Solar Power Firms Seek Delay to Brazil Solar Farm Startups

April 9, 2016, 3:33 PM UTC
Technicians working on solar panels
Photograph Sam Diephuis -- Getty Images

Canadian Solar, Renova Energia SA, and four other solar power companies have asked Brazil to allow them to delay the startup of dozens of solar farms for two years due to current market conditions.

In their letter to the government seen by Reuters on Friday, the companies said Brazil’s currency slump and the lack of local supplies make the solar projects unfeasible at present.

The companies account for almost 80% of all projects cleared for construction during a licensing round in 2014, or around 690 megawatts of new power capacity.

The 2014 round was the first opened by Brazil exclusively for solar power in a push to diversify electricity generation away from hydropower after two years of droughts reduced supplies to critical levels.

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Brazil relies on hydro electricity for 67.9% of its power. Thermal power accounts for 28.7% of Brazil’s power supply, while nuclear and wind power supply just 3.4%.

In their request addressed to power sector regulator Aneel the companies asked for a two-year delay in start dates originally planned for 2017.

Under Aneel’s regulations, companies that fail to begin generation at their expected dates must buy power on the spot market to fulfill contract obligations, unless granted a waiver.

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Aneel has yet to answer the companies, but it usually denies such requests since the contracts specify that firms have to shoulder the risks, including economic variables.

Several power generation projects are facing similar problems in Brazil since its currency lost about 40% of its value in 2015 and credit conditions deteriorated amid the worst recession in decades.

There are dozens of power generation assets on sale in the country as financially distressed companies try to reduce their portfolios of projects.