recently launched wind atlas for the state that pegged potential at 4.7GW at heights of 100 metres.

“The measurements have identified wind speeds of 6.5m/s and above in many regions of the state”, he said, pointing out that many developers have already committed to announce projects once the tax incentive measures are in place.

São Paulo’s auction, however, will differ from the federal government auctions – through which power is bought by distribution companies – and from the recent solar power auction held by the state of Pernambuco, when state government buildings were the buyers.

In São Paulo, the auction will probably attract large and medium-sized industries and commercial operations that will want to take advantage of cheaper renewable power, said Lautenschlager.

“Large supermarket chains, call centres, hospitals are all interested in buying renewable power,”, he said. “One example is a shopping centre in the town of Votuporanga that negotiating power from a 6.5MW solar PV that will be built here in the state”. 

According to the Votuparanga city hall, the 6.5MW plant will be built by Solatio Energia with an investment of R$32.5m ($13.9m). The city hall said that Solatio is waiting for implementation of tax incentives to start developing the plant. 

Among large industries that could buy renewable power at the auction, Lautenschlager mentioned Brazilian cement, metals and mining group Votorantim, which plans develop a 42MW wind power project in the state, and Japanese car manufacturer Toyota, which plans to invest in solar power.