Iberdrola wins its largest network project in the world: it will build a 1,700-kilometre power line in Brazil
- It has won two lots in the auction: one of 1,707 kilometres between the states of Minas Gerais and São Paulo and the other, located in Mato Grosso do Sul. They will involve an investment of 1 billion euros and will create more than 11,000 jobs during construction.
- The acquisition of the assets reinforces the company's expansion in the transmission segment and consolidates its commitment to the country.
- The company is betting on this auction because of its attractive regulatory framework - revenues are linked to inflation - and the country's legal certainty.
Iberdrola takes a giant step forward in Brazil. The company, through its subsidiary Neoenergia, has been awarded its largest power grid line in the world in the 1,700-kilometre power transmission line auction held on Thursday, according to the country's National Electricity Agency (Aneel).
Specifically, Neoenergia won two of the 13 lots offered: one, 1,707 kilometres, the longest project offered in the auction, between the states of Minas Gerais and São Paulo. The company also won the 291-kilometre contract in the state of Mato Grosso do Sul. According to the regulator, the investment in these projects will amount to 5.5 billion Brazilian reals (around €1 billion) and will create more than 11,000 jobs during construction.
The company is betting on this auction thanks to its attractive regulatory framework - revenues are linked to inflation - and the country's legal certainty. "The acquisition of the assets reinforces Neoenergia's expansion in the transmission segment and consolidates the company's commitment to the development of the country's electricity sector. We have a relevant role in the execution of the transmission project in the last five years that strengthens us in this market. The excellent partnerships with construction companies and suppliers allow us to achieve very favourable conditions", says Eduardo Capelastegui, future CEO of Neoenergia as of 15 July 2022.
The 1,707-kilometre project aims to expand the transmission capacity of the northern region of Minas Gerais, so that energy generated by renewable sources can flow. It consists of three 500 kV lines, plus a 440 kV line. The new 500 kV New Bridge 3 substation will also be built. The deadline granted by the regulator for its construction is 60 months from the signing of the concession contract on 30 September 2022. This project could create around 10,000 jobs during construction.
The second foresees the construction of 291 kilometres of lines in nine municipalities in the state of Mato Grosso do Sul, with two 230 kV lines and sections and a 230/138 kV Paraíso 2 - 2x150 MVA substation. The objective is the integration of the small hydroelectric power plants Fundãozinho, Areado and Bandeirante and the connection of the distribution in the Paraíso region. The timeframe estimated by the regulator for completion is 48 months and around 1,250 jobs are expected during construction.
Networks, key assets for Iberdrola
Brazil is one of Iberdrola's growth markets. The company has more than 2,300 kilometres of transmission lines in operation in the country, following the completion of the April 2017 auction deliveries, with an average lead time of 15 months in relation to the deadline of the National Electricity Agency (ANEEL).
In addition, it has 4,000 kilometres under construction, distributed in the five regions of Brazil. The company acquired lot 4 in the December 2021 auction and, since 2017, has added 13 projects. In its latest projects, the company has demonstrated efficiency and commitment to value creation, respecting a strict capital allocation policy and producing secure returns for its shareholders.