No solar PV projects were selected in the long awaited A-3 energy tender auction in Brazil on Monday.
The first government energy tender auction to allow the participation of solar energy projects was unanimously dominated by wind, with 39 wind farms totalling 867.6MW commissioned at the auction.
The auction took place yesterday, 18 November at the headquarters of the Chamber for Commercialisation of Electric Energy (CCEE) in Sao Paulo.
There were 31 unsuccessful PV projects with a generation capacity of 813MW participating in the A-3 energy auction, of which 12 projects were planned in the Bahia region amounting to 309MW, four projects in Minas Gerias totalling 115MW, nine in Paraiba totalling 253MW, four projects in Piauí accounting for 91MW and two projects in Rio Grande do Norte with a capacity of 45MW.
In September, a much higher 2.7GW of PV projects were being considered in the preliminary round for the A-3 auction.
In total, 429 renewable energy projects, from biomass and hydro, participated in the A-3 auction with a total of 10.46GW in proposed energy projects all competing for tenders.
A ceiling price of BRL126 per MWh (US$54) was set for all power sources, which industry observers previously said could prove be too low for solar projects in Brazil to be financially viable, and would prevent solar projects being selected in the A-3 auction.
By the end of the auction the average price for the wind energy bids was BRL124.43 MWh (US$54.92).
Just before the auction a consortium of Brazilian energy companies called for solar-only auctions, claiming a reasonable price to offer PV projects would be between BRL190 (US$83) to BRL200 (US$87) per megawatt hour, far higher than the A-3 ceiling price.
Leonardo Calabró, executive vice president of COGEN, part of the consortium, predicted last week that as solar is not yet competitive with wind and other energy sources in Brazil, it was unfair for solar to compete in the A-3, or the upcoming A-5 energy auctions.
President of Brazil’s Energy Research Company (EPE), Mauricio Tolmasquim said soon the same level of price parity and participation should follow for solar, saying A-3 “is the time of wind” but solar will soon follow “as prices fall”.
Tolmasquim also said previously: “Although solar energy is not yet competitive in terms of the cost of the other sources, especially with wind” solar’s presence at the A-3 auction “demonstrates the concrete interest of entrepreneurs to invest in this source.”
The auction was arranged by the federal government to fulfil the country’s energy demands for 2016 – when the successful energy projects from A-3 must come online.
The auction offered 25 year contracts for purchasing electricity, commencing 1 January 2016; overall 28 companies took part in the energy auction.
Investment in constructing of the successful wind farms is estimated at US$3.3 billion. The wind farms are to be located in Bahia, Ceará, Pernambuco, Piauí and Rio Grande do Sul.
The next A-5 auction, 13 December, (with a five-year development deadline, rather than the three years permitted under the A-3 auction), accepted a record breaking 152 preliminary PV bids or 3,601MW, with PV projects second in popularity, after wind. The A-5 auction has set an even lower rate of BRL122 (US$52.0) per MWh, with projects to come online by 2018.
Brazil has been slow on the take up of solar energy, but the state of Minas Gerais is leading the way as its government recently gave the go ahead for a PV manufacturing plant just after announcing its first incentive programme for renewable energy producers.