Two Spanish energy companies among companies seeking to secure Brazil’s wind and solar tender

Two Spanish energy companies among companies seeking to secure Brazil’s wind and solar tender

After canceling solar and onshore wind plant tenders in 2019 and 2020, Brazil has restarted government-organized tenders, which has attracted bidders from as far as Spain. Iberdrola, an electric utility company based in Bilbao, and EDP Renewables (EDPR), headquartered in Madrid, are among a list of companies bidding on the 60 gigawatts (GW) auction.

Developers are eyeing long-term contracts under the Brazilian administration’s non-regulated market offers. The country’s economy has been dwindling due to unemployment, and Covid-19 added salt to the injury. The poor economy may affect this project’s implementation, with only 41GW of photovoltaic (PV) and 22GW of onshore wind plants projected to be installed.

“The regulated market tender still offers long-term power purchase agreements (PPAs), with risk allocation favoring the power generator, especially if you look at the guarantee of grid connection,” said Luiz Barroso, CEO of PSR a consultancy firm based in Rio de Janeiro. “The companies are still competing in the non-regulated market, but it is still competing in the non-regulated market, but it is stratified. Not all companies want a long-term PPA,” added Barroso.

Brazil aims to contract energy firms between 2024 and 2025 for 20-year agreements to develop the renewable energy sector. Energy companies that specialize in wind power and utilities in Brazil are encouraged by their growing interest in renewables. Regulated PPAs offer cheaper power in the non-regulated market, and public players might get better opportunities in auctions, a docket previously dominated by private firms.

Last year saw legislators push for the de-regulation of Brazil’s power sector. Industry stakeholders embraced this move by Congress to provide an opportunity for solar and wind projects. There was an eruption of renewables projects contracted in the non-regulated power market.

“The future is green, free, and technology-based,” said Bento Albuquerque, Brazil’s Mines and Energy Minister. Bento said this in 2020 when he endorsed a bill in Congress to remove constraints in the country’s power industry. Besides Iberdrola and EDPR, other companies presented their bids. These include Pacific Hydro, Casa dos Ventos and local private entities.

The non-regulated market contributed 70% of the 4.8GW of new wind projects approved by Aneel, the country’s electricity regulatory agency, in 2019. In 2020, this percentage was maintained of the total 6.5GW. Companies bidding on regulated projects indicate that energy firms are willing to work for lower pay. Regulated contracts are less risky. Once work commences on this project, Brazil’s onshore wind capacity will rise from the current 18GW to 28.7GW by 2024 and more by 2025.

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