Brazil ventured into the solar power industry on Friday, Oct. 31 and approved contracts for the building of 31 solar panels in an effort to diversify its sources of energy after the worst drought in the country caused a massive energy crisis that rattled the nation.
Aneel, Brazil's energy regulator finished its first exclusive solar power auction last Friday, which guarantees a 20-year energy supply from companies that plan to invest 4.14 billion reais ($1.67 billion) and will provide energy for the country in 2017.
This is the first time Brazil constructed large-scale solar projects in the country. The 31 solar parks will reportedly provide 1,048 megawatts (MW) of combined installed energy capacity. Market expectations were for projected total awards of 500 MW.
"This auction is a mark, not only because it signals the entrance of solar power in the Brazilian energy mix, but because it was one of the most competitive to date," said Mauricio Tolmasquim, head of the government's energy research company, EPE.
The solar power auction went out for over eight hours. The terminal price for the 31 solar parks were concluded at around 220 reais (489) per megawatt-hour, lower than the initial price of 263 reais ($106), for a total of 18 percent discount.
"This is one of the lowest prices for solar energy in the world," Tolmasquim said.
The lower price was because many of the areas that the solar parks would be put on already contain wind farms, therefore the solar park developers would have lesser trouble and shell out less money to build land and transmission lines, according to Tolmasquim.
The Brazilian government controls sets the maximum price for the megawatt hour and companies lower down their price in order to get the deal. Companies that offer the lowest price acquires the contracts.
