Brazil's 2021 Emergency Auction: Water Scarcity Yielded Record High Electricity Prices

Report Summary:

On 25 October, Brazilian authorities held an emergency capacity auction to help the country navigate through the severe drought that continues to affect the nation. A total of 1,221 MW of capacity (including 1,178 MW of natural gas-fired plants) secured contracts at an average price of R$ 1,564/MWh (US$ 281/MWh), setting a record for the country. Developers adopted a wide variety of strategies to make successful bids in the auction, which awarded power purchase agreements (PPAs) for the period between May 2022 and December 2025.