Arxen seeks to increase operational flexibility for its thermal plant in Pará, as Aneel reviews the request following its experience with Eneva.
Arxen, formerly known as New Fortress Energy (NFE) in Brazil, has filed a request with the National Electric Energy Agency (Aneel) to remove the mandatory generation requirement for its Novo Tempo Barcarena thermal power plant, located in the state of Pará.
The request, which targets an initial five-year period, proposes ending the contractual inflexibility that currently requires the plant to generate an average of 580.83 MW between July and December of each year, regardless of the actual needs of the power grid.
This initiative by Arxen comes amidst growing challenges regarding gas supply in the Barcarena region.
Recently, Alunorte, part of the Norsk Hydro group, had to reduce its alumina production due to gas supply disruptions, forcing the company to source LNG directly from the market to meet its needs.
The company had previously submitted a broader proposal in April, seeking a general review of its contractual terms. However, the new request, submitted in September, focuses specifically on easing generation requirements during peak demand months.
The objective is for the Novo Tempo Barcarena plant to remain available to be dispatched by the National Electric System Operator (ONS) only when there is an actual need, taking into account factors such as variable unit costs and system conditions.
A precedent under review: the Eneva case
Aneel is analyzing Arxen‘s request within a particularly relevant context, given the recent outcome of similar negotiations involving Eneva.
Eneva attempted to obtain flexibility for its plant contracts through an agreement at the Federal Court of Accounts (TCU), aiming to optimize commercial opportunities for gas sales.
However, the proposal was rejected by Aneel‘s board, which cited uncertainties regarding the long-term impacts of such flexibility.
The Eneva case, which involved approximately 1.2 GW of installed capacity, proposed the removal of mandatory generation while keeping the plants available for ONS dispatch.
Although the Electric Energy Commercialization Chamber (CCEE) estimated cost savings of up to R$ 1.7 billion for regulated consumers through 2030, the ONS pointed to a potential increase in thermal generation costs.
A lack of consensus on the effects of the contracts beyond 2030 led to the termination of the negotiation.
Arxen’s new proposal
Arxen‘s request has been bolstered by a technical study prepared by Volt Robotics.
The current proposal, which has been forwarded by Aneel‘s technical staff to the ONS and the CCEE, will be evaluated for its effects on system operation, contracts, and market settlement.
The Novo Tempo Barcarena plant, which won the A-6 auction in 2019, has an installed capacity of 629.367 MW and was sold with a physical guarantee of 605 average MW.
Parallel to the discussion on inflexibility, Arxen is also seeking to increase the plant’s commercially cleared capacity, having recently obtained authorization to operate at up to 552 MW and now requesting authorization to reach 610 MW.
This expansion is considered crucial for receiving contractual revenues and minimizing exposure to penalties.
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