Norway’s Scatec is optimistic about the progress of its Rio Urucuia solar project in Brazil, for which it obtained long-term financing earlier this month, and about the growth potential of its operations in the country as a whole.
Established in 2007 and operating in the country since 2017, Scatec has two large solar plants (with partners) in operation in Brazil, while developing Rio Urucuia in Minas Gerais state.
“Brazil is a focus market for the group. The overall potential remains very good, and we’re evaluating several opportunities in the market,” country manager Aleksander Skaare told BNamericas.
Scatec’s non-recourse project financing for Rio Urucuia comprises 150mn reais (US$27.7mn) and is being provided by Brazil’s Banco do Nordeste.
The financing corresponds to 30% of the project’s estimated capex of 506mn reais. Santander was Scatec’s financial adviser for the transaction, BNamericas has learned.
Skaare said that all construction permits have been obtained and that Rio Urucuia is in the “final phase” of civil works.
“All the permits we needed to begin construction were ready before we started. We’re now in the process of services, of electromechanical works, involving substations,” said the executive.
The company expects to connect the plant in the first half of next year.
With the activation of Rio Urucuia, Scatec will reach 835MW in operation in Brazil, according to Skaare. The company has also mapped a pipeline of opportunities in the country equivalent to 1GW.
Opportunities and challenges
Skaare mentioned green hydrogen and data centers as two segments Scatec is actively evaluating in Brazil. It is more cautious on the former, however, due to issues such as market maturity and complexities still existing for this type of project, he said.
Regarding data centers, Scatec is in talks with companies in the sector about different PPA contract models, including self-generation/self-production, to supply energy to the sites.
“Data centers are large energy consumers, and in this sense, it’s something we monitor, including to offset the overall private PPA market. When we’re evaluating potential players, data centers obviously come into focus.”
For now, however, the Norwegian group has not yet signed a contract in the segment.
While Brazil offers good opportunities, Skaare highlighted that there are still obstacles to overcome.
One challenge is curtailment, or the restriction of power generation from intermittent renewable sources like solar and wind, even when resources are available.
While being a common tool to prevent grid instability, curtailment also results in the loss of clean energy and can affect the profitability of renewable projects.
To help mitigate this problem, Brazil is readying a battery auction to bolster the electrical system’s storage capacity.
“We’re closely monitoring how this issue evolves. When will the auction be held, when will we bring batteries into play, and how will we facilitate and structure this in the best possible way,” said Skaare.
Another issue on Scatec’s radar is provisional measure (MP) 1300/25, which created new rules for the electricity sector, particularly regarding distributed generation.
At the same time, it has raised concerns due to some amendments submitted by lawmakers.
Despite these issues, Skaare said that “legal certainty in Brazil is good,” with “good structures and predictable procedures” for an investor like Scatec.