Brazil's first solar power auction to clear 500 MW of new plants
By Anna Flávia Rochas and Marcelo Teixeira
SAO PAULO Oct 30 (Reuters) - Brazil will take its first leap into commercial solar power generation on Friday with a rights auction of at least 500 megawatts of new solar parks, adding a new energy source as a drought reveals the danger of depending on hydropower.
Sun-kissed Brazil has one of the highest solar radiation factors in the world and plenty of land for solar farms, plus large reserves of silicon to make solar panels. Yet pilot projects have installed just 30 MW of solar capacity in the country so far.
About 400 solar projects are registered to participate in Friday's auction, representing more than 10 gigawatts of potential capacity. But an energy price ceiling and financing issues may limit new licenses, according to companies involved.
Dozens of local and foreign companies are lining up to enter the new market, including SunEdison Inc, Elecnor SA , Alupar Investimento SA, Renova Energia SA and CPFL Energias Renováveis SA.
The Brazilian Solar Power Association (Absolar) estimates the auction will distribute between 500 MW and one gigawatt of new rights do sell solar energy. Investment bank Itau BBA, whose energy experts are advising companies in the auction, has a similar forecast.
"I would say it will be closer to 500 MW than to one GW," said Marcelo Girao, who oversees project finance for the energy sector at Itau BBA.
He estimates the auction will trigger 2.25 billion reais to 5.5 billion reais ($0.9 billion-$2.3 billion) of investments in new Brazilian solar parks, based on a cost between 4.5 million and 5.5 million reais per installed megawatt.
Brazil's state development bank, BNDES, will finance up to 80 percent of the investments, depending on each project's specifications. Continuación...