Today is the Labor Day holiday in the U.S.

But today is also Brazilian independence day. It was 193 years ago today that Brazil declared independence from Portugal -- and the holiday happens to coincide with the announcement of the winners of Brazil's third solar auction.

The winners

Brazil's reverse solar auction last week was a "highly competitive" contest which awarded a total of 833 megawatts (out of 11.2 gigawatts of total qualified bids) at a clearing price of $0.085 per kilowatt-hour. Here are the results.

  • Enel Green Power (EGP) of Italy was the big winner and was awarded the right to sign 20-year energy supply contracts for a total of 410 megawatts across three solar projects at $79 per megawatt-hour
  • SunEdison/Renova won projects totaling 59 megawatts in the Bahia region.
  • Conergy won 54 megawatts for two projects to be built in northeast Brazil. “Brazil’s auction was one of the most competitive in the world,” said Conergy's Eduardo Abreu. Conergy’s two projects are to receive a 20-year PPA in the amount of $82.57 per megawatt-hour indexed to local inflation; they are set to begin construction in the first quarter of 2017.  
  • Sun Premier won 5 megawatts at $78 per megawatt-hour
  • Canadian Solar and Spain’s Solatio won five PV projects totaling 180 megawatts in Minas Gerais, Brazil. Canadian has a 20-year PPA at approximately $78 per megawatt-hour.
  • Gransolar won 60 megawatts at $79 per megawatt-hour
  • Invesiones Solares won 20 megawatts at $79 per megawatt-hour
  • CESP won 30 megawatts at $78 per megawatt-hour

According to GTM Research’s Latin America PV Playbook, Q2 2015 was the largest quarter in the history of the Latin American market. Honduras accounted for 307 megawatts. With 29 megawatts, Latin America’s usually dominant Chile was the second-ranked market. Panama connected its largest plant to date and rounded out the top-three list with 12 megawatts; Brazil followed with 11 megawatts. 

The suppliers

Project finance is expensive in Brazil, but the winning projects in these solar auctions can rely on lower-interest financing from the Brazilian development bank BNDES -- if they meet local content requirements. Solar analyst Adam James notes that the benefit of lower-cost financing is tempered by the higher-than-market prices of domestic Brazilian solar.

  • BYD is commissioning a 400-megawatt capacity solar module factory in Sao Paulo next year. Production is slated for projects in Brazil's solar auctions, according to Recharge.
  • Globo Brasil has built a 180-megawatt PV module factory in Brazil.
  • SunEdison will build PV modules in Brazil and is working with Renova Energia SA to develop projects and a $30 million solar factory.
  • Pure Energy announced a 40-megawatt factory (financed by the Brazilian development bank) in 2014.

The headwinds

GTM Research analyst Adam James notes that an auction award is still a long way from an executed project. James suggests that one of the largest challenges is the commodity-driven forex risk when PPAs are negotiated in Brazilian currency.

By 2020, GTM Research expects Brazil to be in second place behind Mexico in this region's solar market. For more on the Latin American solar market, including expert analysis, quarterly reports and data, check out the Latin America PV Playbook.