With power demand weak, Brazil mulls an auction to cancel projects

With electricity demand in Brazil slashed by the harshest recession in a century, the government is evaluating an innovative kind of power auction – to allow companies to bid for the right to cancel licenses to build plants.

Firms had rushed to bid for licenses to supply the power needed to fuel growth as a commodities-fueled boom drove annual economic growth above 7 percent in 2010 and cheap credit sparked a consumer spending spree.

But a collapse in commodities prices tipped Brazil into a recession that has shrunk economic output by more than 7 percent since 2015, crippling demand for electricity and leaving an excess of generating capacity.

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