Brazil’s growing dependence on hyrdopower-based energy

How is the renewable energy sector in Brazil developing?
Brazil has an energy matrix strongly based on renewable resources, with around 80 percent being produced from hydroelectric power plants. Brazil is one of the few countries in the world to have such a high percentage of energy coming from hydric resources. While it is a positive aspect, important challenges occur in its operation, especially regarding energy security goals.

Challenges happen due to Brazil’s continental proportions, thus it needs a wide-range transmission network; in other words, far reaching transmission lines able to bring energy from where it is generated to the central grid, balancing high rainfall zones with regions of lower pluviometric rates.

However, the latter is an old challenge and the country has already learnt how to deal with it. This way, my analysis is the sector’s primary issue at the moment would be to assure energy security goals are accomplished. Here, environmental rules have been changing the way hydroelectric power plants are built.

Because of the requirements for getting environmental licenses and permits to those projects, energy generators have been reducing the volume of dammed water for each project, frequently opting for ërun-of-the-river stations and that has been leading to system instabilities.

In parallel, the country, after excessively concentrating its matrix on that kind of resource, currently lacks diversity at its electrical system to compensate for those new smaller dams and the boom-and-bust cycle on pluviometric rates. This is reflected in relevant ups and downs in both pricing and energy availability.

Another key issue is to reach those energy security goals by using cleaner energy resources. After all, if the country’s matrix growth is to rely on those smaller hydroelectric power plants, it must have alternative and complementary resources that can offset any lack of water supply.

Eolic energy is currently one of the few activities that supports the local economy.To Brazil’s north-eastern region, a landscape with windmills is a sign of prosperity and opportunity

Under this situation, eolic energy gains relevance within the Brazilian matrix, potentially being a standout as a complementary resource. There is also an interesting correlation between wind and rainfall: generally speaking, when it rains, wind flow lowers, and when rainfalls are scarce, the wind flow is stronger. In other words, when a windmill generates energy, it can replace hydroelectric generation.

Brazil already understands how important the complementary relation between those two energy resources is. Not by chance, Empresa de Pesquisa Energetica, an arm of the local energy regulator ANEEL, foresees eolic power having the highest growth rate for the next few years.

Is the government doing enough to support renewable energy firms, and is the industry in need of subsidies?  
Eolic energy development in the country might be taken as a success story. In the beginning, eolic energy was virtually non-existent if one is considering the late 1990s and early 2000s. The scenario has quickly changed and developed. Nowadays, Brazil already figures as one of the world’s main markets for this industry, mostly thanks to the government position: doing as much as possible to provide us with a profuse eolic industry in the country.

In terms of solar energy, shared generation is already manageable, and specific rules and legislation have been created for it. But the roll out of this model is still very slow.

The incentives led to consistent savings on energy bills, and the fixture of photovoltaic panels was a spontaneous move from end users. The problem with this strategy is that the advantages provided by the system, as well as actual savings on bills for the average Brazilian, are part of a long-term process, and customer engagement tends to be slow.

Large-scale solar energy projects, small hydroelectrical power plants and biomass plants all depend on specific public auctions to grant concessions. If that doesn’t happen, they get stuck in the queue, as they are not as competitive as other resources.

Renova Energia has recently moved into the solar energy market. What opportunities do solar resources offer your business? 
Energy generation from solar resources is still incipient in Brazil, even with solar irradiance levels that reach 6.8 on its measurement scale (a level second only to that found in the Sahara desert). However, we believe solar energy potential to shared solutions reaches about 5-10 GW.

Even so, it’s an industry that is going to advance gradually. I don’t think there is going to be a boom in demand. Renova is positioning itself in this particular market, closing sales as an important player in the shared energy segment.

Taking the sales at the large-scale solar energy market, which has been growing in terms of global importance, we see good opportunities in the future. In Brazil, solar photovoltaic energy remains much more expensive than the other alternatives ñ like run-of-the-river power plants but we believe that, with a public auction similar to that made for the eolic sector in 2009, solar energy might be a viable competitor against other resources like small-sized hydro power and biomass. The potential for solar energy in Brazil is massive.

What do you say to people who believe wind farms are a blight on the landscape and are not efficient enough?  
Caetite City, in the state of Bahia, is one of the places where our wind farms are located. Itís a region that lacks resources and job opportunities. For this reason, eolic energy is currently one of the few activities that supports the local economy. To Brazilís north-eastern region, a landscape with windmills is a sign of prosperity and opportunity.

Windmills integrated into the landscape are a guarantee of revenues in a region lacking resources. Land acquisition for installing windmills brings greater revenue to the region than many social programmes. The city hall in Guanambi, a neighbouring city that also houses Renova’s windmills, has even incorporated the image of the mills on its postcards.

Taking the sales at the large-scale solar energy market, which has been growing in terms of global importance, we see good opportunities in the future

Nonetheless, the consolidation and development of a new industry always come with some scepticism, but the efficiency of the introduced model and social-environmental issues created from eolic mills building are themselves enough to dismiss initial concerns.

From an environmentally-friendly point of view, impact to the environment is considerably lower than that caused by a hydropower plant, and from a social point of view, the windmills are helping to keep families in their native regions. It’s the most efficient resource by far. In comparison, Brazilian wind farms have a net capacity factor above 50 percent, while local hydroelectric plants operate with a net capacity factor of 35 percent.

How long do you think it will be before renewable energy makes up a significant portion of the whole world’s energy provision? 
This is a tricky question to answer. I imagine once energy markets are consistently region-centric, given the demand for natural resources, and particular regulations and laws for each region or country. This way, each region should be developing local policies to take maximum advantage from its captive natural resources. I believe the next generation, familiar with the beliefs and the responsibility of preserving natural resources, will be seeking and charging with more voraciousness the issue of sustainability. Itís all a matter of the generations involved and their moral compasses.

Moreover, investments in new technologies are aimed at easing the decision-making process in new ventures, increasingly looking to generate energy from renewable sources. In Brazil, we truly believe in their potential, especially on wind power, as a complementary solution to the country’s energy demands ñ mainly because the country is undergoing a turning point as far as the energy
sector goes.

With dams registering low water levels due to the dry weather, the Operador Nacional do Sistema decreed thermal plants to be online (a non-sustainable solution triggered by emergencies in the system). Its role in the country is that of a kind of insurance policy on energy supply every time the hydro power structure reduces production.

Cost per MWh generated in thermal units may vary between BRL400 and BRL500, much higher than natural gas thermal units, which have also been used to mitigate low levels in Brazilian dams. Having said that, eolic energy emerges as the most likely complementary solution for the hydroelectric system, especially during the drier seasons, with competitive prices and operating under a sustainable model.