Compass Generation

According to the 2029 Energy 10-Year Plan, published by the Energy Research Company (EPE) in 2019, Brazil is expected to record installed power growth for 23 GW gas-powered thermal plants, thus, representing a greater share in the electricity matrix, from 8% to 16% of total generation capacity.

The natural gas will play a key role in the energy matrix, as in addition to replacing more pollutant sources of energy, such as coal and fuel oil, it also offers reliability to the electricity system, as it complements the intermittent renewable sources, such as solar and wind energy, responding to a power surge. Compass is focused on developing a 3 GW-thermal generation portfolio, with an approximate total investment of R$11 billion, jointly with strategic partners.

The business model consists of long-term power purchase agreements in the regulated market (Power Purchase Agreement – PPA), with remuneration of availability and inflexible and flexible dispatches. Due to our electricity trading additional platform, there is also an eventual opportunity of voluntary dispatch and remuneration via spot energy prices, the Price of Differences Settlement (PLD), when we materialize competitive gas to ensure this operation’s profitability. Currently, Compass is developing two natural gas-powered thermal projects, and other four projects with partners, aiming at taking part in the next new and current energy auctions held by Ministry of Mines and Energy of Brazil (MME).

In addition to the strategy of operating in the regulated market, the free market also raises an important opportunity fomented by a discussion of the Energy Sector Renovation coordinated by MME.  Also on March 10, 2020, the Brazilian Senate approved the Bill (PLS) No. 232/16, referring to the reduction of the minimum consumption threshold to migrate to the energy free market, thus, significantly increasing the universe of consumers who could opt for a bilateral contract, directly with the energy provider. This reduction would directly result in stimulating the energy trading directly by generation companies or through trading companies capable of centralizing a more fragmented demand.