Brazil publishes rules for auction to 'decontract' energy

Friday, April 21, 2017

An auction to cancel wholesale electricity contracts secured at reserve energy tenders in Brazil will be held by the end of August, according to the mining and energy ministry.

The announcement follows a government decree that allows project developers to bid against each other to annul contracts awarded in 2014 and 2015. Bidders offering the highest payment will be freed of contractual obligations.

Start your 15 day free trial now!


Already a subscriber? Please, login

Only projects yet to begin testing will be eligible for bidding. Auction terms and conditions, in Portuguese, can be seen here.

Brazil is in the midst of a growing electricity supply glut as an ongoing recession hits consumption.

Two auctions for reserve capacity were called off last year after they failed to attract interest from investors.

The supply-demand gap has been widened by Brazil's rapid capacity expansion as a slew of major projects come online.

According to power industry regulator Aneel, developers began operating more than 9GW of capacity in 2016, a new record for a calendar year.

Rio de Janeiro-based utility Furnas, a subsidiary of federal power holding company Eletrobras, this month confirmed it would take part in the auction.

Furnas is hoping to rescind power purchase agreements for its Famosa, Fortim, Punaú and Baleia wind farms, which total 462MW of capacity.

The projects have been in limbo since Furnas terminated a contract with debt-stricken supplier Impsa in 2014.