Brazil's A-5 Electric Power Auction at Risk from Permitting Issues

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Within 40 days, Brazil's A-5 Electric Power Auction is scheduled to take place, but the country's Ministry of Mines and Energy (MME) is considering the possibility of suspending the event if some of the hydroelectric projects fail to complete the environmental permitting process on time.

The MME will decide whether to suspend the event on December 1, which is the deadline for submitting the environmental permits.

In the A-5 Auction, power purchasing contracts will be secured for energy coming from natural gas, biomass, wind, and hydro generation projects, which must begin operations by 2016. Ten hydroelectric power projects are registered in the upcoming auction: Sao Manoel (700 megawatts (MW)) and Sinop (300 MW), both on Teles Pires River; Sao Roque (300 MW) on Canoas River; Cachoeira Caldeirao (219 MW) on Araguari River; Ribeiro Goncalves (113 MW), Urucui (134 MW), Castelhano (64 MW), Cachoeira (63 MW) and Estreito do Parnaíba (56 MW) on Parnaíba River; and Riacho Seco (276 MW) on Sao Francisco River.

Only three of these projects--Cachoeira, Castelhano and Estreito do Parnaíba--have obtained environmental permits from Brazil's Environmental Regulatory Agengy (IBAMA). Brazil's Empresa de Pesquisa Energética (EPE), a technical bureau related to the federal Ministry of Mines and Energy (MME), is considering these three plants on the Parnaíba River, totalling 183 MW, as a hydro complex, which makes the projects more attractive for entrepreneurs seeking economies of scale.

The Sao Manoel hydro project is facing licensing problems that will prevent it from participating in the auction. The project represents 30% of the total hydropower registered, and having the Sao Manoel project tender out of the auction plays a big role in the decision whether to hold the auction.

The remaining hydropower projects are facing obstacles in the judicial field for obtaining the enviromental licenses on time to participate in the contest.

Other than large hydropower projects, natural gas and biomass power plants, windfarms and small hydropower plants will participate in the auction as well.

For additional information, see related October 3, 2011, article - Signup for Brazil's A-5 Energy Auction Shows 337 Projects Totaling 24,253 Megawatts.

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