Engie Brasil Warns About Possible Decline in Competitiveness of Transmission Auction Due to Interest Rates and Acquisition

Engie Brasil Is All Set to Participate in the Transmission Auction Happening Next Friday, June 30. It Is Expected That the Competition Might Occur at a Level Below Previous Bids. 

After participating in a panel discussion at a CEBRI event on Wednesday, June 28, in Rio de Janeiro, the president of Engie Brasil Energia, Eduardo Sattamini, said: “A high level of competition is expected, maybe lower than previous auctions due to some specificities with interest rates, investments made by some players, and the size of the lots. It won’t be easy, but we will do our best”.

However, regarding the other auction indicated by the Ministry of Mines and Energy for 2024, set at R$20 billion, the executive commented that this decision was correct, stating that he has been discussing with governments for a few years that in order to have a sustainable industry in transmission, it is necessary to distribute investments over time. 

In this way, another auction is already scheduled to take place in October 2023. President Eduardo expressed confidence in the realization of the auction and also in the capacity by the end of the year to provide greater security to the system, especially amid a scenario of oversupply of intermittent renewables. Furthermore, he is working on creating value for hydropower plants that currently face significant challenges due to market structure and the lack of valuation of their attributes.

Engie Brasil: The Subsidies 

The subsidies in the sector permeated a significant part of the last panel of the first day of the event. Eduardo from Engie Brasil expressed opposition to the existence of more incentives of this type unless they are very well structured and have an end date. However, this is different from most of the lobbies seen in the National Congress.

Thus, for the executive, when new technologies are introduced, regulatory agility is required to correct the inefficiencies brought to the system, especially if the subsidy is prolonged and granted to certain sources. It is also important to remember that another point that cannot be overlooked, according to Eduardo, is the need to enhance the value of hydropower plants for pricing offers.

Moreover, the executive highlighted that it is also necessary to consider the commercial capacity of reduced plants and compensate for the extension of concessions. Thus, reformulating ways for the sector not to have GSF below the current 85%, unless due to hydrological issues.