No hydro sold in Brazil auction; oil-fired prices driven down

No hydropower was sold July 26 in Brazil’s fourth public power auction, in which electricity distributors purchased 1,304 average MW from 12 oil-fired power projects.

The price of oil-fired generation fell 2 percent to 134.67 reais (US$71) per MW for delivery after 2010 despite concerns about energy shortages around that time. Contracts worth a total of 171.5 million MWh were sold for 23.1 billion reais (US$15.6 billion).

All the energy sold was from diesel and fuel-oil plants, but none from gas-fired or hydroelectric projects that had been expected to participate. (HNN 7/2/07) Developers of natural gas-fired generation had withdrawn from the auction complaining the government-set ceiling price of 140 reais per MWh was too low given the prospects of Brazilian imports of liquefied natural gas needed to feed growing demand.

President Mauricio Tolmasquim of the federal energy research agency, Empresa de Pesquisa Energetica (EPE), said the absence of hydro projects, which could offer energy at lower costs, was a positive sign. He said that means more energy from those projects would be available after 2010. He added that most of the purchasers are located in northeastern Brazil, where he said there is less unexploited hydropower available.

Tolmasquim said a major hydroelectric project that was expected to participate, 212.58-MW Serra do Facao on the San Marcos River in Goias, is not expected to be completed until the second quarter of 2010. He speculated the developers decided not to participate because auction contracts called for delivery by January 2010.

Similarly, it appeared that Suez Energy Brasil decided to wait until the next auction, for delivery of energy in 2012, to sell power from its share of the 1,087-MW Estreito project on the Tocantins River in Maranhao and Para states.

Tolmasquim said power sold in the auction was 101.8 percent of the predicted demand of 1,281 MW, indicating there is sufficient electricity available from the 15-year contracts to provide energy security from 2010.

The EPE official said the auction result �unmasks� the argument of companies that contended prices needed to be higher to prevent an energy shortage. He said it also showed that Brazil’s oil-fired projects are competitive in the energy market.

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