Why Brazil's Delta Geração will continue to focus on natural gas

Bnamericas Published: Monday, January 30, 2023
Why Brazil's Delta Geração will continue to focus on natural gas

Located in Campo Grande, Mato Grosso do Sul state, William Arjona (190MW) was the first thermoelectric plant to use natural gas in Brazil. 

After two years of inactivity, it was acquired by Delta Geração, part of the Delta Energia group, in 2019, which expects a positive scenario for the plant, both on the gas supply and energy generation fronts. 

In this interview, Delta's president Alessandro di Domenico talks about the status of the enterprise and the opportunities ahead.  

BNamericas: Will Delta continue to focus exclusively on natural gas for power generation or are other sources considered?

Domenico: The plan is to focus on natural gas, given the large supply that will come in the next years from the Brazilian pre-salt and onshore and LNG [liquefied natural gas] products. 

And now there’s also talk about the cheap gas that can come from Argentina through new pipelines. 

We see this as a very prosperous scenario for the country, as Brazil is bathed in gas from all sides. 

The pre-salt is very promising, but it depends on new infrastructure. Vaca Muerta [in Argentina] is an incredible reserve, one of the biggest in the world, which can offer a very cheap product, but also depends on a transport infrastructure. It’s well known that there is a decline in production in Bolivia. So, one can take advantage of the existing infrastructure, with Bolivia helping with this eventually idle transportation capacity. This can work with the thermoelectric generation market in the sense of expanding the gas supply.

During the water shortage in 2021, we had supplies coming from Bolivia and [federal company] Petrobras. The [William Arjona] thermal plant is connected to the TBG network [Gasbol pipeline], which is connected to Bolivian gas. But we don't necessarily need to buy from Bolivia. We’re a free consumer of gas, and we can choose our suppliers. 

BNamericas: How has William Arjona's operational performance been since the 2021 water crisis?

Domenico: We acquired William Arjona in the middle of 2019. It had been inactive since 2017. So, we made some investments, necessary maintenance to make it fit, and we framed it in a profile without a contract [for gas acquisition] in the regulated environment, with the distributors. Then there was that energy demand in the midst of the water shortage, when all the thermal plants were called to operate. 

After 2021, the country went through a very intense rainy period, which continued into 2022, so that the hydroelectric reservoirs began to recover in all submarkets, allowing the shutdown of many plants. 

But thermal plants play an energy security role, controlling voltage and frequency, helping the inertia of a system that has a wide range of intermittent sources.

BNamericas: Did William Arjona sell energy in an auction in 2021? Is there a surplus of energy that can still be commercialized?

Domenico: The auction was held in December 2021, with a commitment to start supply only in 2026. In any case, we’re attentive to opportunities that may arise, such as eventual energy export processes. Argentina itself is very demanding of energy in winter. Besides, there are possibilities associated with electrical issues in Brazil, such as demands from the operator to help control voltage and frequency. 

The scenarios are comfortable for 2023, perhaps 2024, but one can no longer say that the [hydroelectric] reservoirs are multi-year. History has shown that these periods of water shortages are recurrent, cyclical, and can happen again. So we have to be prepared. 

BNamericas: Do you intend to participate in the auctions planned for 2023?

Domenico: Yes, we’re interested in enabling new projects and conditions to participate. Especially because there will be decontracting through 2030 of the older thermoelectric plants in the country, which participated in past new [greenfield] energy auctions. Therefore, there will be a replacement of the matrix and a need for more capacity. 

Our focus is the backup capacity auctions, which turned out a great attribute, a good energy solution for the system.

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