R$18.2bn Transmission Auction Competition Spurs Investment with Discounts

28 Mar, 2024

R$18.2bn Transmission Auction Competition Spurs Investment with Discounts

The first energy transmission auction of 2024, slated for Thursday (28) at São Paulo's B3 headquarters, anticipates drawing investments nearing R$18.2 billion and securing contracts for nearly 6,500 kilometers of transmission lines. Expectations are high for robust competition among major players, fostering prospects of discounts.

Confirmed participants include Eletrobras, Alupar, and Engie, with others such as CPFL, Neoenergia, Cymi, Energisa, alongside management firms, infrastructure funds, and banks like Vinci, XP, Pátria, Perfin, and BTG Pactual. The allure for investors lies in the regulated nature of the transmission sector, offering a 30-year contract linked to IPCA without default risks.

However, some traditional players like Taesa and Copel won't participate due to debt concerns and a focus on financial discipline, respectively. Colombia’s Isa Cteep, with a hefty budget, remains cautious about further leveraging.

Aneel states the infrastructure will benefit 14 states, expanding the network to accommodate power from renewable projects, especially wind and solar, and bolstering regional service. Despite high demand, stakeholders must navigate equipment shortages, labor constraints, and environmental permits.

Minister Alexandre Silveira underscores the investments' role in ensuring energy security and unlocking renewable potential, expected to create 35,000 direct jobs. Manufacturers like WEG, Siemens Energy, and Hitachi Energy anticipate fulfilling market demands.

Aneel vows stricter qualifications to deter unqualified bidders, learning from past disqualifications. Spread geographically, the auction offers integration opportunities with existing assets, favoring major players.

Yet, environmental concerns loom amid Ibama's ongoing strike, affecting seven lots requiring federal licensing. EPE emphasizes the projects' role in enhancing renewable flow, regional service, and energy reliability.

President Thiago Prado highlights the auction's alignment with the sector's planned solutions, strategically linking lot continuation to others' success.