Brazil state solar auction to impose domestic content restriction

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The Brazilian state of Minas Gerais is to apply domestic content regulations to its solar auction in November.

The Superintendent for Minas Gerais’ Economic Development Secretary, Guilherme Augusto Duarte de Faria, told Bloomberg, developers taking part in the auction must buy equipment manufactured in the state.

The state-level move follows the introduction of domestic content requirements for bidders wishing to quality for solar project financing from Brazil’s national development bank, BNDES.

Faria told Bloomberg Minas Gerais is looking to utilise the current solar enthusiasm after the BNDES announcement, to improve solar energy development in Brazil.

Faria also said five developers have expressed interested so far, along with three module manufacturers planning to build facilities in the state.

Last summer the state’s deputy governor, Alberto Pinto Coelho, announced plans for a solar manufacturing facility to be built in the state.

State governor for Minas Gerais, Alberto Pinto Coelho also announced a solar incentive in August last year with tax breaks for investors building modules, inverters and solar plants.

A local company, Companhia Energetica Integrada, is already building a 3MW solar park in the state, and Tecnometal, Brazil’s first solar panel maker, has apparently demonstrated an interest in investing in Minas Gerais.

The Minas Gerais solar auction is to have a ceiling price of BR260 (US$109) per MWh and offer 15-year power contracts with utility, Energetica de Minas Gerais.

Last year, vice president of Brazil’s Industry Association of Cogeneration (COGEN), Leonardo Calabró, said a reasonable price for solar auctions to offer is BRL190 (US$83) to BRL200 (US$87), per MWh.

The state of Pernambuco successfully held a state solar auction last year for 180MW of solar capacity, auctioned with an average price set at BR250 (US$105) per MWh.

Brazil’s next national energy auction is to be held 30 September and is for all energy sources to compete for national tenders. The later LER reserve auction in October will include a solar-only category, after last year’s auctions procured zero solar projects.

The Brazilian government has turned its focus to solar energy, after a drought caused energy prices to sky rocket as expensive thermal electric generation replaced cheap generation lost from parched hydro power plants. 

There is currently growing optimism for solar development taking part in the national state auctions this year, and solar has also taken a front stage position in Brazil’s national election debates, with the election to begin in a few weeks.

Also this week EPE released its plans for energy developments for the next ten years, with only 3.5GW of solar planned.

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