Novidades

Brazilian hydro power plants auction: government sets new rules to attract foreign investors

22/10/2015

The Brazilian government recently set out new rules authorizing the participation of foreign investors on the auction process of 29 existing hydro power plants. The auction originally scheduled for October 30 was postponed for November 6.

The plants in the auction are those that did not have their contracts extended when the new regulation for the sector was created, in 2012.

The new concessions will be awarded for 30-year term contracts and the awarding criteria will be the combination of lowest energy price charged from the distribution companies and the highest grant price to be offered by the bidders (the government expects to collect 17 billion Reais).  The granting price will be paid in two instalments: 65% to be paid when the awarding is granted in December and 35% after 180 days (the values will be updated according the official government interest rate – SELIC).
The purpose of attracting foreign investors is to foster competition in the auction and the government expects foreign companies to have a significant participation in the auction, since they are favored by Brazil’s current economic scenario, including the Real/Dollar exchange rate and high interest rates.
Starting on 2017, each awarded project will be able to commercialize 30% of the energy generated in the free market, while the other 70% will be sold to distribution companies under the regulated market, with prices defined by the Brazilian Energy Agency (ANEEL).  For 2016 100% of the energy will be sold under the regulated market which has the current reference price of 126.50 Reais per MWh.

Although the Brazilian government has implemented changes to the auction′s rules in order to attract foreign investor, it is not clear, thus far, how will the government deal with the current restrictions related to the ownership of rural lands in Brazil by foreign companies.

Please find below the list of projects that will be awarded:

 

 

 

Group Subgroup Power Plant State Installed Capacity (MW) Physical Guarantee

(average MW)

Grant Value (Reais) Payment on Award (Reais) Payment in 180 days (Reais)
A A1 Rochedo Goiás 4.000 3.000 15,820,919.60 10,283,597.74 5,537,321.86
B B1 Gov. Parigot (Capivari/ Cachoeira) Paraná 260.000 109.000 574,826,745.42 373,637,384.52 201,189,360.90
B2 Mourão Paraná 8.200 5.300 27,950,291.29 18,167,689.34 9,782,601.95
Paranapanema São Paulo 31.500 25.170 132,737,515.43 86,279,385.03 46,458,130.40
C C1 Palmeiras Santa Catarina 24.602 16.700 88,069,785.77 57,245,360.75 30,824,425.02
Bracinhos Santa Catarina 15.000 8.800 46,408,030.82 30,165,220.03 16,242,810.79
Rio dos Cedros Santa Catarina 8.400 6.750 35,597,069.10 23,138,094.91 12,458,974.18
Garcia Santa Catarina 8.920 7.100 37,442,843.05 24,337,847.98 13,104,995.07
Salto Weissbach Santa Catarina 6.280 3.990 21,041,823.07 13,677,184.99 7,364,638.07
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