What could affect interest in Brazil's first transmission auction of 2024?

With projected investments of around 18bn reais (US$3.7bn), the first power transmission auction of 2024 is expected to attract major players in the sector, as has been the case in recent years. 

But a series of factors could affect the market's interest in the process, the draft notice for which was announced on Tuesday by regulator Aneel.

For Franceli Jodas, a partner at KPMG, in addition to the regulatory scenario, the exchange rate and the Selic benchmark interest rate, the result of this year's second transmission auction, which will take place in December, must also be taken into account.

The auction will be one of the biggest in recent times, with an expected turnover of 21bn reais for the construction of lots that tend to be won by traditional, more experienced players.

Another factor pointed out by Jodas is the result of the assessment of synergies between the projects proposed in the tender and the agents already operating in the respective regions. 

"The low rates of return of the projects increase the competitiveness of companies that are already present in the region and that have some operational synergy between the existing assets and the assets to be auctioned," she told BNamericas.

According to the consultant, the first auction next year could also attract new entrants with the strategic objective of transmitting renewable energy from the northeast region of the country.

Gianluca Di Mattina, an analyst at Hike Capital, cites companies such as Rialma, Cymi Construções, Furnas, Engie Brasil, Celeo, ISA-CTEEP and the Genesis Consortium as possible candidates to take part in the auction.

The latter was disqualified by Aneel after winning a lot in the first auction of this year, held on June 30. The project was taken over by ISA-CTEEP.

"If the auction is concluded correctly, there will be benefits both for the companies that win the auction and for the country, generating more jobs and infrastructure, providing a higher quality of service and resolving a bottleneck in energy transmission," Mattina told BNamericas.

The draft notice, which will still be analyzed by the 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. The construction of the 69 projects in the tender is expected to create 35,000 direct and indirect jobs.

The lots are detailed here, in Portuguese.