Brazil to launch first gas-fired power auction

For the first time ever, Brazil’s Ministry of Mines and Energy is preparing to open an auction for power projects based on natural gas, international media reported Wednesday.

The ministry is currently carrying out a two-week public consultation on a proposal to conduct regional tenders during H1 2019 for power purchase agreements starting in 2023 and 2024. Under this scheme, the agreements would run for a period of 15 years.

The objective of the power auctions is to strengthen the Brazilian power sector, ramp up the share of gas in the energy matrix and create a market for the expected increase in domestic gas production as a result of pre-salt activities.

As Brazil’s energy matrix is heavily reliant on renewables, natural gas projects could help reduce intermittency issues throughout the national grid. The majority of the country’s electricity is derived from hydropower, at 63.6%, followed by biomass, wind, and finally, gas.