Spotlight: Brazil’s 2024 electric power outlook

A large transmission tender and the opening of the free (non-regulated) market are among the highlights of Brazil’s electric power sector in 2024. 

With projected investments of around 18bn reais (US$3.7bn), the next transmission auction is expected to attract major players in the sector.

The draft notice, which needs to be analyzed by federal audit court TCU, provides for the construction and maintenance of 6,464km of new transmission lines, as well as 9,200MW in transformation capacity.

Of the 15 lots proposed, six are expected to cost more than 1bn reais.

As usual, a second power transmission tender should be held in December, but the details have not yet been released by the government. 

A significant expansion of the national transmission grid is required in order to transport energy from renewable energy projects mostly being installed in the northeast to the main consumption centers in the southeast.

The two transmission tenders carried out in 2023 involved total forecast investments of 37.4bn reais for the construction of 10,655km of power lines and 10,240MVA in transformation capacity.   

Meanwhile, the expansion of distributed generation (DG) systems is expected to require smart grid and energy storage solutions in order to assure the security of the grid. 

Also read the Brazil section of BNamericas - The Next Phase of the Energy Transition. 

FREE MARKET

As of January, all high-tension consumer units in the country will be able to migrate from the regulated to the free electric power market.

Currently, only units with consumption above 500kW can freely negotiate their energy supply. 

The local electricity commercialization chamber CCEE estimates that 72,000 new consumer units could migrate to the free market with the new rules.

This means new business opportunities for power trading firms of different sizes, both traditional – some of them belonging to large power generation groups, such as Eletrobras and Engie – and newcomers. 

Also read: Esfera Energia expects strong growth with Brazil's market opening; Why Delta Energia is investing in distributed solar power generation; Urca Trading announces entry into the retailer Free Energy Market; Brazil’s CMU seeks customers to get 20GW solar projects off the ground; Brazil’s Tradener expecting big expansion in free power market. 

GENERATION

Given the current low price of energy, Brazil is likely to see slowing investment in new wind and solar projects in the coming months. 

With hydroelectric reservoirs being full, there is now less need to use more expensive thermoelectric plants, which is reflected in a low PLD reference price in the free energy market.

Added to this is the expansion of DG, which has increased energy supply, and relatively slow growth in electricity consumption.

Even so, Brazil is expected to add 4GW of wind power capacity in 2024, while maintaining outstanding PV solar potency growth, mainly when it comes to DG. 

Energy contracting will continue to be driven by the free market, since local power distribution concessionaires still have a surplus of electricity contracted at tenders held by watchdog Aneel in recent years. 

This is one of the reasons why the government decided to postpone the backup capacity tenders originally scheduled for 2023, possibly to 2024.  

According to Aneel, Brazil has 10.8GW of power generation plants scheduled to begin commercial operations in 2024, including 4.9GW of solar, 4.2GW of wind, 1.154GW of biomass, 301MW of fossil fuel and 152MW of hydro capacity. 

Source: Aneel

DISTRIBUTION

Investments by distribution firms in 2024 are expected to total around 20bn reais, according to Marcos Madureira, president of sector association Abradee.

With the approach of expiration of concession contracts and after failures in big consumption centers like Rio and São Paulo, power distribution utilities are being pressured to improve services. 

Examples of investments being made by the distributors include the construction of isolated grids as well as grid automation projects, with the installation of sensors and automatic reconnection equipment.   

OFFSHORE WIND, GREEN HYDROGEN

Brazilian lawmakers recently approved bills to regulate the offshore wind generation and green hydrogen markets. 

Lawyers told BNamericas that the rules – which will now be reviewed by the senate – are positive for the development of these activities in the country.

While it is unlikely that commercial plants will come out of the drawing board in the near term, the fact that two of the most important Brazilian players, Petrobras and Eletrobras, plan to invest in these markets, which could stimulate others to follow their paths. 

Also read: Why Petrobras could become an offshore wind power; Spotlight: What Eletrobras’ green hydrogen guidelines mean