Brazil sets December date for wind and solar reserve tender

Brazil will hold this year's second reserve tender for wind and solar on 16 December, while scrapping PV from the first reserve tender in September.

Interim mines and energy minister Fernando Coelho Filho has given more time for developers to register wind and solar projects for the December tender, which was originally scheduled for the end of October.

However, he has kept the 1 July 2019 start date for the 20-year power-purchase agreements and the conclusion of construction. Investors have registered 20.8GW of wind and 12.5GW of solar.

In the 23 September auction, the Mines and Energy Ministry will now contract reserve power from small hydro, but no solar. The tender, originally scheduled for July, had attracted 9.2GW of PV bids.

Filho also says a regular A-3 tender will be held by the year's end, but it has yet to say whether wind or solar will be included.

Confirmation of a reserve tender is in part a turnaround from Filho 's initial stance. After assuming office in mid-May, he suspended the first tender, saying he had to appraise the problem of over-contracted distribution companies following a decline in power demand.

Ministry officials said the whole reserve contracting model needed to be revised because it could result in a burden to consumers.

Unlike regular tenders, which contract power according to estimated future demand from distributors, in reserve tenders standby power is contracted by the government in case extra supply is needed, but the cost of generation is divided between all consumers as a surcharge on bills.

Since 2009, reserve tenders have also been used to diversify the power mix and introduce wind and solar into Brazil's mostly hydro/thermal structure, resulting in 3GW of solar being contracted by 2018 and a significant amount of the 17GW of wind contracted by 2019.​

Wind leaders had feared that the changes meant that the industry was looking at a cliff in contracts from 2019, while power demand is predicted to rise again next year. Solar players worried that the industry's growth path could be blocked.

Power demand actually increased 0.6% in May, year on year, led mostly by residential consumption, and preliminary reports from the power trading chamber, CCEE, indicate a 0.4% demand rise in June compared with June last year.

The CCEE says that could go up by 2% year on year in July, while the energy planning authority, EPE, is projecting an average 3.8% yearly demand increase until 2025.