Brazil auction brings LNG-to-power with high costs

Brazil auction brings LNG-to-power with high costs

Sao Paulo, 29 October (Argus) — Brazil's emergency power auction on 25 October met its objectives, securing 1.2GW from 17 projects, but at a high cost for Brazilian power customers.

The auction to provide reserve power from May 2022 to December 2025 topped the total current spent on reserve power contracted in auctions since 2008 — with R11.7bn ($2bn) to be paid annually to generators by both regulated and bi-lateral market consumers under duties charged monthly ex-post. For the 12 months through August, payments to reserve power generators from auctions since 2008 totaled about R7.4bn.

With high natural gas and LNG costs around the world, the Brazil emergency power auction increased the appetite for LNG-to-power, with LNG delivered in Brazil currently priced at $32.12mmBtu.