Brazil to Hold Federal Auction for Power Generation Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Brazil's Ministry of Mines and Energy (MME) announced last month that it plans to hold two federal auctions for new power generation projects during this year's second quarter. Requests to participate in the events are being received by Empresa de Pesquisa Energética (EPE) until March 18. EPE is a federal bureau related to the MME that fosters research and development in both public and private energy sectors.

The first of these two events is the Renewable Energy Auction that will secure energy-purchasing contracts exclusively for new wind- and biomass-based generation projects. Any projects in these categories will negotiate their future energy ouput in what is called an availability contract. This means that they must be prompt and ready to start commercial operation whenever required by the Operator of the National Grid (ONS). These contracts will have a validity of 30 years, and startup of the projects must be completed by July 1, 2014.

The second event that should occur next quarter is the A-3 Energy Auction. Its name implies that all projects tendered or negotiated at the auction must be ready to produce electricity no later than January 1, 2014. The A-3 Energy Auction will include new power projects that are fueled either by water (hydro), wind, biomass or natural gas.

Wind, biomass and natural gas-fired projects will secure contracts in the same mode as if they were to participate in the Renewable Energy Auction, meaning contracts will be valid for 30 years. Hydro projects, however, will close what is known as quantity contracts. Quantity contracts tie an average megawatt output that a plant or project can actually generate to an energy distribution agent that buys that quantity over a certain period of time and makes it available to the grid. The validity of quantity contracts also extends for 30 years.

The actual date and time of the auctions have not been determined. The auctions were normally conducted by Brazil's energy regulatory agency, which recently empowered Camara de Comercializacao de Energia Eletrica (CCEE) (Sao Paulo, Brazil) to do them instead.

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