In June of this year, a new A-4 energy auction will take place in Brazil. A new feature will be presented to the market with new types of contracts, different from those carried out in previous auctions. The new contracts will be based on quantity of energy and not availability, according to information from ABSOLAR (Brazilian Solar Energy Association). Market sentiment is optimistic about this new change, which should be very positive for the solar sector.
The energy contracting model by quantity was traditionally used with hydraulic sources and was later also adopted for wind generation, making its debut in the A-6 auction that took place in the country in 2018. With the growing maturity of the solar sector in Brazil , the model now extends to the photovoltaic source.
In the quantity contracting model, financial contracts are made in which the generator makes an energy offer in R$/MWh and assumes the risk for delivering the contracted quantity of energy.
On the other hand, in the energy contracting model based on availability, the generator is remunerated in R$/MWh to remain available, with the risk of energy unavailability being assumed by the buyer. The first model is more favorable to the insertion of the energy source in the market, as it reduces buyers' risks.
With the new change proposed for this year's June auction, the solar source gains equal status with other sources and competes in a more balanced way in the market, in addition to gaining the possibility of participating in all other auctions to come.
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