Brazil awards 806MW of solar with its lowest ever tariff in latest auction

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Credit: BNDES

Brazil’s ‘A-4’ power auction has seen energy agency EPE allocate 806.6MW(AC) of solar at the lowest ever price in the country.

This capacity was dispersed among 29 PV projects at an average price of BRL118.07/MWh (US$35.25), offering a discount of 62.2% in relation to the ceiling price. The previous auction saw average prices reach BRL145.68/MWh.

Rodrigo Sauaia, executive director of the Brazilian PV association Absolar, told PV Tech that competition remained “significant” throughout the auction, driven by the more than 20GW of projects that had lined up to take part. It was also the highest reduction in price from the ceiling tariff in any of Brazil's PV auctions.

Sauaia added: “Solar continues its trajectory to become one of the cheapest and most competitive electricity sources in Brazil.”

However, he also noted that Absolar and its associate members believe that the prices offered are considered to be challenging to deliver.

He also noted that some of the players awarded contracts are traditional players while others, who are starting their activities in Brazil for the first time, are already well-known to the electricity sector.

In terms of other technologies, four wind farms totalling 114.4MW were contracted at an average price of BRL67.60/MWh. Two hydroelectric plants and two small hydropower plants totalling 41.66MW were contracted at a price of BRL198.12/MWh, while two biomass thermal project totalling 61.8MW were contracted at an average price of BRL198.94/MWh.

Sauaia noted solar’s consistency in delivering prices lower than other sources of renewables.

He also said: “Because of that, we believe that the government will probably see solar as a more attractive source for future auctions and contracts both on large-scale, but also possibly on other ways of contracting solar in the country, meaning that solar is starting to become more a part of the Brazilian electricity sector mentality and culture, something that unfortunately took us at least 10 years.”

He said other technologies in Brazil had started out with far more support from the government so the trajectory of gaining of competitiveness in solar is “unprecedented” in Brazil.

A total of 1,024.5MW capacity was awarded in this latest auction, with the power generated to be supplied for a 20-year period from 1 January 2022.

The Auction was conducted by the National Electric Energy Agency (Aneel) at the headquarters of the Chamber of Commerce of Electric Energy (CCEE), in São Paulo.

Director of Aneel, Tiago Correia, said: “Now it is up to ANEEL to monitor the management of the contracts so that the energy is delivered within the established deadline.” 

The states with the contracted projects were Ceará (14 plants), Minas Gerais (8 plants), Piauí (6 plants), Bahia (4 plants), Pernambuco (3 plants), Rio Grande do Sul (2 plants), Espírito Santo Mato Grosso do Sul with a plant in each state. 

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