Aggreko mulls gas plant-battery hybrid projects for Brazil’s capacity auctions

The English and US-owned business could offer gas-plus-storage projects in a thermal and hydro capacity reserve auction (LRCAP) planned for June as well as bidding in this year’s planned energy storage tender.
A solar plant installed by Aggreko in the state of Ceará. | Image: Cristiano Saito

Temporary power provider Aggreko is adopting strategies to incorporate more renewable energy sources and battery energy storage into its projects in Brazil and is exploring the possible co-location of batteries with gas plants.

The company, which builds and operates thermal power plants, is betting on the energy transition in the form of isolated systems in the north of Brazil, both in equipment it operates and in an auction for such sites scheduled for May.

Aggreko, which is based in Glasgow, Scotland, plans to explore the hybridization of battery energy storage systems with gas-fired thermal power plants with a view to also bidding in two electricity LRCAP planned in Brazil this year.

Hybridized isolated systems

Aggreko operates 26 thermal power plants in isolated areas of northern Brazil and the company’s leader of complex business development and hybrid projects, Cristiano Saito, said his employer has submitted hybridization projects for some of the sites in response to a call from Brazil’s Ministry of Mines and Energy (MME), which wants to reduce generation costs. The MME’s Pro-Legal Amazon Management Committee has allocated BRL 372 million ($63.7 million) to reduce fuel consumption expense in the region.

English and US-owned Aggreko plans to compete in May’s auction, which aims to award three more power generation contracts for isolated areas. The sites will serve 169,000 people in ten locations in Amazonas state and one in Pará.

TDR Capital and I Squared Capital-owned Aggreko is exploring how best to combine batteries with solar and thermal power generation and is considering issues such as renewable energy production over time, reliability, and thermal generation cost, as well as location-specific requirements, according to Saito. He said, “We are conducting a market survey, both for solar modules and inverters and storage systems, knowing that we are still determining what the optimal solar and battery solution will be for each location.”

Saito said Aggreko’s acquisition of battery business Younicos, in 2017, has provided expertise, even if the unit subsequently exited battery manufacturing. “We have this original manufacturer’s expertise in really knowing what causes problems with this type of solution,” he said. “Technology has evolved, and we are talking to the main [battery] manufacturers but we are looking for the best solution based on this in-house expertise. We understand that thermal generation is more expensive today but, for isolated systems, it is very reliable.”

While planning to bid for the off-grid power contracts, Aggreko will also offer engineering, procurement, and construction services to other successful bidders.

Cristiano Saito, complex business development and hybrid projects leader at Aggreko.

LRCAP

Saito said Aggreko also plans to compete in June’s planned LRCAP for thermal and hydroelectric power plants and in the energy storage procurement round which is also planned for this year, on a date still to determined.

The Glasgow-headquartered business is expected to bid for gas projects in the first exercise, which will commission facilities through 2030. “The expectation is for a very significant [grid capacity] demand, which justifies the contracting of a very short-term product, for 2025,” said Saito. “So, we see the system as very demanding in terms of power. This is precisely because of the success of renewables here in Brazil, which is creating a problem during peak [grid demand] hours with the [unavailability] of renewables. Aggreko understands this as part of this energy transition effort; these thermal plants will operate little but they are essential to guarantee the stability of the system.”

The possible co-location of batteries with thermal power plants would be relevant for the energy storage LRCAP. “I think there should be demand for both and a smaller thermal contracting [volume] should be considered to allow for this storage capacity auction in the sequence,” said Saito. “There is certainly this challenge of thermal stealing demand from the second, [energy] storage auction but given the way the storage auction was modeled, there could be an advantage in, for example, placing this thermal that won the [first] auction with the storage solution in the second auction.”

A solar-diesel hybrid project with Aggreko equipment at a mine in Eritrea.

From pv magazine Brasil.

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