Spotlight: Brazil’s wave of private power purchase agreements

The opening of Brazil’s free (non-regulated) energy market has led a growing number of companies to sign private power purchase agreements (PPAs). 

Among the main offtakers are energy-intensive industries, such as mining, steelmakers, and petrochemical companies, as well as large telecom operators. 

The profiles of the PPAs vary significantly too. For example, São Paulo-based general warehousing company Ceagesp recently signed a PPA with Comerc Energia to meet the energy demand of the 22 units of the food supply company.

The contract was awarded through a competitive process won by Comerc in February this year. The value of the deal is approximately 61.9mn reais (US$12mn), and the volume sold will be 5.43MWa/y (average MW per year). 

Other variations include the PPA currency, which can be indexed in reais or US dollars, and the duration of the contract, usually five, 10 or 20 years, among other time frames.  

Marina Aidar, a project finance partner at law firm Demarest Advogados, said that, with the modernization of energy trading in the electricity sector, the profile of PPAs is changing. 

“Long-term contracts with power distributors in the regulated market are being used less and less, while purchase and sale contracts in the free market, in which the parties freely negotiate the conditions, are becoming more common,” she told BNamericas. 

Here, BNamericas provides a list of PPAs signed in the country in recent years: 

Scatec and Statkraft

In April 2024, the companies signed a PPA for a 142MW solar power plant in Minas Gerais, with construction scheduled to start in the second half of this year and commercial operations set to begin at the end of 2025.

The contract is for 10 years, with a negotiated volume equivalent to 75% of the energy that will be produced by the park.

Casa dos Ventos and Dow

In February, the chemical giant Dow signed a contract with Casa dos Ventos for the purchase of wind energy. 

The agreement runs for 15 years and guarantees a continuous volume of 60MWm for a Dow plant. 

It also calls for the possibility of having the chemical industry investing in the Rio do Vento wind complex (1,038MW) in Rio Grande do Norte state, making it possible for Dow to produce its own energy in the future.

Atlas Renewable Energy and Votorantim

In January, a Votorantim signed a PPA with Atlas Renewable Energy to obtain 100MWa of solar energy for 15 years.  

The new energy generation will come from the Luiz Carlos Solar project in Minas Gerais state, which will have an installed capacity of 787MWp, of which almost two thirds (470MWp) will be destined for Votorantim's units. 

Casa dos Ventos and ArcelorMittal  

In April 2023, Casa dos Ventos and ArcelorMittal formed a joint venture to develop a 55MW wind energy project (Babilônia) with an investment of 4.2bn reais. 

The JV will have a 20-year energy sales contract with the steelmaker to supply electricity.

Atlas Renewable Energy, Hydro Rein and Albras

In the same month, Atlas Renewable Energy, Hydro Rein e Albras signed a PPA associated with the Boa Sorte solar plant in Minas Gerais state.

With 438MW of installed capacity, the project will generate a total of 920GWh/y for 20 years, between 2025 and 2044. 

Albras will also start receiving electricity from Casa dos Ventos’ Vista Alegre solar plant in 2025. The Minas Gerais 902MWp project will generate approximately 2TWh/y.

Enel and Portobello

In March 2023, Portobello Grupo and Enel Trading signed a partnership in the ceramics sector to supply half of the consumption of Brazil's largest tile company with renewable energy. 

The 15-year contract provides for the supply of a maximum volume of 10MWm, which is equivalent to consumption of 87.6GWh/year.

Comerc Renew and Grendene 

In December 2022, the companies signed a 20-year PPA to supply 80% of the fashion giant's operational demand. 

Located in Várzea da Palma, Minas Gerais, and scheduled to start operating in 2024, the PV solar plant will supply 10MWa to Grendene.

With investments of around 400mn reais, the photovoltaic complex will have an installed capacity of 120MWp.  

Casa dos Ventos and Horizonte Minerals

In November 2022, Horizonte Minerals inked PPAs with Casa dos Ventos, securing renewable power at a low cost for its 100%-owned Araguaia nickel project. 

The PPAs comprise three underlying contracts delivering a fixed price of US$28.4/MWh during years 0-5 and US$29.6/MWh for years 6-10, excluding transmission costs and other charges. All contracts are priced in US dollars. 

Gerdau and Newave Capital

In the same month, Gerdau announced a partnership with Newave Capital to acquire a stake in the share capital of the renewable energy generation platform Newave Energia. 

The deal includes the acquisition of long-term energy, by Gerdau and its subsidiaries, corresponding to up to 30% of the energy generated by energy generation projects owned directly or indirectly by Newave Energia and its subsidiaries, on a self-production basis. 

Lightsource BP and América Energia

In July 2022, the companies signed a 15-year PPA associated with the Milagres solar plant (210MWp) in Abaiara, Ceará state.

Milagres is scheduled to start operating in 2024, with investments of 800mn reais. 

Alunorte/Equinor, Scatec and Hydro Rein

In the same month, Equinor, Scatec and Hydro Rein signed a 20-year PPA in US dollars with the Alunorte alumina refinery, owned by Norsk Hydro, in Pará state, which will consume approximately 60% of the energy produced. 

With an investment of 2.1bn reais, the Mendubim solar plant was inaugurated in April this year.

Canadian Solar and Usiminas

In February 2022, Canadian Solar and Usiminas signed a PPA for the self-production of 30MWa of renewable energy for 15 years from 2025. 

Scheduled to begin in 2024, the construction of the solar park in Goiás has estimated investments of 1.35bn reais. 

Casa dos Ventos and Valgroup

In November 2021, Valgroup, one of the world's largest plastic converters and recyclers, signed a PPA with Casa dos Ventos. 

The 15-year agreement guarantees a volume of 25 MWm for the industry, equivalent to approximately half of Valgroup's energy consumption in Brazil. 

The energy comes from the 360MW Babilônia Sul Wind Complex in Bahia.

AES Brasil, Alcoa and Unipar

In the last quarter of 2021, AES Brasil, which was recently purchased by Auren Energia, signed contracts with Alcoa and Unipar. 

Casa dos Ventos and Unigel

In September 2021, the companies signed a contract of more than 1bn reais for a 20-year PPA. 

The deal includes an option allowing the latter to become a self-producer, as one of the partners in Casa dos Ventos’ Babilônia Sul wind complex in Bahia. 

Atlas Renewable Energy and Unipar 

In July 2021, chlorine, soda and PVC producer Unipar and Atlas Renewable Energy formed a partnership to build and operate a solar power generation park. 

With an installed capacity of up to 239MW in Minas Gerais, the Lar do Sol Casablanca II park was contracted to supply energy for 19 years. It began operating in 2023. 

Neoenergia and Claro

In December 2020, Neoenergia signed a PPA with telco Claro associated with a PV solar power plant in Paraíba state with an installed capacity of 149MW. 

Anglo American and Casa dos Ventos

In June 2020, the groups became shareholders in special purpose companies (SPEs) for the production of renewable energy at the Rio do Vento wind park in Rio Grande do Norte. 

The project received an investment of 2.4bn reais in the construction of eight wind farms, three of which will be used to produce energy for the mining company.

Voltalia and Braskem

In March 2020, the companies signed a 20-year contract, enabling the expansion of the Serra do Mel solar complex in Rio Grande do Norte. 

Casa dos Ventos and Vale

In January 2019, Vale announced that it had signed a contract with Casa dos Ventos for long-term energy produced by the Folha Larga Sul wind farm in Bahia. 

With an installed capacity of 151MW, the Casa dos Ventos project has energy contracted for 23 years. 

OTHER STRATEGIES 

Signing a PPA is not the only way of ensuring low-cost, renewable energy. 

This is the case, for example, of energy self-production through leasing, in which the party that is going to consume power leases solar panels and enters into a consortium with the generator, who will be remunerated through the lease. 

In March 2023, Minas Gerais’ Cemig and retailer Mart Minas concluded the negotiation of an energy self-production contract. 

The agreement on the free energy market will guarantee the lease of part of the solar park of the Jusante photovoltaic plant, in Minas Gerais. 

With an investment of 377mn reais, the 20MW plant will supply 62 Mart Minas stores in Minas Gerais and 19 Dom Atacadista stores belonging to the group and located in Rio de Janeiro. 

DECARBONIZATION

Additional forms of decarbonizing industrial operations have also been adopted by large industrial players. 

Last March, Braskem contracted Veolia to replace fossil fuels used in steam production at its Triunfo hub in Rio Grande do Sul state with renewable energy solutions that have the potential to reduce emissions of CO2 equivalent by 500,000t/y.

The partnership followed a 400mn-real investment agreement, signed in 2022, to produce renewable energy using steam from eucalyptus biomass in Alagoas. 

With operations starting in 2023, the project will generate 900,000t/y of steam for 20 years, which will mean a reduction in CO2 emissions of approximately 150,000t/y.