While the 2014 FIFA World Cup in Brazil has dribbled and tackled its way through its goal-rich group phase, the country’s power sector has been stuck in crisis mode.
Low rainfall and therefore depressed production from hydropower has led to a high dependence on the spot market for thermal power. However, renewable energy developers have had reason to celebrate with wind a big winner of an auction in early June on top of having walked away with a record amount of contracted capacity in 2013.
Brazil has been conducting auctions for new capacity and for immediate power from existing sources in order to counter the power crisis. In 2012, there was only one auction, resulting in 282MW of contracted renewable power. In 2013, there were six auctions (6.2GW of renewables), and the government has plans to hold seven auctions this year, two of which have already been held.
In its most recent auction held on June 6, wind came away with the lion’s share, some 551MW, of the 968MW contracted. In its H1 Brazil Market Outlook published on June 10, Bloomberg New Energy Finance projects 2.7GW of wind build-out in 2014, and 3.7GW in 2015.
Across the Atlantic, Spain and France, member states of the European Union and neighbours, have both come out with policies that could change the future of energy within their borders.
On June 18, France’s minister of ecology, sustainable development and energy presented a draft framework “energy transition bill”, the fruit of ideas that the government has been touting for two years to transform the country's economy into one that pollutes less and uses less energy.
The “Draft Bill for a New French Model for Energy” aims to cut France's dependence on nuclear energy and fossil fuels and slash its energy-related carbon dioxide emissions while increasing use of renewable energies.
While greenhouse gas emissions are to be cut 40 per cent by 2030 compared to 1990 levels, the country also introduces a new renewable energy target of 32 per cent for 2030, split between power (40 per cent), heat (38 per cent) and transport (15 per cent). The bill also targets halving overall energy consumption by 2050 compared to 2012 levels.
The government also proposed that it would cap installed nuclear capacity at its current level – 63.2GW. It also put in place a mechanism that would allow it to achieve Francois Hollande’s presidential election campaign promise of reducing France’s dependence on nuclear to 50 per cent of generation by 2025, from around 75 per cent currently. How to achieve this will be left to the majority government-owned nuclear operator EDF, which will have to present its strategy to the government.
Details on this, and the impact this draft bill will likely have on different sectors is presented in BNEF’s Analyst Reaction titled French energy law: big on targets, efficiency, state control, published on June 19.
Meanwhile, Spain set new rates for electricity suppliers that use renewable sources, waste and co-generation based on a “reasonable return”, formally ending a subsidy system dating back to the 1990s that had spun out of control.
On June 20, the Industry Ministry published the new formulae and tables to be used for generators ranging from wind turbines to solar collectors and waste incinerators, in a 1761-page regulation. The new return is based on a host of factors, including the cost of investment and the 10-year Spanish government bond yield.
The tax reform will mean €5 billion in savings for income tax payers and €2.6 billion in corporate tax, according to an El Mundo report.
Originally published by Bloomberg New Energy Finance. Reproduced with permission.