In the recently concluded auction for transmission projects in Brazil, Sterlite Power emerged as the largest winner, clinching six lots at an investment of roughly US$1 billion, which secured about 65% of the capex under auction. These critical projects will largely help move renewable power from northern and north eastern parts of Brazil with southern and south eastern regions where the load centers are located. By 2026, the total electricity consumption of the country is forecasted to increase to 741 TWh, indicating an average annual growth of 3.7% per annum. To cater to this jump in demand, a 64.1 GW expansion in installed capacity of the National Interconnected System (SIN) is planned over the next 10-year period.
The projects entail 23 substations; 2,000 CKM of lines and 5,500 MVA of transformation capacity.
Talking about Brazil and company's investment in the region, the Group CEO of Sterlite Power, Pratik Agarwal, said, "Brazil requires an incremental 61,800 km in transmission lines, and an increase of 199,200 MVA capacity. This makes the market very attractive to us and we have already committed ~USD 1.7 bn of the planned USD 4 bn in the region. We intend to develop global partnerships to execute our global portfolio of projects."
Brazilian power sector is characterized with policy and regulatory maturity. Given the strong contractual framework, including long concession tenures (30 years), inflation-protected revenues (which help lower the forex risk), and auction-based bidding for projects that happen on a pre-announced cadence, the Brazil market presents an ideal setup for any private transmission player.