Trade Resources Industry Views Brazil's Plan to Auction 3.5gw of PV Capacity as Welcome News for Global Solar Industry

Brazil's Plan to Auction 3.5gw of PV Capacity as Welcome News for Global Solar Industry

Brazil's plan to auction 3.5GW of PV capacity through 2018 comes as welcome news for the global solar industry as the ambitious plan is expected to catalyze solar growth in Latin America, according to IHS.

The Brazilian Electricity Regulatory Agency (ANEEL) announced a so-called reserve capacity auction to contract new power-generation capacity to hedge against unexpected drops in power supply. Such drops might include low hydroelectric power levels during drought years.

The next auction is slated for October 2014, and will offer separate categories for different technologies. This approach will benefit the PV market compared to the regular new-capacity auctions, in which multiple renewable power technologies compete, a method that gives an advantage to wind, said IHS.

Exactly how much capacity will be awarded has not yet been disclosed, but IHS said it expects about 500MW to be available for PV projects in the first round. The ceiling price for the 20-year power purchase agreement (PPA) for bids is likely to be set at approximately RS250 per megawatt-hour (MWh), or US$112 per MWh.

In light of the new announcements, IHS has increased its installation forecast for the country, and predicts that the annual installed solar capacity for Brazil will rise to 1,023MW in 2018, up from 167 MW in 2013.

IHS added that Brazil is currently suffering a challenging year in power generation, as extreme drought conditions have threatened electricity supply and forced an increase of costly thermal power generation. As peak wholesale power prices top US$400 per MWh, alternative sources of generation have become attractive in the short term.

Competition for PV projects in the reserve capacity auction will be tough. As an indicator of the PV project pipeline in Brazil, about 6.1GW worth of PV projects have registered for the new capacity auction scheduled for September 2014, even if few are likely to be able to bid below wind projects.

Source: http://www.digitimes.com/news/a20140715PR201.html
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Solar Expectations Rise for Brazil as Auctions Announced, Says IHS
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