Vanessa Dezem – Bloomberg, 7/28/2014
Brazil’s Pernambuco state, which held the nation’s first solar-energy auction last year, said it is on the hook to buy the power after it was unable to find other bidders.
Pernambuco’s government agreed this month to buy the electricity from solar projects with the capacity to produce 96 megawatts of power, said state Secretary of Infrastructure Joao Bosco de Almeida. Contracts to build the projects were awarded in December to developers including Italy’s Enel Green Power SpA, who agreed to sell the power at an average price of 228.63 reais a megawatt-hour ($102.53) for 20 years. The contracts were only to build the projects and didn’t include buyers.
Although getting cheaper, solar power prices are still about 75 percent higher than those offered in the last wind-energy auction in June because the technology is still expensive and all of the equipment has to be imported. In addition to the high price, the duration of the contracts that Pernambuco was offering also deterred buyers, said Helena Chung, a Sao Paulo-based analyst for Bloomberg New Energy Finance. Buyers in Brazil’s wholesale market usually sign contracts for no longer than 10 years.