Brazil's Ministry of Energy Sets Date for Electric Power Auction

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Researched by Industrial Info Resources Latin America (Cordoba, Argentina)--Brazil's Empresa de Pesquisa Energética (EPE), a technical bureau related to the federal Ministry of Mines and Energy (MME), announced that on December 20 the country's next energy auction (A-5) will be held. The plants up for bid must be operational by January 1, 2016.

The tender is going to be held by ANEEL, Brazil's federal energy regulatory agency and it will include the following energy sources: thermal gas (combined cycle), thermal biomass, hydro, small hydro and windfarms.

This new model of recruitment, which includes windfarms, is the result of the success in tendering such projects in the previous auction, which was held August 18. Despite the efforts made by the private sector and some government sectors for the inclusion of coal-fired power plants in the auction, they were not included.

As part of the requirements of the auction, natural gas-fired power plants will have to submit a schedule in which combined-cycle operations are achieved by October 31, 2015, at the latest. Another requirement is that the commercial inflexibility should not exceed 50% and the variable cost per unit (CVU) does not exceed 100 reais ($62.57) per megawatt-hour (MWh). In the case of projects that include expansion of existing gas plants, the CVU should not exceed the CVU contracted in the August auction.

Hydroelectric power stations should obtain their environmental licenses at least 60 days before the auction.

Windfarm projects require new turbines with a minimum output of 1.5 megawatts (MW). Another important requirement is to annualy compensate the buyers for a deficit of 10% or more of the contracted power. Compensation to the purchaser will be made every four years. Windfarm, biomass and natural gas projects will sign 20-year power purchase agreements, while those of hydropower projects will be 30-year contracts.

For further information on the August 18 auction, see July 25, 2011, article - ANEEL Determines Starting Bid Values for Brazil's Upcoming Energy Auctions.

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