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With a Plan to Reach 1 GWac of Capacity by 2025 and Expand Its Role in Solar Energy Generation, EDP Bets on Solar Power Plant Project
EDP Brazil made public last week its investment in the Novo Oriente Solar plant and, according to João Marques da Cruz, the company’s president, intends to make another solar plant viable by 2022. EDP, which has job openings, aims to expand its solar energy generation and seeks to achieve 1 GWac of capacity from photovoltaic projects by 2025.
In an interview with the Broadcast Energia website, President Cruz stated: “Novo Oriente is the second large-scale solar investment – the first was Monte Verde, in the Northeast, which was announced in October – and we are working to have a third this year. We want there to be two more in 2023, always with this dimension of around three hundred megawatts peak, which means 250 MWac.”
The Novo Oriente solar plant will be installed in Ilha Solteira (SP) and is expected to begin operations in 2024. With a capacity of 254 MWac, the capital invested will be approximately R$ 900 million, considering an expense of R$ 3.5 million to R$ 3.8 million per MWac.
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The New Solar Plant Is a Joint Venture Between Two Companies
The Novo Oriente solar plant project consists of a partnership between EDP Brazil and EDP Renewables, where each company is responsible for 50% of the venture. This partnership ensures, according to the group, the specialized knowledge and economies of scale in construction achieved by the company, in addition to facilitating better marketing of solar energy in the local market.
Cruz also stated that the plan to achieve 1 GWac of solar energy by EDP Brazil by 2025, both in centralized solar plants and in distributed generation plants, is the company’s response to the energy transformation process and climate changes. The president of EDP explained that hydropower will be replaced by solar energy.
Regarding commercialization, the president said he has given up some profitability to reduce project risk, while the company’s strategy is to achieve a rate of 85% of contracted energy for a long period and preserve only 15% exposure, with this amount directed to the group’s trading company. In addition, he noted that the Novo Oriente solar plant already has a power purchase agreement for 120 MWac, which made the initiative possible.
The solar energy commercialization model practiced by EDP aims for “remote self-production” for industries and companies. Cruz argues that the time is right for this type of transaction. According to him, clients can engage in contracts of up to 15 years, where the energy cost is capped at a constant price adjusted for inflation, allowing for savings of up to 15% compared to distributed generation projects. “This is an efficient way to have solar, which is why long-term contracts are viable, because we can share this gain with the client, even in face of distributed generation solar,” he said in an interview with Broadcast.
EDP President Also Expresses Plans for Future Plants
At this moment, during the installation of the solar plant in Ilha Solteira, EDP is already committed to making another solar plant viable and plans to announce the next project later this year. The new initiative, according to Cruz, is not yet defined: “We haven’t decided whether the next one will be in the Southeast or the Northeast, we have pipelines for both, it will depend on interconnection capacity to the grid and clients.”
Moreover, the EDP president explained that the installation of the Novo Oriente solar plant in the Southeast, Brazil’s most important commercial center, serves to facilitate transactions and business, given that most clients are located in this region, thereby excluding the risk of discrepancies between energy prices in the Northeast and the Southeast.
Cruz also highlighted that he intends to utilize EDP’s corporate financing to promote project development: “EDP Brazil is a lightly leveraged company – in the balance sheet of December 31, 2021, our debt, after dividend payments, was 2.6 times net debt/Ebitda, which is low, we have room for corporate-level financing,” he told Broadcast Energia.
He further argued that the unfavorable environment faced by the solar generation supply chain, due to a lack of industrial input stock and logistics issues, has already changed. He associated the period of difficulties with the value of the dollar, which peaked at R$ 5.60, causing significant pressure on solar project costs.
Finally, he added that EDP Renewables ensures supply to all plants and that provisions for supply are already included in the project.
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