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Foreign firms win big in Brazil power and T&D auctions

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Brazil has awarded contracts for 4.5 GW of power capacity and around 5000 km of transmission infrastructure in three end-of-year auctions.  

According to the nation’s government, the average price per MWh reached BRL189.45 ($57.26), or almost 39 per cent below the price ceiling set for the tender.

"For energy consumers, this means an economy of BRL68.5bn. For the country, the operation ensured BRL13.94bn in infrastructure investments," the government said in a statement.

Among the major winners were France’s Engie, which is to build 1146 km of transmission lines; Denmark’s Vestas, which is set to supply and install 24 of its 2 MW turbines for two windfarms; Italy’s Enel Green Power, which will build three wind projects totalling 218 MW; India’s Sterlite Power, which will build 1800 km of power transmission lines to the tune of $800m – one-third of the total auction amount; and France’s Voltalia, which will build 91 MW of wind capacity.

Twenty solar contracts were awarded for 574 MW, making up 85 per cent of the awarded capacity. There was only one awarded thermal power plant, a 25 MW biomass-fired project. Winning projects are required to come online by 2021-2023. 

The T&D portion of the auctions was for the construction, operation and maintenance of 4919 km of transmission lines and substations with a capacity of 10,416 MVA across nine states.

Competition was reportedly tough, with one firm, Engie, saying that it had won its contract by offering a 35 per cent discount against the lowest annual revenue allowed by regulator Aneel.

Brazil has scheduled its next energy auction for April 2018.

Fernando Coelho Filho, mines and energy minister, said the auction results prove how interested investors are in Brazil.

“The result of this week’s auction is an undeniable proof of investors’ interest in the Brazilian electricity sector, and yet another demonstration of our improved business environment,” Coelho said.

“With the economic recovery, energy supply to Brazilian industrial, commercial and other consumers is guaranteed at ever more competitive prices.”

 

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