Brazil’s BNDES seeking solutions to support electricity distributors

Brazilian development bank BNDES is looking to support preventive investments by energy distributors and wants to find solutions to continue financing their investments to combat the effects of extreme weather phenomena, the bank's press office informed BNamericas. 

The main forms of credit are BNDES Máquinas e Serviços (machines and services), which finances purchases of equipment such as transformers, and BNDES Finem, through which the bank supports investment projects and the distributors' multi-annual plans.

Over the last 10 years, BNDES has disbursed more than 30bn reais (US$5.6bn) to energy distribution companies, providing funds to small distributors as well as large groups such as Energisa, Neoenergia and Equatorial. Between January and May 2024, the amount disbursed by the bank for projects of this kind reached 859mn reais.

“Regardless of the changes in the energy purchase and sale market, the distributors will continue to play an important role in infrastructure and require investments, for which the BNDES will continue to be available,” the bank said in emailed comments.

The market changes mentioned by the bank basically involve expansion of the free (non-regulated) market and distributed generation (DG), which have led power distribution concessionaires to lose a significant number of their clients. 

Last week, BNDES approved 1.76bn reais in financing to support the investment plans of the nine electricity distribution companies controlled by the Energisa Group. 

That funding will benefit 11 states and make it possible to maintain and increase operational quality for 20mn people served in 863 municipalities.

Energisa Mato Grosso will receive the largest sum, at 395mn reais, while the remainder will go to the distributors serving Mato Grosso do Sul (288mn reais); Tocantins (231mn reais); Paraíba (215mn reais); Paraná, Minas Gerais and São Paulo (171mn reais); Sergipe (149mn reais); Acre (125mn reais); Minas Gerais and Rio de Janeiro (117mn reais) and Rondônia (75mn reais).

The distributors' periodic investment plans are an established practice to meet the quality standards set by electric power regulator Aneel and make it possible to maintain operations and improve the quality of electricity supply, as well as enabling the companies to control commercial losses, expand the network and increase their customer bases.

The works due to be carried out by the concessionaires include connecting new households, expanding substations and power distribution lines, and replacing equipment. Energy grids must also be expanded or replaced.