Brazil Clean-Energy Developers Sell 1.5 Gigawatts of Wind, Solar

  • Government raised auction ceiling prices after currency slumps
  • Brazil targetting 7 gigawatts of solar power by 2024

Energy developers won contracts to sell almost 1.5 gigawatts of clean electricity in Brazil after the government raised a price cap to attract bidders.

Wind-power companies including Rio Energy and EDP Renovaveis SA agreed to provide 548 megawatts of capacity, Sao Paulo-based electricity trading board CCEE said on its website Friday. Solar companies such as SunEdison Inc. and Rio Alto Energia won contracts for 929 megawatts at the government-organized energy auction.

The slumping economy has hindered new energy projects after the Brazilian real fell 37 percent this year. That’s making it more expensive to import solar panels and wind-turbine components. BNDES, the country’s development bank and the most important source of long-term financing, has raised interest rates.

“Competition was huge in this auction,” said Rafael Brandao, a partner at Rio Alto Energia. “Payers were fighting for contracts and the prices were pressured at the end.”

Solar projects won contracts to sell power for an average of 297.75 reais ($77.49) a megawatt-hour, below the ceiling price of 381 reais a megawatt-hour. In a similar auction in August, the maximum price was 349 reais. In Brazil’s energy auctions, the regulator Aneel sets a ceiling price and developers bid down the amount at which they’re willing to sell electricity. The lowest offers are awarded long-term deals.

Solar Prices

Solar prices were a nice surprise,” said Igor Walter, a director at the Ministry of Mines and Energy. “The prices are realistic. The ceiling price raise was determined to bring competitiveness to the auction and generate competition.”

Brazil has set a goal of having 7 gigawatts of installed solar power capacity by 2024, according to Mauricio Tolmasquim, the head of Brazil’s Energy Research Agency, known as EPE. That’s an increase from last year when the government was targeting 3.5 gigawatts of solar capacity in operation by 2023.

For wind energy, the average price in the auction was 203.46 reais a megawatt-hour, below the 213-real ceiling. The maximum price in a similar auction in August was 184 reais.

“Higher ceiling prices were successful in attracting investors for the event,” Helena Chung, an analyst with Bloomberg New Energy Finance, said in an interview in Sao Paulo.

Brazil is seeking to replace 15 gigawatts of inefficient thermal power plants with cleaner and cheaper energy sources, Energy Minister Eduardo Braga said Thursday.

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