By Brazil Stock Guide – Axia Energia secured a contract in Brazil’s 2026 Capacity Reserve Auction on Wednesday (18), ensuring the future expansion of the Luiz Gonzaga hydropower plant, located on the border between Pernambuco and Bahia. The project will add 246.6 megawatts of installed capacity to the facility.
The company plans to invest approximately 1 billion reais ($200 million) in the construction of a new generating unit. Power delivery under the contract is scheduled to begin on August 1, 2031, in line with auction terms set by Brazil’s power regulator ANEEL and market operator CCEE, under guidelines from the Ministry of Mines and Energy.
The move aligns with Axia Energia’s long-term strategy of allocating capital to assets that enhance system reliability and deliver sustainable returns, as Brazil faces growing demand for firm capacity.
“The expansion of Luiz Gonzaga represents a small portion of Axia’s hydropower growth pipeline. Given the country’s increasing demand for capacity, we see hydropower as the most suitable solution from both a technical and economic standpoint,” said Elio Wolff, the company’s Vice President of Strategy and Business Development.
The Luiz Gonzaga hydropower plant, located on the São Francisco River, is one of the largest energy assets in northeastern Brazil. Commissioned in 1988 and formerly known as Itaparica, the facility currently has 1,479.6 megawatts of installed capacity across six generating units.
Beyond supplying electricity to the region, the plant plays a key role in stabilizing Brazil’s northeastern power grid and regulating water flows along the São Francisco River, making it a strategic asset for the country’s energy system.