Power Newsletter: 2018 A-6 Auction Result: Wind Power Leadership With 60.15% Discount Price

On August 31, 2018, the National Electric Energy Agency ("ANEEL") held the 2018 A-6 Auction to contract electricity from new hydroelectric, wind and thermoelectric (coal, natural gas and biomass) projects, with the supply beginning on January 1, 2024.

With a low demand of 835 MW, only 62 projects were awarded PPAs with a total capacity of 2.1 GW, as follows: (i) 48 wind power plants with 1,250 MW of capacity; (ii) 11 hydro power plants with 457.7 MW of capacity; (iii) 3 thermal power plants with 391 MW of capacity, including two biomass and only one natural gas thermo power plant.

It is worth mentioning that the 2018 A-6 Auction was the first in which wind power projects were awarded PPAs in the "quantity modality", in which the risks of surplus or deficit are undertaken by the generator. Despite this, the price offered by wind power projects received a discount of 60.15% at an average final price of BRL 90.45/MWh.

The contracting of other power sources was minimal, especially for natural gas thermo power plants, considering that 36 projects were registered at this auction with a total capacity of 27.6 GW, but only one 0.3 GW project was successful, that is, about 1% of the capacity offered at this auction.

The average price of the A-6 Auction was BRL 140.87/ MWh, with an average discount of 46.89%, which represents a saving of BRL 20.9 billion for final consumers.

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