Brazil’s A-4 and A-5 thermal power auctions: Petrobras’ strategy to win Report

Insight 30 June 2021

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Report summary

On 25 June, Brazil’s Chamber of Electric Energy Commercialization held the A-4 and A-5 existing energy auctions. These two auctions aimed to re-contract existing thermal power plants and allowed new thermal power projects to compete. 36.3 GW of power projects were registered. From the buyers’ side, just three local distribution companies (LDCs) requested demand, totalling 162.5 MWavg. Petrobras’ flexibility, variable cost per unit and fixed revenues submitted for its Cubatão thermal power plant made it the sole winner in both the A-4 and A-5 auctions. In this insight, we explore: The inflexibility declared for different thermal power plants. What Petrobras’ fully flexible strategy means for Brazil’s gas market. The fixed revenues and variable cost per unit used by Petrobras for its power plants. The differences between Cubatão’s submitted and real CVUs. Why LDC electricity demand was so low in these auctions.