Engie strengthens its position in Brazil with a major victory in the 2024 transmission auction

Engie dominated Brazil’s second electricity transmission auction in 2024, securing a major contract involving the construction of transmission lines and substations across five states. This victory represents a total investment of 2.9 billion reais ($533.8 million) and positions the French group as a key player in modernizing the country’s power transmission network.

Strategic development and concession objectives

The operation covers the construction and maintenance of high-voltage transmission lines, along with the installation of several strategic substations in the states of São Paulo, Paraná, Minas Gerais, Santa Catarina, and Espírito Santo. With this acquisition, Engie expects to generate an annual revenue of 252.4 million reais after offering a discount rate of 48.14% on the maximum allowed revenue. This competitive bid enabled Engie to surpass several competitors, including Eletrobras and Copel, as well as local and international consortiums such as Alupar and the Spanish firms Cymi and Acciona.

Engie: Enhanced vertical integration

Already well-established in the renewable energy sector in Brazil, Engie is expanding its activities into transmission to strengthen its presence across the entire energy value chain. This vertical integration strategy is part of a broader plan to develop Brazil’s energy infrastructure as the government aims to modernize and expand the national grid to meet the growing electricity demand. This modernization is particularly crucial in the northern and northeastern regions, where connectivity remains insufficient despite the high potential for wind and solar energy production.

Auction results and other winners

In addition to Engie, other companies secured lots during this auction. Taesa won lot 3, which requires an investment of 244 million reais to build a substation in São Paulo State. Cox Brasil secured lot 4, which involves creating a substation in Bahia State, at an estimated cost of 168.2 million reais. Although these projects are of smaller scale compared to Engie’s, they also align with the national effort to diversify and strengthen the power transmission network.

Perspectives for the Brazilian energy sector

The Brazilian electricity transmission market is particularly attractive to foreign investors due to its growth potential and the significant public investments in infrastructure. The Brazilian National Electric Energy Agency (ANEEL) has increased the frequency of auctions to stimulate the development of transmission capacity, which is critical to integrating the growing renewable energy production. The government estimates that the need for new transmission infrastructure will amount to several billion reais by 2025.

Engie, already operating nearly 6,000 kilometers of transmission lines in Brazil and Chile, is using these projects to consolidate its presence in the region. Since 2017, the group has expanded its network through projects like Gralha Azul in Paraná State and Novo Estado in Tocantins and Pará States. The 2024 auction marks a new milestone in this strategy, allowing Engie to establish itself as one of the main transmission operators in the country.