SAO PAULO, June 28 (Reuters) - The Brazilian government on Friday awarded licenses for new power generation projects that would add 402 megawatts (MW) of capacity by 2023, mostly from solar power, according to the country’s power trading chamber CCEE.
Companies which won the licenses during an auction in Sao Paulo on Friday are expected to invest 1.89 billion reais ($492.79 million) to build the projects, CCEE said.
The auction posted a record-low price for solar generation at 65 reais ($16.95) per megawatt, as costs for the power source continue to decrease globally, putting it ahead of other sources such as wind and small hydroelectric projects.
Solar projects accounted for half of the new capacity to be added.
But the number of new licenses awarded was way below market expectations for up to 1 gigawatt of new capacity, as Brazil’s economic recovery remains sluggish.
Ricardo Cyrino, Brazil’s electricity secretary, said another reason for the low interest in the auction was that many companies have decided to operate in the free power market, where they negotiate supply contracts directly with consumers without using the regulated market where power distributors clinch contracts with generators in periodic auctions.
Cyrino said most companies behind the new power projects decided to negotiate at the auction as low as 30% of the energy they will be able to produce, leaving the rest for deals in the free market.
Among the companies winning contracts on Friday were Spanish group Iberdrola, France’s Voltalia and local companies Celesc and Cemig. ($1 = 3.8353 reais) (Writing by Marcelo Teixeira Editing by Bill Trott)