Brazil PV project bid price hit a low point in the first round of investment yields, or down to single digits

Polaris solar PV net news: Brazil PV power generation projects in the first round held on October 31, after fierce bidding, 890-megawatt contract awards exchange capacity (1,048 MW DC capacity), the closing price of 215 Brazil reais/MWh ($ 87/MWh). According to Bloomberg new energy finance statistics, which is one of the lowest PV electricity price.

So far, the lowest price of photovoltaic electricity contracts from the United States, estimates at $ 50/MWh, but enjoyed a subsidy-related contract. Globally, the lowest unsubsidized PV electricity contract prices from Uruguay, $ 91.5/MWh. According to Bloomberg new energy finance estimates, the current Brazil photovoltaic power “levelized cost of energy” (LCOE) is about 235.4 Brazil reais/MWh ($ 95/MWh). The so-called “levelized cost of energy”, which assumes that the project offers investors a good rate of return, the project cost allocation between 20 an indicator obtained during the project period.

The bid prices fall below the levelized cost of energy, could mean two things:

˙ First, the project owner (bidders) current project costs are still significant fall (project to be put into operation until October 2017).

˙ Second, the project owner may made a big concession on the yield.

The bidding eventually granted 20 power purchase contract settlement price of 215 Brazil reais/MWh. A total of 31 projects bidding, 890 megawatts total Exchange capacity. Company Brazil domestic well-known energy companies RenovaEnergia and RioEnergy, there are transnational development company Solatio EnelGreenPower, solar energy development company (360 MW) as well as the other 4 companies (project volume totals 130 MW).

Earlier, Bloomberg new energy finance, the use of independent development of “Brazil reverse bidding valuation model” measure to get the “rational” bid closing price of 260 Brazil reais/MWh, very close to the upper limit of the tender price 262 Brazil reais/MWh. But that analysis assumes that in Brazil building owners will seek 13% the first large-scale photovoltaic projects yields (after tax capital gains rate). As Bloomberg new energy finance in one part of tendering available to customers as explained in the studies, from Brazil’s renewable energy bids often appears “irrational” bid, the prices could fall sharply.

In addition to photovoltaic projects, Brazil also has other renewable energy projects. Wind power tender 769 MW contract awarded a total, including 31 projects to settle at 142.3 Brazil reais/MWh ($ 57.4/MWh). Below the Bloomberg new energy finance estimates, the lowest Brazil wind energy costs to levels (some 147.5 Brazil reais/MWh, or 59.5 $/MWh), but higher than June 6, 2014 Brazil settlement price of wind power tender. Wind power winning bidder include RenovaEnergia, EnelGreenPower (photovoltaic electricity will get in bidding for contracts), CEREnergia, and PECEnergia and Copel, and Gestamp. Biomass/biogas projects have not received any bids.

“In the first round of bidding, wind power projects are the main winners, we also saw fierce competition between projects, leading to price low, yields are low. The PV project is somewhat similar. Have a project out of the lowest bid 200.8 Brazil reais/MWh ($ 81.1/MWh); we estimate the yield will be about 8% of the project, “Bloomberg new energy finance tracks permanent missions of Latin America’s new energy industry, said HelenaChung, an analyst in Sao Paulo.

Brazil’s PV economic have some unique characteristics. On one hand, since import duties and projects equipment parts localization requirements, Brazil PV project’s up-front costs than in other parts of the world. Meanwhile, Brazil is rich in solar resources, successful projects with an average capacity factor of approximately 19% (Germany, 11%), located in the State of Bahia, is equipped with an automatic tracking system capacity factor can even reach the item 23.7%. Moreover, Brazil renewable energy projects can benefit from Brazil’s National Development Bank (BNDES) loans. In addition, there is another factor that makes Brazil PV project economic analysis becomes more complex, it’s PV compensation plans reward exceeded planners, the penalty did not complete the terms of the plan.

The tender was in Brazil an important moment in China, one of which is hotly contested presidential election just ended, the other power sector is plagued by power shortage and high electricity prices.

“Brazil opportunities in the photovoltaic industry has just revealed that huge potential to development by around 2025 and to tens of millions of kilowatts. “Bloomberg new energy finance, analysis MichelDiCapua of the Americas,” said investor enters a new market, a relatively new investment technologies, usually looking for high yields. But here, seize market opportunities, attractiveness is difficult to resist, even if it means sacrificing yield. ”

[October 31, 2014 the exchange rate: US $ 1 =2.477 Brazil reais]

Original title: Brazil PV PV bid price hit a low point in the first round bid prices are close to record lows; investment profit rate dropped to single digits

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