Renewables in Brazil – Market traits, outlook and potential

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Article published on 9th December 2019

 

The Brazilian Market for renewables is growing at an increasing rate. The country’s energy market is divided into one regulated and one unregulated available only to larger companies. Brazil is mostly dependent on hydro plants for its energy production, however, seasonality largely affects the country’s actual output compared to its potential output and this has historically resulted in energy crises, large price fluctuations and shortages. There is potential to fill up this void with energy from renewable sources. Legislation and government policy is also being adapted to the new reality of renewable energy and to stimulate growth in the market. Intersolar, a fair with focus on the photovoltaic industry, took place in Brazil during September 2019. Thousands of people participated and it was characterized by a general positive atmosphere about the growth potential of the industry in Brazil and South America. The government agency ANEEL has lately sold off large development contracts for renewable energy projects in energy auctions, indicating a continuous growth in the upcoming future.

 

1 Brazil – Overview of a Country with Continent’s Characteristics 

Together with size and special features to be considered unique in the world, Brazil is regarded as a hydrothermal system, with a predominance of hydroelectric power plants. The diagram below illustrates Brazil’s continental dimensions.

 

Source: IBGE 2019

 

The Brazilian Electrical System has unique characteristics that guide the operational decisions and planning, such as:

  • Continental dimensions;
  • Predominance of hydroelectric generation;
  • Hydrological diversity of river basins allowing for complementarity between regions;
  • Abundant biomass sources;
  • Large suitable areas for developing solar and wind farms;
  • Considerable full interconnection between regions from an extensive system of long-distance transmission lines;
  • Participation of several agents with plants in the same river;
  • Fragmented market (i.e. many different companies in the market)
  • Large investment horizons and maturity (e.g. for transmission lines, hydro plants, etc.)

 

2 Current and prospective share of each source of energy

  • Currently in Brazil, the total installed capacity as of 2019, is around 167GW.
  • The majority of the power generated comes from large hydroelectric plants (100GW or 60%) – due to the considerable environmental impact from those large projects, often in areas of natural, ecological or cultural value. Controversies exist on whether large hydro electrical plants can be considered as renewable energy. For this text, we do not consider it or consider it separately from renewable energy.
  • Renewable energy has increased its representativeness over the years in the market presenting a total capacity installed of 39 GW in 2019 and is currently responsible for 24% of the total installed capacity in Brazil.
  • Although power generated from thermoelectric plants has been considered costly and expensive for the system, they still comprise a significant part of the Brazilian market (26GW or 15%)

Source: MME & ANEEL 2019

 

Source: MME/EPE (2018)

 

 

 

 

Source: CCEE 2019

 

Source: CCEE 2019

 

 

Output/Capacity​January 2019​July 2019
Hydro​49%34%​
​Thermo​22%36%​
​Nucear​87%​92%
​Wind​39%​46%
​Biofuel​6%​33%
​SHP​55%​37%
​PV​26%​23%

Source: CCEE 2019

 

 

 

 

 

 

 

 

 

 

 

 

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1 A gross analysis on available data, a more accurate analysis would be to measure production in GWh to potential output which is the industry measure of capacity factors.

2 Not necessarily high capacity factors, since wind turbines are deliberately designed for technical reasons not to operate at full or high capacity.

3 Pimenta F., W. Kempton, and R. Garvine. 2008. Combining meteorological stations and satellite data to evaluate the offshore wind power resource of Southeastern Brazil. Renewable Energy, doi:10.1016/j.renene.2008.01.012. 

 

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