Brazil delays national energy auction

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The Brazilian government’s Energy Research Office (EPE) has announced a delay in the national energy auction.

EPE, an arm of the Ministry of Mines and Energy, published the delay in Brazil’s official gazette last week.

Named the ‘A-5 energy auction’, it is to be postponed by two weeks, from the original 12 September date, to 30 September.

The A-5 auction invites all forms of energy development to bid for government power supply contracts. This year is only the second time that solar has been included in the auction.

The A-5 auction has already attracted 225 solar power projects to register, totalling 6.1GW. The proposed projects will be competing with natural gas, coal plants and wind projects.

Over a thousand projects applied for the all-energy A-5 auction this year, with 50.9GW of tenders. Successful projects are to come online by 2019.

Wind and natural gas accounted for 70% of the applications, with over 700 wind projects, totalling 17.4GW, and 36 natural gas plants accounting for 20GW.

However last year no national solar bids were successful in Brazil: the A-5 auction, and the following national renewables-only auction, the A-3, procured zero solar projects.

Analysts concluded the zero-solar effect was due to costs, with a low ceiling price of BRL126 per MWh (US$56.93) set in the A-3 auction.

A consortium of Brazilian energy companies (the Brazilian Association of Independent Power Producers, Industry Association of Cogeneration COGEN, and the Brazilian Electrical and Electronics Industry Association) said a reasonable solar price is far higher, between BRL190 (US$85) to BRL200 (US$90) per MWh.

In June Brazil’s government announced the next A-3 energy auction, for 2014, is to be held 10 October. The A-3 renewables auction is to have a separate solar only category, so solar does not have to compete head-to-head with other renewables.

A severe drought reducing hydro power capacity is thought to have stirred the high quantity of applications for this year’s A-5, and the inclusion of solar power; however a ceiling price has not yet been confirmed. If the price is too low, solar is unlikely to be procured when competing directly against other more established sources, such as wind.

Read more about solar auctions in Brazil, from sister site Solar Business Focus, here.

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