First Energy Capacity Reserve Auction Held in Brazil May Be Nullified Due to Unequal Conditions Dispute

After Some Hurdles That Arose With the Participation of 7 Plants Through Injunctions From the STJ, Unequal Conditions Were Alleged

Held in December 2021 by Aneel and the Electric Energy Trading Chamber (CCEE), the 1st capacity reserve auction concluded with 17 winning plants and the contracting of 4.6 GW of power at a cost of R$ 57.3 billion. 

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However, a hurdle that arose was the participation of 7 plants through injunctions granted by the STJ. These decisions allowed these enterprises to participate in the auction with a dispatch cost above R$ 600/MWh, which was prohibited in the notice. 

Alexandre Aroeira Salles, a doctor in law and founding partner of the Aroeira Salles law firm, comments: “The Notice states that in the case of revocation or annulment of the Award of a Bidder, Aneel may invite another bidder successively and according to the ascending order of the bid values. Similarly, if a bidder is disqualified, the successor will be called to present their qualification documents and, if qualified, will be awarded under the conditions of their proposal.”

Regarding the participation by injunctions from the STJ, Aroeira Salles adds: “If the injunction from the STJ is not confirmed in the final judgment, there may be a scenario where: (i) if the award has already taken place, Aneel will have the option to invite the successor bidder; and (ii) if the award has not yet occurred and the bidder is disqualified due to the non-confirmation of the STJ injunction, the second best offer will be invited to qualify and consequently be awarded under the terms of their proposal.”

“Moreover, it is important to note that the notice also provides for the possibility of Aneel revoking the auction if it is deemed inappropriate or inconvenient to the public interest, without resulting in any right to compensation or indemnification (item 18.1.1),” concludes the jurist.

Awarded by Trade Winds, Ceará Could Become the Saudi Arabia of Green Hydrogen at the Lowest Global Cost

According to Bloomberg New Energy Finance, as long as the current regulations are followed, Ceará could become the Saudi Arabia of Green Hydrogen at the lowest global cost. The existing legal norms are “fully applicable” to other energy generation projects harnessed by wind power at sea, said the majority partner and CEO of Eólica Brasil Ltda, which developed the project for Brazil’s first offshore wind farm — Asa Branca, located within the sea off the Ceará municipalities of Amontada, Itarema, and Acaraú, in an interview with Diário do Nordeste.

The executive, who is also president of Abemar (Brazilian Association of Offshore Wind Energy), reveals in the interview that it is necessary to “demystify the false legal insecurity for offshore wind, given that the existing general norms are fully applicable and were applied to the Asa Branca Offshore Wind Farm, from my company, there in Ceará.”

(The Asa Branca wind farm project, currently under analysis by Ibama, plans to install 10 modules, each with 72 turbines of 15 MW, which will be supplied by Vestas, which already manufactures them in Denmark, or by GE or Siemens, who will certainly be manufacturing them at the time of the project implementation, as well). Read the full article here.