The Importance of Maintaining the LRCAP 2026 Contracting Schedule for Brazil’s Energy Security
The Brazilian Institute of Oil, Gas and Biofuels (IBP), which represents the country’s leading oil and natural gas producing companies — responsible for 94% of domestic natural gas production — expresses its support for the approval of contracts for the power plants selected in the 2026 Capacity Reserve Auction for Power Supply (“LRCAP” or the “Auction”), in accordance with the established schedule, given its strategic importance for the security of the national energy supply.
The LRCAP should be understood as a security mechanism for Brazil’s National Interconnected System (SIN), based on technical criteria established by the National Energy Policy Council (CNPE) and aligned with internationally recognized practices.
In this context, the projects selected through the LRCAP are not intended to compete with renewable sources in the day-to-day generation of electricity. Rather, they are designed to ensure the reliability of power supply on a continuous basis, complementing the intraday variability of renewable sources — such as solar and wind generation — and providing system responsiveness during adverse weather conditions or critical demand situations.
Given the expansion of intermittent renewable sources within Brazil’s electricity matrix, it is equally necessary to increase the participation of flexible and dispatchable generation sources — such as natural gas-fired thermal power plants — capable of operating continuously under different weather conditions for periods ranging from hours to weeks or even months, depending on the needs of the system.
Alternative solutions to thermal generation, such as battery energy storage systems, play an important role in supporting the reliability of a renewable-based power system. However, they still face significant limitations regarding storage duration and the scale required to ensure the level of reliability demanded by the electricity system.
It is also important to emphasize that the public consultation and administrative procedures related to LRCAP 2026 have been conducted, and that the review of results and ongoing competition assessments by the competent authorities form part of the proper regulatory process. These efforts contribute to strengthening the legitimacy and transparency of the auction, including through the implementation of targeted adjustments when appropriate.
It is important, however, that these stages be completed in accordance with the previously established timetable, ensuring legal certainty and efficiency, and enabling ANEEL to formalize the results in compliance with applicable administrative principles.
In light of the above, the IBP reiterates its support for the approval of the LRCAP 2026 results, emphasizing that any further delays could increase the risk of capacity shortages, potentially compromising the security of the national energy supply and leading to the adoption of more costly emergency solutions.
The contracting of the winning thermal power plants is a relevant element in reducing energy costs over the medium and long term and in enabling a secure energy transition based on the balanced expansion of the electricity matrix and the efficient combination of renewable and dispatchable energy sources.
