Brazil looks at longer renewables PPAs and wind-solar hybrid tenders

Brazil is studying changes to next year's energy tenders, including longer renewables power-purchase agreements (PPAs) and contracting wind-solar hybrids.

And in the future, tenders could be held for storage capacity, the interim energy planning secretary, Eduardo Azevedo, told congressmen.

He also said that in September the government should finalise studies to improve the ProGD micro-generation programme, which aims to attract R$100bn ($31bn) in investment, mostly in rooftop solar, in coming years.

“We want to help the market to allow investments to be feasible and lasting. We are going to continue to signal this to the market,” he told a hearing of the lower house Mines and Energy Committee.

Azevedo indicated that the interim government is revising the 2016-25 ten-year plan — which projects 25GW of wind and 10GW of solar — and in the 20-year period to 2035, renewables will be contracted at a level “never before seen”.

“Our long-term projection points to average 4% yearly GDP growth in 20 years, which means we will need to double our current capacity — that is another 140GW," he added.

“And because of our commitments made at COP21, the decline of reliability of hydroelectricity supply and the need to reduce fossil-fuel-based generation, we are talking about investments never before seen in renewables.”

Saying that the ministry is still studying the 2016 reserve tender — expected to be scheduled for October — Azevedo indicated that changes for next year's tenders, for the non-regulated market and for solar rooftop and distributed generation, could be announced in coming weeks.

Studies are still being carried out for this year's tender, but the ministry is already looking at promoting changes in the 2017 auctions.

Lengthening the PPAs (currently 20 years), he added, could help investors obtain financing and reduce the final price.

Wind-solar hybrids could also cut costs, since they can use the same transmission infrastructure, he said, citing Enel Green Power's 10MW Fontes Solar array and 80MW Fontes dos Ventos wind farm in his home state of Pernambuco. which produce solar power during the day and wind power at night.

Additional changes to the tenders aim to simplify processes principally for the declaration of physical guarantees that are affected by the choice of turbine model.

“We know that after a tender the developer often changes the equipment, so we want to make this simpler,” he said.

Azevedo also indicated that more detailed planning and incentives for the expansion of the transmission grid would aim to allow the construction of projects in areas that may not have the best wind or solar resource but have good grid connections.

The ProGD revamp could include technical guidelines to avoid impacts on local networks; a secondary market for power credits obtained through net-metering; and new financing mechanisms,

The ministry is considering using the RGR Fund — a federal charge on consumers that subsidises power bills for poor families — to finance rooftop arrays, among other micro-generation technologies.

“Instead of giving discounts on the bill of consumers up to 50kWh a month, we could help them generate their own power and not pay anything at all,” he said.