Huge Hydro Plant Planned for Amazon

http://www.energytribune.com/articles.cfm?aid=762

The era of mega-hydroelectric projects in Brazil is back after a hiatus. A consortium led by Brazilian engineering firm Odebrecht and federal power company Furnas won the December 10 auction to build and operate the 3.15 gigawatt Santo AntÙnio plant on the Amazon’s Madeira River. The project could usher in a new era of major hydroelectric plants.

The auction results came as a surprise, as the winning offer was far lower than expected. In Brazilian power auctions, the project goes to the bidder who offers to sell the plant’s power at the lowest price. The Odebrecht-Furnas team, dubbed the Madeira Energia group, won on an offer of 79 reais ($44.60) per megawatt-hour, well below the government’s auction price cap of 122 reais per MWh. The other two bidders submitted offers of 98 and 94 reais per MWh.

The low price raised eyebrows, with critics saying it would not cover the cost of plant development, estimated at 9.5 billion reais. They claim the government put pressure on bidders to keep prices low, pointing out that federal power companies held major shares in the three competing groups. However, others say the project will be profitable and that Madeira Energia will earn roughly 100 reais per MWh, given the transmission fees it will collect from distributors.

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