Brazil is banking that a drop in prices and interest from foreign companies will boost the amount of energy it’s able to generate from the sun, the nation’s deputy energy minister said.

The country will hold an auction tender on Oct. 10 focusing on solar, wind and biomass energy. It will be the first national energy auction with a specific category for solar.

“Solar energy is now at the stage where wind energy was in 2009,” Deputy Energy Minister Marcio Zimmermann said in a June 4 interview in Brasilia. “We are now seeing that it is possible to have solar projects at $100 per megawatt-hour and this is a level that we are comfortable at getting.”

The country had about 26 megawatts of solar capacity at the end of last year, compared with almost 2,200 megawatts of wind, according to Bloomberg New Energy Finance. Solar currently accounts for less than 1 percent of Brazil’s power generation.

Energy demand in Brazil has surged in the last few years, which is stimulating a more diversified mix of sources, according to Jose Ricardo Oliveira, an energy specialist at Ernst & Young.

“Solar is the next wave,” Oliveira said, adding that while panel prices are falling, the technology remains expensive and Brazil still has abundant hydroelectric sources.

Energy Auction

Brazil will today hold its first A-3 energy auction for 2014, according to the Brazilian Official Journal. Proposals for large-scale solar farms won’t be accepted. In an A-3 auction, projects must start operating and generating power in three years.

Besides wind, small hydro-power plants and biomass plants will also compete in today’s event. In total, federal energy planning company Empresa de Pesquisa Energetica, which was created in 2004 to help the government plan its energy supply, has qualified 268 projects for a combined 7,000 megawatts of capacity.

About 1 gigawatt of wind energy capacity must be commercialized in the auction, Helena Chung, a Sao Paulo-based analyst for BNEF, said in an interview.

The “auction is going to have projects of bigger companies,” Chung said yesterday.

No less than 225 projects with a combined 6,102 megawatts registered to participate in an A-5 energy auction scheduled for September. In it, they will have to compete with all other power sources. At least 6 gigawatts worth of solar plants have registered for that auction.

Boosted by state-controlled oil company Petroleo Brasileiro SA’s interest, thermal plants run on natural gas are also showing promising interest in the September auction, Zimmermann said.

“They know how to work those projects and can offer enough gas for the plants,” the deputy minister said.

Brazil is also keen on auctioning 8 gigawatts of hydropower capacity on the Tapajos River this year, Zimmermann said.

“That shows that we are not giving up on hydro energy, our biggest asset in clean and renewable energy in Brazil,” he said.