ANEEL Determines Starting Bid Values for Brazil's Upcoming Energy Auctions

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Researched by Industrial Info Resources (Sugar Land, Texas)--ANEEL, which is Brazil's federal energy regulatory agency, has determined the starting values for bids at the A-3 and renewable energy auctions during a meeting of its executive board last Monday. The events have been scheduled for August 17 and 18, respectively, and will be performed using an online platform.

ANEEL's resolution came out shortly after Empresa de Pesquisa Energética (EPE) (Brasília, Brazil) announced it had concluded the technical assesment of all registered projects and set the date for both auctions to take place.

Projects signed up for the A-3 Energy Auction must be ready to produce electricity no later than March 1, 2014. This auction will include new power projects that are fueled either by water (hydro), wind, biomass or natural gas. The starting bid price was fixed at $89.50 per megawatt-hour (MWh), the exception being made for the energy coming from the 450-megawatt (MW) Jirau's expansion; initial bids for this projects were placed at a maximum of $65.68 per MWh.

At the renewable energy auction, energy purchasing contracts will be secured exclusively for new wind- and biomass-based generation projects. Any contract with a distributor agreed upon at this event must be completed by July 1, 2014. Regardless the source of energy, all projects taking part at this other event will have a starting bidding value of $94.01 per MWh. The starting bid determined by ANEEL is the highest price that can be paid for energy at each event, which means that both will be price-descending auctions.

Any project tendered at the Renewable Energy Auction will negotiate its future energy ouput in what is called an availability contract. This means that they must be prompt and ready to begin commercial operations whenever required by the Operator of the National Grid (ONS). Also, wind, biomass, and natural gas-fueled projects included in the A-3 auction will secure contracts in this way.

On the other hand, hydro projects at the A-3 auction will close what is known as "quantity contracts," which tie an average megawatt output that a plant or project can actually generate to an energy distribution agent. The agent then buys that quantity over a certain period of time and makes it available to the grid. The validity of all contracts extends for 30 years.

Participation numbers previously reported by EPE show that a total of 582 projects have signed up to be part of the event. There are 30 grassroot natural gas-fired projects that represent an installed capacity of 10,871 MW. This figure is similar to the one that comes from the 429 wind registrations with 10,935 MW. Thermo projects also account for 81 biomass-fueled registrations, or 4,580 MW. There will be 41 small hydro projects with a total capacity of 725 MW, plus the 450-MW plant expansion coming from Jirau's hydro project upgrade.

For additional information on 2011 Reserve and A-3 Energy Auctions in Brazil, view May 31, 2011 article - Brazil's EPE Reports 582 Projects Worth 27,561 Megawatts for July's Energy Auctions, and the July 11, 2011, article - Brazilian Ministry of Energy Sets Date for A-3 and Renewable Energy Auctions with 582 Projects Totalling 27,561 Megawatts.

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