Energy major Shell and Brazilian steel company Gerdau have penned a 50-50 joint venture (JV) agreement for the development, construction and operation of a 260MWp solar PV project in the solar hotbed state of Minas Gerais.
Slated to be built in 2023, depending on approval from regulatory authorities, the plant will supply half the power produced to Gerdau’s steel production units in Brazil, with the other half traded on the country’s growing free market via Shell Energy Brazil.
Brazil has a favourable ‘self-production’ model whereby projects that are built for self-consumption, rather than trading on markets, pay lower tariffs on the electricity produced. Companies are also able to outsource the construction and operation of projects to third parties.
Its growing free market has also seen more flexibility for companies to strike more lucrative, bilateral power purchase agreements (PPAs), circumventing the country’s national auctions.
Shell said the partnership with Gerdau “could enable the development of approximately one-third of the total capacity of the solar park” and that it would find other long-term customers to allocate the remaining power to.
“We are taking another important step in building a robust portfolio of renewable energies in Brazil, reinforcing the diversification of our businesses, always in line with our purpose of providing more energy and in an increasingly cleaner way,” said Shell’s director of renewables and energy solutions at Shell Brazil, Guilherme Perdigão.
Brazil’s solar sector has been booming of late, not least because of new net metering laws affecting distributed generation that come into effect in January 2023, causing the market to go into “overdrive”.
Utility-scale capacity additions are also on the rise, surpassing wind for the first time last year in a country that has typically had one of the lowest levelised cost of energy (LCOE) in the world for wind power.
PV Tech will be taking a much closer look at the Brazilian market in our upcoming edition of PV Tech Power through interviews with local experts, analysts, solar companies and banks. The 30th edition of PV Tech Power will be out later this month.