Brazil’s 2026 Capacity Reserve Auction (LRCAP) has played a key role in advancing the integration of natural gas infrastructure and power generation, reinforcing the gas-to-wire model in the Brazilian energy market.
The auction resulted in the contracting of a significant volume of thermal capacity, largely based on natural gas, creating strong incentives for the development of LNG regasification terminals and associated thermoelectric projects.
New LNG terminals—particularly those linked to projects developed by companies such as Eneva and OnCorp—are expected to serve as logistical hubs supporting power generation in regions with limited pipeline infrastructure.
Market implications
The auction structure has favored integrated projects combining:
- LNG supply and regasification infrastructure
- thermoelectric generation capacity
- decentralized energy solutions outside the pipeline grid
This model is expected to drive further investment in gas infrastructure, particularly in underserved regions.
At the same time, global geopolitical developments continue to affect LNG supply dynamics and pricing, introducing additional risks for project developers.
Legal considerations
Projects developed under the LRCAP framework may involve complex legal and regulatory matters, including:
- gas supply and LNG contracting arrangements
- power purchase and capacity reserve contracts
- regulatory approvals for energy and gas infrastructure
- project financing and revenue certainty
Photo: Canva
