Brazil contracts a third of the energy generated by Itaipu for its reserves

RIO DE JANEIRO, BRAZIL – The new generation projects, which will provide backup power to the Brazilian electricity system, were selected Tuesday in a public auction from among 132 proposals received by the National Electric Energy Agency (ANEEL) with a combined capacity to generate 56.7 GW.

Among the winners were two thermal plants of state-owned oil company Petrobras and one of Neoenergía, Brazil’s second largest distributor, controlled by Spain’s Iberdrola.

This was the first auction held by ANEEL to contract reserve power for the country, an unprecedented initiative organized amidst the greatest water crisis in the past 90 years in Brazil, which led to minimum water levels in dams, reduced the power generated by hydroelectric plants and forced the government to contract expensive thermal plants to avert a blackout.

The winning companies in the auction organized by ANEEL and the Brazilian Ministry of Mines and Energy pledged to invest R$5.98 (US$1.049) billion to build new plants or expand the capacity of existing thermal plants.

The new contractors also undertook to be able to generate the 4.6 MW of energy ordered from 2026 and supply it to the National Interconnected System upon request.

This capacity may or may not be requested by the system depending on the hydroelectric dams’ water levels, which account for over 70% of the energy consumed in Brazil.

The companies also agreed to sell their energy at a price of R$824,553.83 per megawatt per year, 15.34% lower than the maximum established by ANEEL and much lower than currently charged by the thermal plants contracted this year as an emergency measure to address the water crisis.

In exchange, the winners will be allocated R$57.3 billion in the 15-year term of contracts, resources that will come from an existing fund financed by consumers and used to pay the thermal plants contracted in emergency cases.

“The selected projects will be required to offer the contracted energy from July 2026 at the pre-established price whenever the National System Operator requests it at times of peak consumer demand,” ANEEL said in a statement.

“This measure lowers generation costs in periods of drought, particularly in years when water is scarce, such as the one we are currently experiencing,” the regulator added.

Of the selected thermal plants, 9 are powered by natural gas, 7 by fossil fuels such as diesel and 1 by sugar cane bagasse.

WINNERS

The auction winners were thermal plants operated by Global Participações, Delta Geração, Geramar, LGSA, UTLP, Paranaíba, Petrobras, Portocem, Termopernambuco, Tevisa and Trombudo.

Petrobras will offer part of the energy generated by the thermal plants it operates in the cities of Betim and São José.

One of the contracts was awarded to Termopernambuco (Termope), a thermal plant with the capacity to generate 533 MW that Neoenergía (Iberdrola) owns in the state of Pernambuco (northeast).

The Neoenergia plant, with the capacity to generate energy from 2 natural gas turbines and another steam turbine, was awarded a contract under which it will provide part of its electricity to the system for R$207 million per year for 15 years, starting in 2026.