Solar developers have had limited success in recent energy auctions in Brazil with relatively higher prices for PV. Several analysts spoke to pv magazine about the results of the procurement process.
July 22, 2021
The Brazilian Electricity Regulator and Electric Power Commerce Chamber (CCEE) held Auctions A-3 and A-4 on July 8 to resume large solar contracts in the Brazilian regulated market after 2020 with no new auctions closed has been.
The amount of contracted energy – 21.4 MW in auction A-3 and 17.6 MW in auction A-4 – is relatively lower than in previous years, although demand is under pressure due to the economic slowdown. The final prices averaged 122 BRL (23.80 USD) / MWh in the A-3 round and 136.75 BRL / MWh on average in the A-4 round.
In 2019, the lowest price for solar energy was 66.43 BRL / MWh, but the share of energy reserved for the free market was higher at around 66%. This energy was sold at higher prices as part of an electricity purchase agreement with a private customer.
According to Absolar President Rodrigo Sauaia, there has been a welcome “rationalization” of prices at the latest auctions.
“We saw a more robust basis for contracts in the regulated market for more rational value,” he said. “This is an interesting sign that shows that there is room for this type of project to distribute more energy in the regulated market.”
For example, one of the projects selected in the A-5 auction, the Santa Luzia VII solar park, sold a total of 93% of its capacity in the two auctions, 40% of which in the A-3 and 53% in the A-4, at 137 , 40 BRL / MWh or 138.50 BRL / MWh. The plant is being built by the Brazilian developer Rio Alto Energia in Paraíba together with the Santa Luzia IX park, which was commissioned as part of the A-4 exercise, and another outside the auction plan called Santa Luzia V. Three projects have a capacity of 50 MW .
Another selected project was the Boa Hora plant in the state of Pernambuco. It consists of the projects Boa Hora 4, 5 and 6 with 23 MW each and sells 1.8 MW each in the A-3 auction for 120 R $ / MWh. This means that most of their capacity is made available for the free market.
“Many players invest resources and teams to develop projects in the open market,” said Sauaia. “So you take part in the auction and are not necessarily ‘bid’ because you have the contract price reference on the open market.”
An impressive 16.9 GW out of 408 solar projects were allowed to participate in the A-3 and 19.5 GW out of 464 projects in the A-4 exercise, with the same projects often participating in both auctions.
The results of the most recent auctions also confirmed the competitiveness of solar compared to other sources.
“The last auctions show once again that PV is the most competitive technology in terms of the prices awarded,” said Josefin Berg, head of research for clean energy technologies at IHS Markit PV magazine. “The prices are low, but since projects last three to four years, the winners expect costs to fall.”
In the A-3 round, solar contracts with an average of 122 BRL / MWh were concluded, below biomass, wind and hydropower. In the A-4 round, the average price for solar was 136 BRL / MWh.
So far, 835 solar projects or 32,254 GW have been registered to participate in the A-5 auction, which is geared towards the supply of electricity from 2026. The call for applications will take place on September 30, 2021.
This content is protected by copyright and may not be used any further. If you would like to work with us and reuse some of our content, please contact: [email protected]