The Brazilian government has contracted approximately 500 MW of thermal energy from fossil fuel and biodiesel plants to bolster energy supply, particularly during peak demand periods.
On September 20, the Brazilian federal government entered into contracts for around 500 MW of thermal energy generated from existing plants using fuel oil, diesel, and biodiesel, marking the conclusion of the country's most anticipated electricity capacity auction of the year. This strategic procurement, overseen by the Ministry of Mines and Energy, aims to enhance the reliability of the energy system during times of shortage, particularly during the evening hours when solar energy generation ceases and consumption spikes.
Of the total capacity contracted, 20 MW will be sourced from existing fuel oil plants, while 383 MW will come from diesel, with 56% of this capacity available as soon as August 2023, and the remainder by August 2027. For a three-year period, the diesel plants will provide essential power, filling critical gaps in energy supply. In addition, biodiesel plants are set to deliver 98.4 MW starting in August 2030, supported by a ten-year supply contract. These biodiesel facilities are already operational, thus avoiding the need for new construction.
The auction was characterized by an average discount on energy prices, reflecting the competitive landscape of Brazil's energy sector. This move is pivotal in ensuring energy security amidst growing demand, as it prepares the country for impending challenges in energy supply, thus alleviating concerns about potential energy shortages in the future.
