Lots auctioned at the end of the year form the largest set of transmission projects ever tendered by Aneel, with expected investment of BRL 19.7 billion

The result of the first energy transmission auction of 2023 raises investment expectations for the next tender, to be held in December — according to experts consulted by CNN.

At last Friday’s auction (30th), nine lots were sold, with a 50.97% discount and BRL 15.7 billion in investments potentially raised for the electricity sector.

According to the federal government, the three lots auctioned at the end of the year form the largest set of transmission projects ever tendered by the National Electric Energy Agency (Aneel), with expected investment of BRL 19.7 billion.

“Considering the result of the first auction and the country’s economic outlook for the coming months, we estimate that there will be strong competition in the next auction. This strong competition may boost the value of the investments made by the competitors”, says Adriano Correia, vice president of the Brazilian Institute of Finance Executives of São Paulo (Ibef-SP).

A researcher at the Center for Infrastructure Studies and Regulation (Ceri) of Fundação Getúlio Vargas (FGV), Romário Batista reiterates the positive expectations for future auctions, but points out that most of the investments planned for the next tender are associated with assets “for which the universe of potential manufacturers is limited”.

Joaquim Queiroz, partner in the Energy practice at Giamundo Neto Advogados, reiterates the assessment of the ±800 kV DC Graça Aranha – Silvânia transmission line and its converter stations.

“What stands out is that there will be only three lots, one of which is highly complex technically and involves very significant investments, which may scare off groups without financial strength and proven experience”, he explains.

Success in the first auction

The three experts agree that the auction, based on its final terms, can be considered a success for Aneel.

“I think that, from any angle, the mega transmission auction was very successful. It secures investments of around BRL 15.7 billion in the expansion of the energy transmission system, mainly to carry renewable generation from the Northeast to the Southeast”, says Romário Batista.

Joaquim Queiroz — while agreeing with the assessment — points out that “the market has been watching more closely the victory of a consortium with no track record in the transmission segment or in the electricity sector”.

Commenting on the positive moment for the sector, Adriano Correia indicates that this progress has been driven in recent years by renewable energy generation, especially solar and wind (key sources for the energy transition).

“These sources require greater transmission capacity, especially since most projects are located in the Northeast of the country and the largest consumption is in the South and Southeast. That is why these auctions were so relevant to the development of the sector”, he explains.

The FGV Ceri researcher acknowledges Brazil’s “comparative advantages” for the energy transition, but highlights another element. According to the expert, the progress is also largely due to factors linked to the recognized regulatory certainty of this segment in Brazil.

“Annuities for 30 years, default risk close to zero, flexible deadlines for project implementation and the possibility of early revenue, etc.”, he lists as positive highlights of the regulatory model.

The December tender

The December tender notice provides for the construction and maintenance of 4,471 kilometers of transmission lines and 9,840 megawatts (MW) of conversion capacity at substations.

The three lots involve the construction of nine projects in five states – Goiás, Maranhão, Minas Gerais, São Paulo and Tocantins. With construction periods of 60 to 72 months, they are expected to generate 36,000 jobs.

Among the lots presented, the first stands out, which includes the delivery of approximately 1,468 km of direct current transmission lines crossing three states (Maranhão, Tocantins and Goiás).

The set to be tendered concentrates the largest investment ever planned for a lot auctioned by Aneel: BRL 15.9 billion

Story by journalist Danilo Moliterno, originally published on 07.03.2023 by CNN Brasil (in Portuguese).