A Brazilian government bill mandating 2.5GW of new gas-fired power plants will increase the curtailment of renewable energy plants by 12%, according to analysis from Aurora Energy Research.
A Senate bill passed last week orders the construction of five 500MW gas-fired thermal capacity projects, each ordered to have a minimum of 70% “inflexibility”, meaning they must be used. The plants, due to be commissioned by 2032 in Goiás, the Federal District, Rondônia, Minas Gerais and Maranhão, will add approximately 15.3TWh of mandatory electricity generation annually.
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Aurora said that the mandate “crowds out renewable output and reduces the system’s ability to absorb wind and solar production during periods of oversupply, leading to higher curtailment levels.”
It expects both solar PV and wind projects to see a 1.6 percentage point increase in curtailment rates in its ‘Central Scenario’, which translates to a 12% increase in curtailment in 2032 as a result of the policy, and an additional annual cost of BRL500 million (US$98.1 million) annually.
The analyst said that wind curtailment will be worst in the northeast of the country and solar curtailment will be worst in the southeast.
Last month, prior to this bill, Aurora had forecast a reduction in curtailment in the late 2020s in Brazil, as new grid infrastructure plans come to fruition and battery energy storage system (BESS) deployments increase. It forecast a decrease of between eight and 12% by 2030, which could be entirely undone by this legislation.
Curtailment has already become “one of the most critical challenges facing the country’s power system,” the analyst said at the time, and has negatively impacted investment in the sector.
Brazilian media reports suggest that the Senate’s reading and vote on the bill took place in under eight minutes, potentially off the formal agenda. The legislation—bill PL 5.017/2019—was originally concerned with electricity discounts for agriculture and aquaculture activities, reports suggest, but was rapidly amended and expanded to include the mandates for new gas capacity. The bill is not yet confirmed as law.
Mandating new, explicitly inflexible gas capacity goes against the broad trends of modern energy and grid development, which generally prioritise flexibility and modernisation to allow greater renewable energy generation and reduce reliance on polluting fossil fuels.
