Zero solar success in Brazil’s A-5 energy auction

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No solar projects were successful in the second national energy tender auction in Brazil.

The A-5 energy auction held in Sao Paulo at the end of last week handed out contracts for 115 energy projects totalling 3,507MW, but zero solar projects were among the successful bidders.

The auction was to choose projects to win government energy tenders and meet growing national energy demands. All projects are to come online by 1 May 2018.

Out of the 115 successful energy projects, 97 were wind farms, accounting for 67% of the 2,337MW capacity up for grabs. Hydro also featured strongly.

There were 687 qualified projects competing, with a total of 21,130MW. Out of the 687 participating, 88 were PV projects.

The lack of success for PV is the second time in the space of only a few weeks that solar has failed to win any contracts in Brazil’s national energy tendering process. Last month, none of the 31 PV projects chosen to compete in Brazil’s A-3 energy tender auction were successful, with observers saying the ceiling bid price that had been set of BRL126 (US$53.3) per megawatt hour was too low.

The continued failure of PV to attract interest in the national energy tendering process has already prompted calls for ‘solar-only’ auctions, given that PV is not yet at a sufficiently low cost in Brazil to compete with cheaper forms of power such as wind.

Talking to PV Tech, Frost & Sullivan energy and environmental research analyst, Vinicius Vargas said: “The ceiling price was too high” at the A-3 and A-5 energy auctions.”

Early in November a consortium of three Brazilian electricity associations submitted proposals to the government for solar-only energy auctions, with 500MW of capacity to be set aside for solar projects every year for the next three years. The Brazilian Association of Independent Power Producers (APINE), the Industry Association of Cogeneration (COGEN), and the Brazilian Electrical and Electronics Industry Association (ABINEE) are now preparing to send the government a proposal for the solar only auctions. They said a reasonable price to offer for PV would be BRL190 (US$83) to BRL200 (US$87).

The Brazilian state of Pernambuco is to host Brazil's first solar-only energy tender auction, now on 27 December 2013, after moving the date from the 13 December. The deadline for applications is 20 December.

Vargas said Pernambuco has 180MW made up from 12 solar projects in its pipeline and state-led solar-only auctions are beginning to gain traction, with three other states expected to announce state auctions for solar projects “they are not waiting for the government”. States are starting to compete for solar developments and are predicted to offer incentives to combat the challenge for some companies to develop solely in Pernambuco.

PV’s continued struggle in Brazil also undermines claims by analysts that the country is on the cusp of a solar boom.

Frost & Sullivan previously predicted that a “stable economy and booming energy sector are drawing investors away from the stagnant North American and European solar photovoltaic markets towards Brazil's potential-laden domestic market”, estimating US$431.1 million will be available in market earned revenue from Brazil’s PV industry by 2017. Brazil was also rated one of the top emerging markets by market analysts, IHS.

Frost & Sullivan project 380MW will be installed in Brazil by 2017 as the region benefits from lots of investor interest, and corporate budget commitments in solar energy research and development.

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