The problems surrounding the 2026 Reserve Capacity Auction ( LRCAP ), which took place in two phases last week, fit more into a manual of sequential errors that threaten to end up in court than into a success story for the electricity sector.
Changes to the energy price ceiling set on the eve of the auction, with threats of cancellation from the Federal Audit Court (TCU); modeling errors that ended up generating an oversupply of energy; and a paltry discount of 5.2%, had already tarnished the image of the auction shortly after the first results were released last week.
A surprising initiative by Âmbar , the energy arm of J&F, together with the National Electric Energy Agency (Aneel), this week, contesting the result of two rounds of bidding in which it had participated – and won – , denouncing errors in the auction platform's classification of its power plants, now threatens to open a new institutional crisis in the electricity sector, unparalleled in this segment.
RLCAP, the largest auction in the sector's history, brought together more than 360 qualified projects, contracted approximately 18.9 gigawatts (GW) on the first day alone, Wednesday, March 18, and generated investments exceeding R$ 64 billion, involving hydroelectric plants, as well as thermal plants using gas, coal, oil, and biodiesel. The volume of long-term contracts totaled more than R$ 515 billion.
The purpose of the reserve capacity auction is to ensure that the Brazilian electrical system has sufficient firm power to meet demand during critical periods, regardless of generation conditions.
The LRCAP contracts power plants based on power availability, not energy generated. The mechanism seeks energy security, reducing the risk of blackouts – therefore, renewable energy plants, which are intermittent, do not participate. It also promotes technological diversification, including thermal power plants and hydroelectric expansions. Finally, it ensures predictability of investments and operational stability over the years.
Objection
The possibility of the auction ending up in court gained strength with Âmbar's challenge. The company claims to have been harmed by an error in the classification of one power plant and by a blockage in the bidding system for another, both of which are thermal power plants.
The appeals filed by Âmbar claim that the Araucária II Thermal Power Plant — a new project, not yet built — was classified in the auction as an existing plant, a category that provides for shorter contracts, of ten years, and a lower ceiling price. As for the Santa Cruz Thermal Power Plant , according to the company, it only managed to sell the expansion portion because the bidding system allegedly prevented the offering of the main part of the plant.
Filed on March 23, the questions will be evaluated by the Permanent Auction Commission (CPL) of Aneel. Âmbar also requested that, in case of rejection, the process be taken to the agency's board of directors.
In the case of Araucária II — a 369-megawatt (MW) project with R$1.35 billion in planned investments and a scheduled start of operations on January 1, 2027 — the company maintains that the project uses entirely new equipment and has never operated. Even so, only 220 MW were contracted as if they were from an existing plant, at a price of R$2.25 million/MW per year. New plants, however, can compete for 15-year contracts and have a higher price ceiling of R$2.9 million/MW per year.
In its appeal to Aneel, Âmbar argues that the reclassification occurred during the auction, without notice or justification, and recalls that EPE qualified Araucária II as a new project, eligible only for products from 2028 to 2031. As a result, Araucária secured R$ 693.3 million/year, while Araucária II received R$ 420 million/year, according to data from CCEE, which conducted the auction. The company requests a review of the 2028 product or, alternatively, the annulment and reopening of the competitive phase.
Regarding the Santa Cruz thermal power plant in Rio de Janeiro, Âmbar states that the system blocked the offer for the 2027 product, even though the plant was also qualified to participate in that year. The project has two parts: one of 325,920 MW, contracted until December 31, 2026, and another of 130,368 MW, referring to the expansion negotiated in the 2026 product. The company says it intended to offer the main part for 2027, whose supply only begins in August, without contractual overlap.
According to the appeal, the tender notice does not prevent the sale of different parts of the same plant in different products, and the technical qualification confirmed this possibility.
An executive in the electricity sector, speaking to NeoFeed on condition of anonymity, however, disputes Âmbar's argument about possible flaws in the auction platform. "Honestly, I found it very strange, I've never seen anything like it in an energy auction," reveals the source, who assures that a large part of the market is watching the episode with surprise.
“The auction may be new, but the bidding platform isn't, meaning it's hard to understand how such an extraordinary error could have occurred,” he adds, noting that only Âmbar reported a serious problem in an auction with hundreds of products and dozens of agents. “The same platform worked two days later in another auction,” he adds. According to him, the perception is that the company may have been confused with the auction rules.
Change
The filing of the appeal with Aneel, along with the announcement of the departure of two senior executives from Âmbar, including CEO Marcelo Zanatta , led market sources to speculate that the change in leadership reinforces the hypothesis of an internal failure within the company in conducting the auction.
An executive close to the J&F group, who also wished to remain anonymous, says that linking Zanatta's departure from Âmbar to a possible failure in management serves the narrative of competing companies.
“It’s very convenient to say that if the CEO was fired, the mistake was Amber’s,” the source tells NeoFeed . “The assumption for this to be true is that the appeals are pointless; if the error was a system error, it makes no sense to fire the CEO,” they argue.
According to this executive, Zanatta had been with the group for 15 years and had already negotiated his departure from the position after the auction. According to him, Zanatta was responsible for transforming Âmbar, where he had been at the helm since 2020, into a giant in the sector. When he took over, the company only had one significant asset, the Cuiabá thermoelectric plant, with a capacity of 480 MW.
"After that, he oversaw the acquisition of Eletronuclear, Roraima Energia, and Amazonas Energia, as well as coal-fired power plants, transforming Âmbar into a company with 7.1 GW of installed capacity; Zanatta is close to the Batista family," he emphasizes.
The executive attributes the auction problems to two distinct but verifiable systemic failures that blocked Ambar's ability to fully compete, resulting in an estimated potential revenue loss of nearly R$12 billion.
According to him, these are not errors of judgment, but rather operational failures of the system that prevented it from splitting the power of a plant, the Santa Cruz plant, and correctly registering a new plant, Araucária 2, forcing it to compete in less favorable categories: "J&F's bet is that the factual clarity and the materiality of the damage will force an administrative solution, despite the risk of litigation by competitors."
According to Daniela Poli Vlavianos, a partner at the law firm Poli Advogados e Associados, the arguments presented by Âmbar have the potential to succeed, provided they are effectively based on relevant flaws in the bidding process and not merely on dissatisfaction with the economic outcome obtained.
"If Âmbar proves that the auction design restricted the participation of agents, created undue barriers, or distorted price formation, then the challenge will have legal merit," he states.
According to Victor Hugo Iocca , Director of Electrical Energy at Abrace Energia – an association representing large consumers of electricity and natural gas – the auction reflected the waste of energy and resources, impacting electricity bills, which are expected to be 10% more expensive in the medium term.
According to him, the thermoelectric generation lobby strongly influenced the volume of energy traded, around 20 gigawatts (GW). As a result, contracting such a large volume at once resulted in very low discounts for gas and coal projects.
“Friday’s auction, for diesel oil, with a smaller volume, had discounts of up to 50%,” says Iocca. “The strategy of treating the auction as a ‘last opportunity’ for thermal power plants inflated costs for the consumer, without regard for the real needs of the system.”
Iocca also cites other problems, such as the absence of a phased strategy that prioritized more flexible sources and tested new technologies, such as storage batteries.
"Set against a backdrop of sector degradation, with a history of controversies and litigation, the case reinforces the urgency of structural reform to ensure market sustainability and avoid future crises," says Iocca.
