Brazil's Ministry of Energy Moves Out Dates of Power Purchasing Auctions Once Again, A-3 and A-5 Auctions to be Held in October

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Brazil's Ministry of Mines and Energy (MME) again has moved out the A-3 and A-5 energy auctions from their previously scheduled date to October 11, 2012, and October 25, 2012, respectively. This is the second time that the MME has postponed these events, which originally were planned to be held in March and April of this year.

The deferral gives more time to developers that might be interested in submitting their new projects to fulfill all participation requirements, such as completing environmental permitting, receiving a declaration of technical approval, or getting a confirmation of fuel availability. These are some of the mandatory conditions that most projects have to meet in order to be eligible for the auctions.

Projects signed up for the A-3 energy auction have a new startup date: April 1, 2015. This auction will include new power projects that are fueled either by water (hydro), wind, biomass or natural gas. The starting bidding price was fixed at about $56.47 per megawatt-hour (MWh), the exception being made for the energy coming from the expansion of non-operational hydro projects: initial bids for these were placed at a maximum of about $41.34 per MWh. Starting bidding values for the A-5 auction have not been released yet.

Participation numbers previously reported by Empresa de Pesquisa Energética (EPE) (Rio de Janeiro, Brazil), a federal bureau that fosters research and development in power-related areas, show that a total of 598 projects had originally signed up to be part of the A-3 auction. This number should increase because of the extended registration period, which will now close on June 28, 2012. Signup deadline for the A-5 auction is July 5, 2012, with the exception of natural gas-fired projects, which have until August 6, 2012.

The reasons for moving the dates of auctions are different. With regard to the A-3 postponement, some sources have argued that the cancellation of power purchasing agreements (PPAs) that pertained to several thermoelectric projects awarded between 2007 and 2009 that did not even begin construction has caused an unexpected demand that would need to be fulfilled in the near future. Namely, this is the case that affects the several thermo projects awarded to the Bertin Group (Lins, Brazil) and Multiner (Rio de Janeiro).

Rescheduling of the A-5 Auction, on the other hand, has been motivated by the delays in the permitting processes of several large hydro projects that the government wants to tender this year. MME officials have recently expressed that they will wait for as long as possible for the permits to come out in order to include all the relevant hydro projects in the upcoming A-5 auction.

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