Electricity sector in Brazil
This dependence on hydropower makes Brazil vulnerable to power supply shortages in drought years, as was demonstrated by the 2001–2002 energy crisis.
[6] The National Interconnected System (SIN) comprises the electricity companies in the South, South-East, Center-West, North-East and part of the North region.
In the old days, about 88 percent of the electricity fed into the national grid is estimated to came from hydroelectric generation, with over 25% coming from a single hydropower plant, the massive 14 GW Itaipu dam facility, located between Brazil and Paraguay on the Paraná River.
[5] Natural gas generation is second in importance, representing about 10% of total capacity,[12] close to the 12% goal for 2010 established in 1993 by the Ministry of Mines and Energy.
[15] Brazil needs to add 6000 MW of capacity every year in order to satisfy growing demand from an increasing and more prosperous population.
[16] The National Agency for Electricity (ANEEL) has commissioned feasibility studies for several hydroelectric plants (small, medium and large) in the period 2006–2008.
[18] The government is also pursuing development of the controversial 11,000 MW Belo Monte Dam in the state of Pará, on the Xingu River.
IBAMA approved Belo Monte's provisional environmental license in February 2010 despite internal uproar from technicians over incomplete data.
In order to counter the risk of unavailability of gas supplies, Brazil is in the initial stages of planning to build two LNG terminals that would likely come on-stream around 2010.
The power sector in Brazil serves more than 50 million customers, which corresponds to about 97% of the country's households, who have access to reliable electricity.
ANEEL's function is to regulate and control the generation, transmission and distribution of power in compliance with the existing legislation and with the directives and policies dictated by the Central Government.
The initial role of the operator was to create a single, integrated commercial electricity market, to be regulated under published rules.
Private capital participation in the generation business will likely represent 50 percent of the installed capacity in the years to come[5] Brazil's transmission system is growing in importance since adequate transmission capacity is essential to manage the effects of regional droughts, allowing to move power from areas where rainfall is plentiful.
As a matter of fact, the rationing that occurred in Brazil in 2001–2002 (see The 2001–2002 crisis below), could have largely been averted if there had been adequate transmission capacity between the south (excess supply) and the southeast (severe deficit).
[21] Transmission has remained almost exclusively under government control through both federal (Eletrobras) and state companies (mainly Sao-Paulo-CTEEP, Minas Gerais-Cemig, and Parana-Copel) until recently.[when?]
[21] Source: Bear Stearns 2007 The Brazilian Energy Research Agency (EPE) has published a 10-year expansion plan outlining a projected investment of US$ 20 billion in the electricity transmission sector by 2029.
[6] Brazil's gross wind resource potential was estimated, in 2019, to be about 500 GW (this, only onshore), enough energy to meet three times the country's current demand.
This delicate situation was the result of heavily subsidized tariffs and a revenue shortfall in the sector of about US$35 billion, which led to the delay in the construction of about 15 large hydro plants due to lack of funds for investment.
A major commitment was made by the then President of Brazil, Fernando Henrique Cardoso, to carry out a substantial reform of the Brazilian electricity sector.
Some of the state-owned generation capacity was acquired by foreign investors such as Tractebel, AES, Prisma Energy, El Paso and Duke, which became significant producers.
In addition, local investors such as industrial groups, large customers, utilities and pension funds also invested heavily in the national generation sector.
This achievement allowed the system to overcome that long period without blackouts and brownouts[36] and proved the potential of demand-side management and energy efficiency efforts, which were able to create a virtual capacity of 4,000 MW, helping the country to bridge the supply demand gap in a very economic way.
However, despite initial expectations, the new administration opted for a model that clearly aims to attract long-term private investment to the sector and that heavily relies on competition.
In addition, the existing institutions were preserved and in some cases strengthened, with a new company, EPE, created with the specific mission of developing an integrated long-term planning for the power sector in Brazil.
[5] The new legislative framework was defined by Law 10,848/2004, which established clear, stable and transparent rules aimed at ensuring supply and the continuous expansions of the intrinsic sector activities (generation, transmission and distribution).
The existing delays in granting environmental licenses and the uncertainties on the Bolivian gas supply, explain to a great extent the lack of hydroelectric and gas-fired thermoelectric projects respectively.
Transmission, it has remained almost exclusively under government control through both federal (Eletrobras) and state companies (mainly Sao-Paulo-CTEEP, Minas Gerais-Cemig, and Parana-Copel) until recently.[when?]
[40] This low contribution to emissions from electricity production in comparison with other countries in the region is due to the high share of hydroelectric generation.
The distribution of projects by category is as follows:[42] Source: UNFCCC An exergoeconomic assessment accounting for the total and non-renewable unit exergy costs and specific CO2 emissions of Brazilian electricity is performed by Flórez-Orrego et al. (2014),[43] comprising thermal, nuclear, hydro, wind farms and biomass-fired power plants.
The Inter-American Development Bank (IDB) is currently (April 2008) supporting several projects and contributing to various technical assistance initiatives in the power sector in Brazil.
