The MME (Ministry of Mines and Energy) announced the holding of two new capacity reserve auctions in the form of power (LRCAPs), both scheduled for March 2026.
Normative Ordinances No. 118 and No. 119, published in the DOU (Official Gazette of the Union) this Friday (24), establish the guidelines and systems for the competitions, which, according to the Ministry, aim to ensure the supply of electricity in the SIN (National Interconnected System) through the contracting of dispatchable sources.
The first of these, the 2026 Capacity Reserve Auction, detailed in Ordinance No. 118 and scheduled for March 18, will include thermoelectric plants (UTEs) powered by natural gas, coal and hydroelectric plants (UHEs).
Scheduled for March 20, the second LRCAP, referring to Ordinance No. 119, will be dedicated to UTEs powered by fuel oil, diesel oil and biodiesel.
Both auctions are part of the government's strategy to ensure firm power for the SIN, in a context of increasing participation of intermittent sources, such as solar and wind power.
The LRCAPs will be organized by ANEEL (National Electric Energy Agency), based on studies by EPE (Energy Research Company) and ONS (National Electric System Operator). Operationalization will be the responsibility of CCEE (Electric Energy Trading Chamber).
The two competitions have deadlines for registration and submission of documents until November 14, 2025, and the submission of additional technical information until December 12, 2025, as established by the ordinances.
Auction of natural gas, coal and hydroelectric power plants
The 2026 LRCAP for natural gas, coal and hydroelectric plants seeks to secure additional power to without, covering new and existing projects.
The auction will cover products with supply starting between 2026 and 2031, including thermoelectric plants without operational inflexibility and hydroelectric plant expansions that add generation capacity.
Capacity reserve contracts will have supply terms of between ten and fifteen years, varying depending on the technology and year of delivery. EPE and ONS will define the total amount to be contracted, focusing on operational flexibility and system reliability.
Auction of Oil and Biodiesel Power Plants
The second auction will exclusively cover existing thermoelectric projects powered by fuel oil, diesel and biodiesel, with supply also starting in August 2026.
A Ordinance No. 119 determines supply periods of three to ten years, with the possibility of converting fossil plants to operate on biodiesel, a measure that aims to reduce emissions and align the event with energy transition policies.
The system also provides that the calculation of physical guarantees will be done according to the methodologies of MME Ordinance No. 101/2016, and that the winning projects must prove fuel availability and meet the operational flexibility requirements defined by the ONS.
The MME points out that these two auctions aim to reinforce the policy of diversifying the electricity matrix and ensuring supply security, ensuring that different energy sources can contribute to the stability and reliability of the Brazilian system in the coming years.
Controversial history
With the publication of the ordinances, the MME seeks to end a period of regulatory and institutional instability surrounding the power auction policy.
The electricity sector has been experiencing ups and downs in the bidding schedule, with cancellations, rule revisions, and disagreements between the government and private agents.
The first of these auctions was scheduled for the second half of 2024, but was repeatedly postponed due to disagreements regarding contracting criteria and costs for the consumer.
Industry entities criticized the lack of clarity regarding the guidelines, especially regarding the role of gas-fired power plants and the classification of projects that depend on as-yet-nonexistent infrastructure, such as gas pipelines.
Another source of friction involved the need for alignment with the government's decarbonization agenda. Companies and associations demanded that the public notices include incentives for cleaner technologies and hybrid power plants, as well as guarantees that the process would not favor obsolete or high-impact environmental projects.
There was also pressure from entrepreneurs and investors, who complained about legal uncertainty and the delay in defining new guidelines after the cancellation of previous notices.
Batteries
The market is now highly anticipating the scheduling of the battery auction. Recently promised by Minister Alexandre Silveira as a way to circumvent the curtailment issue, the actual holding of this auction remains shrouded in uncertainty.
Not only from a regulatory point of view, but also from the results of the debates surrounding the 1304 Provisional Measure, whose rapporteur, Senator Eduardo Braga (MDB/AM) has already signaled concern about the issue of energy storage.
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