Difficulties implementing renewable generation projects pressuring Brazil's energy prices – Eletrobras

In addition to the severe drought that affected Brazil earlier this year, energy prices in the country are under pressure due to difficulties in setting up new solar and wind generation projects.

That is the view of the executive board of Eletrobras, who took part in a conference call with analysts on Thursday about the firm's financial results for 3Q24.

In addition to the mandatory cuts (curtailments) in generation by national grid operator ONS, renewable generation projects are impacted by the increase in the price of equipment, due to increasing global demand.

“Suppliers haven't been able to react,” said Eletrobras' executive VP for supplies and services, Renato Costa Santos Carreira. 

To address the problem, the company is continuing mitigation actions aimed at achieving economies of scale, consolidating demands from across the holding company, while identifying which types of power generation and transmission equipment can be contracted on a long-term or spot basis. 

Eletrobras is currently working on the expansion of its subsidiary CGT Eletrosul’s Coxilha Negra wind farm in Rio Grande do Sul, which received around 200mn reais (US$35mn) in investments during the third quarter. In the same period, Eletrobras invested 6mn reais in Chesf's Casa Nova B wind farm in Bahia state. 

A further 216mn reais was invested in maintenance activities, especially the replacement of equipment at the Paulo Afonso IV and Sobradinho hydroelectric plants. 

In 3Q24, Eletronorte made investments totaling 96mn reais, mainly in the Balbina  and Tucuruí hydro plants and the Mauá 3 thermal plant, while the company allocated 47mn reais to the Porto Colômbia, Batalha, Manso, Marimbondo and Corumbá hydroelectric plants.

Transmission

In the transmission area, investments in the last quarter totaled 965mn reais, of which 830mn reais were for reinforcements and improvements to assets such as Chesf's Delmiro Gouveia, Messias, Jardim, Teresina, Bongi and Poções substations; Furnas’ Ivaiporã, Itaberá, Araraquara, Brasília Sul, SE Vitória, Adianópolis and Poços de Caldas substations; Eletronorte’s Presidente Dutra, Porto Velho, Imperatriz, Vila do Conde and Marabá substations; and Eletrosul’s Areia, Gravataí, Gravataí II, Itajaí and Blumenau substations.

“We have a very interesting backlog of investment possibilities in reinforcements and improvements, prioritizing safety and preserving our assets,” said Élio Wolff, executive VP of strategy and business development at Eletrobras.

“Our perception is that the regulator [Aneel] has sought to encourage us to make more investments and improve our operation. We see plenty of room for growth in the coming years.”

FINANCIAL RESULT 

Eletrobras recorded net income of 7.20bn reais (US$1.2bn) in the third quarter, up 387% on the same period of last year.

Regulatory Ebitda reached 6.78bn reais in the quarter, rising 9% year-on-year. 

In the first nine months of the year, the indicator totaled 18.3bn reais, an increase of 9.1% compared to the figure for January-September last year.

“The results we’re presenting today reflect consistent work on adjustments and productivity gains at the company, always prioritizing operational, people and environmental safety. These figures reinforce Eletrobras' leadership in the electricity sector in Brazil and Latin America,” company president, Ivan Monteiro, said in a release.