TCU Probes Brazil’s Capacity Auction After Record Thermal Awards

Overview

• Brazil’s audit court opened a formal inquiry into the reserve‑capacity auctions, which also face review at the power regulator, with a focus on alleged “paper generators” and project resales.
• The March auctions contracted 18.97 GW of firm capacity, a record volume that moves about R$64.5 billion now and is estimated to yield roughly R$515–516 billion to generators over the contracts.
• Large users warned that the auction overbought capacity, which they say could add about R$40 billion per year to bills, while thermal producers argued the system needs even more firm power to cover dips in wind, solar, and hydro output.
• Ceará emerged as a standout winner, with eight thermal plants selected and about R$13 billion in planned investment, helped by the Pecém industrial port, access to gas, and a strategic position on the national grid.
• Renewable developers paused or redirected about R$38.8 billion since 2025, citing curtailment that forces wind and solar to switch off at peaks, new rules that tie key tax breaks to battery storage, and higher network charges for projects far from major demand centers.