Brazilian electricity regulator Aneel is taking public comments on measures to enhance the country's financial insurance mechanism for access to transmission lines, with market participants expecting greater security against defaults.
Market participants agree that generation projects must provide some sort of financial guarantee upfront before signing contracts to access transmission lines to ensure a greater lever of protection against unpaid rescission dues.
Power transmission industry association Abrate suggests these financial guarantees should amount to 36 monthly surcharges, while wind power generation association Abeeolica suggests the value equals 40 monthly surcharges.
The issue with the country's current mechanisms for accessing transmission lines originated from a "gold rush" to avoid the end of renewable generation subsidies that resulted in 150GW of authorized projects for a four-year period, an amount of energy that the Brazilian transmission system could not absorb. Many of these projects could not even come to fruition because of a lack of power demand, but they clogged the queue for access to transmission lines. The queue organized projects by when they were approved, leaving many viable projects stuck behind those that could not find customers.
To resolve this problem, Aneel ruled in favor of clearing the queue of projects that are not able to move forward at the beginning of July. The power sector nicknamed this ruling "the day of atonement", a reference to the Jewish Yom Kippur holiday in which observers atone for their sins. Likewise, electricity regulator Aneel will forgive fines from generators for requesting authorizations for projects that will not be built.
The decision was welcomed by both generation and transmission companies. The latter benefits from not having to charge these fines from generatorsand having a higher chance of receiving the monthly surcharges, as companies need to be up to date on their dues to adhere to this forgiveness, said Abrate's director of financial and economic matters Tiago Aragao Soares.
On the generators' side, Abeeolica celebrated a mechanism to allow agents to give back their access to the lines. The association also agreed on keeping the queue, although some of its members would prefer a new procedure to grant access to these connections. The only point that did not please Abeeolica's members was the decision that companies would need to pay previous debts to benefit from the "atonement." The association does not know if companies will accept this part of the measure, Abeeolica's director Sandro Yamamoto said.
Aneel held a public consult at the end of last year for a new tender model allowing access to transmission lines. Abeeolica would still support the development of this new tender, but the government would need to define its rules clearly, Yamamoto said. The association believes, for example, that the tender should not simply privilege whoever is willing to pay more but internalize winning bids into power prices, he said.
