By Brazil Stock Guide – Brazil contracted 501.3 megawatts (MW) of thermal power capacity on Friday (20) in the second phase of its 2026 reserve capacity auction, reinforcing grid reliability amid rising demand. The procurement aims to ensure dispatchable generation during peak periods in the National Interconnected System.
According to Agência Brasil, the contracted capacity includes 383 MW from diesel-fired plants, 98.4 MW from biodiesel units and 20 MW from fuel oil facilities. The auction was organized by Brazil’s electricity regulator Aneel, alongside the Ministry of Mines and Energy and the Electric Energy Trading Chamber.
The auction, held in São Paulo, attracted 38 projects totaling 5,890 MW of offered capacity. It was completed in three bidding rounds between 10 a.m. and approximately 1:50 p.m.
In the first round, diesel and fuel oil plants were contracted for three-year supply agreements starting Aug. 1, 2026, at BRL 899,650 per MW-year, reflecting a 56% discount to the ceiling price of BRL 1.6 million.
The second round, also covering diesel and fuel oil units, secured contracts starting Aug. 1, 2027, at BRL 860,800 per MW-year, again below the auction cap.
The third round focused on biodiesel plants, awarding 10-year contracts beginning Aug. 1, 2030, at BRL 787,150 per MW-year, compared with a ceiling price of BRL 1.75 million.
The auction delivered an average discount of 50.14%, translating into estimated savings of BRL 1.83 billion, while total operational costs are projected at BRL 979 million over the contract period.
Brazil uses reserve capacity auctions to ensure firm power availability, allowing plants to operate during periods of high demand, particularly in evening peak hours.
Earlier in the week, on Wednesday (18), the first phase of the auction contracted 18.997 gigawatts (GW) from hydroelectric and thermal plants fueled by coal and natural gas. That auction generated BRL 515.7 billion in total contract value, with a 5.52% discount and estimated savings exceeding BRL 33.64 billion, alongside BRL 64.5 billion in investments.
Combined, the two auctions held this year secured approximately 19.5 GW of capacity, with a significant share coming from fossil fuel-based generation.