Brazil likely to cancel A-3 energy auction, drop 2014 contracts as well

Brazil will likely cancel this year's A-3 energy auction and also allow the 2014 auction winners to terminate their contracts to participate in future tenders.

The A-3 tender, schedulled for the second half of 2016, is supposed to contract new energy projects with start of power supply on January 1, 2019. It will likely be cancelled due to lack of demand, government officials were quoted as saying by local media.

In another twist, Brazil will also cancel contracts from the 2014 auction contracts, allowing the contractors to refile projects in forthcoming tenders.

Earlier this year, most of the solar power contractors from the 2014 auction requested cancelation of their contracts or rescheduling of start of power supply dates due to the devaluation of the Brazilian currency against the US dollar. Power sector regulator Aneel initially turned down the request in July.

Now, the government looks more willing to negotiate and the request for cancellation will probably be accepted.

Brazil now has two energy auctions left on its schedule for this year. The first one will be held on September 23, focusing on hydropower sources, and the second will take place on December 16. It will contract solar and wind power.

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