The GNA II power plant, located in Sao Joao da Barra in Rio de Janeiro State, was awarded in the 2017 A-6 power auction. The plant is part of GNA’s thermal power complex, which also includes the 1.3-GW GNA I thermal power plant and a liquefied natural gas (LNG) regasification terminal, with a total capacity of 21 MMcmd. Both plants operate on a combined cycle configuration, with each of them utilizing three gas turbines and one steam turbine to maximize efficiency.

GNA II's gas consumption is expected to be substantial during the dry months, driven by its inflexibility. The plant is expected to consume approximately 6.4 MMcmd of gas between July and October, and around 5 MMcmd in November. However, owing to its relatively low CVU, it is well positioned in the merit order curve and is more likely to dispatch during periods when hydro reservoir levels are unfavorable. Considering that the average thermal consumption in Brazil during this period last year stood at around 26 MMcmd, GNA II's consumption may represent an increase of about 23% of the country's total gas consumption for power generation.

While LNG can provide the required supply flexibility to the plant, its prices can be volatile in the global market. Such an indexation provides a hedge to the developer as its variable costs will be passed through to end-users via retail tariffs. Nevertheless, the lack of connection to the transportation grid hinders the plant’s access to cheaper domestic gas whenever available. 

Brazil's electric matrix is marked by a strong seasonal pattern, driven primarily by its reliance on hydroelectric power. Since hydro accounts for 42% of installed capacity and 55% of generation, the mix is heavily influenced by water availability. During the wet season, in Austral summer months, reservoirs will typically get filled and hydroelectric power will be prioritized by the operator due to its lower marginal cost. However, as reservoirs deplete over the dry season, marginal costs tend to rise and supply becomes increasingly reliant on fossil fuels to provide flexible generation during periods of low solar and wind power output, as well as base-load generation when reservoirs go critically low.

Overall, the GNA II power plant is well-positioned to play a crucial role in meeting Brazil's increasing power demands, particularly during the dry season. Its competitive cost structure and flexible fuel supply through its LNG terminal will provide a reliable and flexible source of energy at a competitive cost to the system.

Authors: 

Muched Nassif

Vice President, Renewables & Power Research
muched.nassif@rystadenergy.com

Gabriela Sanches

Analyst, Gas & LNG Research
gabriela.sanches@rystadenergy.com

Lorena Hernandes da Silva Leme

Junior Analyst, New Energies Research
lorena.leme@rystadenergy.com

(The data and/or forecasts in this column are Rystad Energy's, and the opinions are of the authors.)