Brazil (2014)

Degree of reliance on imported energy: 

Most imported electricity comes from Argentina and Paraguay. Total electricity imports in 2011 were 38,430 GWh, or 6.7% of total domestic supply, while exporting a further 2,544 GWh. Total net energy imports in 2011 were 28,611 ktoe, or 10.6% of total primary energy supply.
Brazil is one of the largest coal importers in the world, importing 20,149 kt in 2011. Major coal suppliers of Brazil are the United States and Australia.

Main sources of Energy: 

Total installed electricity capacity (2012): 116,835 MW
Hydro-power: 70.4%
Thermo-electricity: 28.3%
Wind: 1.3%

Total Primary Energy Supply (2011): 270,028 ktoe
Crude Oil: 36.3%
Biofuels and Waste: 28.8%
Hydro-electric: 13.6%
Natural Gas: 8.4%
Coal and Peat: 5.7%
Oil Products: 4.1%
Net Electricity Imports: 1.1%
Nuclear Energy: 1.5%
Geothermal/Solar/Wind: 0.2%
Heat: 0.04%

Total Electricity Generation (2011): 531,758GWh
Hydropower: 80.6%
Biofuels: 6.1%
Natural Gas: 4.7%
Nuclear: 2.9%
Oil: 2.7%
Coal and Peat: 2.3%
Wind: 0.05%
Other Sources: 0.01%

Brazil produces enough energy to cover over 90% of its demand as of 2011. Brazil is the largest consumer of energy in South America.

Brazil has vast hydro-electric resources and accounts for more than 60 hydro-electric facilities with installed capacities of at least 100 MW. Twenty-three of these facilities have installed capacities greater than 1,000 MW. Together with Paraguay, Brazil operates by some measures the world’s largest hydro-electricity complex, the Itaipú facility on the Paraná River, with a capacity of 13,600 MW. The remaining electricity generated in Brazil comes mostly from coal and gas-fired thermoelectric plants. In recent years, Brazil has run an overall power surplus, allowing exports to its neighbours.

In May 2012, Brazil produced 2.78 million barrels per day (bbl/d) of oil and gas equivalent. According to the Oil and Gas Journal (OGJ), Brazil had 14 billion barrels of proven oil reserves in 2012, the second-largest in South America after Venezuela. Petrobras´s discovery of large offshore Campos and Santos Basin oil fields in 2007, containing five to eight billion barrels of oil expanded the country´s proven reserves by 40-50%.

Brazil has also discovered enormous “pre-salt” oil fields, around 18,000 feet below the ocean bed, under a thick layer of salt. Brazil's pre-salt announcements immediately transformed the nature and focus of Brazil's oil sector, and the potential impact of the discoveries upon world oil markets is vast. Some analysts estimate there is more than 50 billion barrels of oil equivalent located in these reserves. However, considerable challenges must still be overcome in order to bring these reserves to fruition. The difficulty of accessing reserves, considering both the large depths and pressures involved with pre-salt oil production, represent technical hurdles that must be overcome.

Brazil has the largest coal reserves in Central and South America, the proven recoverable reserves are around 10 billion tons. In 2006 Brazil produced 7 million tons of coal, while coal consumption reached 23.8 million tons. In 2009, Brazil produced 2,241 ktoe of coal, and imported a further 9,076 ktoe. Almost all of Brazil’s coal output is steam coal, of which about 85% is fired in power stations.

Brazil holds the sixth largest uranium reserves in the world. Brazil has two nuclear power plants, the 630-megawatt (MW) Angra-1 and the 1,350-MW Angra-2. State-owned Eletronuclear, a subsidiary of Eletrobras, operates both plants.



Extent of the network: 

National Electrification Rate (2009): 98.9%Rural Electrification Rate (2009): 92.0%
The Brazilian National Interconnected System (SIN), as of 2010, consisted of approximately 96,140 km of transmission and distribution lines, predominantly of 230 kV and below.
As of 2011, transmission and distribution losses in the country stood at 16.4%.

Capacity concerns: 

Although hydro-electric power is a very cost-effective source, in 2001 droughts caused power shortages and energy rationing. This situation was attributed to the lack of investment within the sector. Rationing lasted until May 2002. The consumption of electricity was drastically reduced, resulting in major economic consequences. The estimated economic cost of the rationing was close to 3% of the GDP.
Assuming an annual GDP growth rate of 4.7% through to 2020, Brazil’s projected electricity consumption will be 730,000 GWh, while installed capacity is expected to grow to 171,138 MW by 2020. Total investment required under the government’s 2011-2020 Power Expansion Plan stands at R$190 billion (approx.. US$105 billion) to bring an additional 62,000 MW of power generation capacity to the grid.
As a result of the ongoing drought, Brazil has constructed additional short-term natural-gas-fired generation in order to ease the burden on the nation's hydro-electric dams, with reservoir levels falling to near-critical capacity. As of February 2014, reservoir levels in the Southeast and Central West regions of the country were at roughly half expected levels for the time of year, resulting in 6,260 MW of additional thermal capacity being put onto the grid in that region.

Potential for Renewable Energy: 

With yearly average global irradiance levels of 5.5 – 6.0 kWh/m2/day, Brazil has a high potential for the use of solar energy. The country has over 150 solar water heater manufacturers, providing installations for residential-scale applications as well as hotels, hospitals and other larger projects. Successful operation of the country’s first grid-tied solar project (1 MW) in 2011, as well as increasing solar energy use in large-scale infrastructure projects (stadia etc.), is changing the climate for solar power in the country, although the technology is still seen as costly, and applications limited to remote areas of the country and projects that fulfil social needs (electricity for schools, hospitals).
Recent targets from the government for 1,400 MW of distributed solar generation by 2022 have accelerated market development, with approximately 122 MW of utility-scale solar projects being awarded long-term power purchase agreements in the 2013 federal energy supply contract auction.
Brazil has a potential for wind power of 143 GW. At the end of 2012, Brazil had 2.5 GW of installed wind capacity, enough to power four million households, accounting for 2 percent of national electricity consumption. In 2012 alone, 40 new wind farms came online, adding more than 1 GW of new capacity to the Brazilian electricity grid and creating 15,000 new jobs. This represents an investment of USD 3.43 billion (€2.63 billion), which is expected to increase to USD 24.50 billion (€18.8 billion) by 2020.Brazil currently has over 7 GW of wind power projects in the pipeline to be delivered by 2016, and the government’s Decennial Energy Plan (PDE 2021) sets a 16 GW wind installed capacity goal by 2021. The local Brazilian wind market is forecast to grow at over 2 GW annually.
Major biomass sources are firewood, sugar cane products and other agricultural waste. Sustainable biomass could have a potential of 20 GW.
The use of biofuel (ethanol) is promoted through the Brazilian Alcohol Program (PROALCOOL), which encourages the production of renewable biomass fuel as an oil substitute. Driven by blending mandates and strong competition between ethanol and gasoline, Brazil remains the second-largest market and continues to have a larger share of biofuels in its transport fuel consumption than any other country. In 2035, biofuels will meet 30% of Brazilian road-transport fuel demand up from 19% today.
With over 262 GW of available large-hydro potential out of a total potential of over 520 GW, Brazil has one of the best hydro-electric regimes in the world. Brazil’s focus on hydro-electric capacity development has been the mainstay of its electricity supply policy for a significant length of time, and as a result the country’s installed hydro-electric was 79,905 MW as of January 2013. Significant hydropower expansion is planned under the country’s 2020 Energy Plan.
As of 2005, Brazil had 360 MW of installed geothermal capacity, predominantly used in the tertiary sector for bathing and swimming heating, with just 4 MW being used for agricultural drying. Brazil has a significant low-temperature geothermal resource that has potential industrial use, although utilisation up until now has been low.

Potential for Energy Efficiency: 

In 1985, in response to heavy dependence on interruptible imported petroleum, Brazil, along with many other oil importing countries, shifted its energy strategy to focus on domestic sources of energy and energy efficiency. Brazil created PROCEL as a cell within its national utility (Electrobras), to begin focusing on energy efficiency. Since that time, PROCEL has been very active in promoting efficient use of energy; but while there are many success stories, market-based mechanisms to stimulate private sector investment in energy efficiency in Brazil, are largely absent.

In October, 2011, the Ministry of Mines and Energy (MME) reported the approval of the "National Plan for Energy Efficiency - PNEf - Premises and Basic Guidelines" by Ordinance No. 594. Both primary energy intensity and industrial energy intensity are significantly below world averages, and 109 TWh of electricity savings are forecast under the PNEf by 2030.


Electricity market
In Brazil, large government-controlled companies dominate the electricity sector.

Federally-owned Eletrobrás holds about 40% of capacity, with state-companies Cepel, CGTEE, Chesf, Eletronorte, Eletronuclear, Eletrosul, Furnas, Itaipu Binacional, Distribuição Piauí, Distribuição Rondônia, Distribuição Acre, Amazonas Energia, Distribuição Alagoas, Distribuição Roraima and Eletropar. Currently, about 27 percent of the generation assets are in the hands of private investors. Considering the plants under construction, as well as the concessions and licenses already granted by ANEEL, this figure is expected to grow up to 31% in the medium term and to reach almost 44% over 5-6 years.

The Operador Nacional do Sistema Eléctrico - ONS, operates the national transmission grid, which consists of two large grids (one in the north, one in the southeast which were connected in 1999) and numerous smaller systems in isolated regions. Until 2007, transmission was almost exclusively under government control through both federal (Electrobras) and state companies (mainly Sao-Paulo-CTEEP, Minas Gerais-Cemig, and Parana-Copel). However, under the new sector regulatory model, there are about 40 transmission concessions in Brazil. Most of them are still controlled by the government, with subsidiaries under federal company Electrobras holding 69% of total transmission lines.

In 2010, there were 63 utilities with distribution concessions, all independent of state control. As of 2007, about 64% of Brazilian distribution assets were controlled by private sector companies.

Hydrocarbons and natural gas markets
Petrobras is the largest producer of oil and natural gas in Brazil. The company reportedly controls over 90% of Brazil’s natural gas reserves. Other important participants in the sector include Sulgas and Britain’s BG.

Structure / extent of competition: 

In 2003 the federal government started promoting some changes which encourage private sector access to the energy market.
A wholesale market wascreated in 1998. A “regulated” pool that buys power from generators and shares the costs between distributors under set prices was launched in 2004 together with a ‘free market’ where distributors and generators can negotiate their own contracts. Distributors buy electricity in the regulated pool via long-term contracts. Short-term differences between distributors’ actual demands and purchases in the ‘regulated’ pool can be negotiated in the ‘free market’. Big consumers can choose between buying directly in the ‘free market’ and buying indirectly in the ‘regulated’ pool through a distributor.
There are two major energy trading environments between generation and distribution. The Regulated Contracting Environment, where distribution companies need to purchase energy from generators through public auctions under cap prices set by government, and a Free Contracting Environment, where free consumers (non-captive) and generators can freely negotiate their own bilateral contracts.

Existence of an energy framework and programmes to promote sustainable energy: 

The Inter-American Development Bank (IDB), as of April 2008, was supporting several projects in the power sector in Brazil, notably the Renewable Energy Service Delivery Project: This project is a technical cooperation that seeks to implement several pilot projects on renewable energy services to isolated communities in Brazil.

Law No. 10,438, of April 26, 2002, created an incentive program for renewable energy called PROINFA (Programa de Incentivo às Fontes Alternativas de Energía), aimed at stimulating the development of wind, biomass and small hydro plant projects in Brazil. Such program provided for the guarantee of energy purchases by the state-owned corporation Eletrobrás, under 20-years’ power purchase agreements, at attractive prices and exemptions or discounts in the payment of certain power sector charges. At the same time, the Brazilian Development Bank - BNDES (Banco Nacional de Desenvolvimento Social e Econômico) and other financial institutions, made available to these projects, long-term credit facilities. PROINFA was originally conceived to include two phases, the first one having already taken place, representing 144 renewable energy projects.

In the first phase, the Program calls for the generation of 3,300 MW of renewable energy with a national business participation rate of 60%, aiming to maximize the country’s regional potentials, create jobs, reduce CO2 emissions through thermal (fossil) displacement, and promote energy contracts with differentiated conditions for conventional sources, as well as a specific tariff/MWh for each source. The second phase fixes a 90% nationalization rate and a 15% Brazilian electrical energy annual consumption rate to be supplied by these sources. The goals of this phase are expected to be reached within twenty years, and the price will be a weighted average between competitive hydroelectric and thermoelectric (natural gas) prices.

PROINFA as described in the Decree No. 5025, 2004, was established in order to increase the share of electricity produced by projects designed based on wind power, biomass and small hydro hydropower (SHP) in the National Interconnected System (SIN). According to Law No. 11,943 of May 28, 2009, the deadline for the start of operation of these projects ends on December 30, 2010.

As part of an overarching strategy to guarantee long-term economic growth, Brazil’s Government continues to focus heavily on investing in improving energy efficiency and sustainability. In this regard, Brazil’s National Development Bank - Banco Nacional de Desenvolvimento Economico e Social (BNDES), the Brazilian Innovation Agency - Financiadora de Estudos e Projetos (FINEP) and the National Agency for Electricity - Agencia Nacional de Energia Eletrica (ANEEL) announced in 2013 the launch of the Inova Energia Program (the “Inova Program” or the “Program”), which provides a series of subsidies and other incentives to assist Brazilian companies and technology institutes to develop and commercialize innovative technologies for the power sector, including solar power, smart grids and energy-efficient vehicles.

This article provides an overview of each of the three areas, namely (i) smart grids; (ii) solar and wind energy; and (iii) hybrid and energy efficient vehicles, which are expected to benefit from the Inova Program (each of these three areas are also referred to as “themes”). The article also briefly describes the goals established by the Brazilian Government for the implementation of the Program, and the current status of the Program.

The Alternative Energy Auction of July 2011 (Regulation Portaria MME 113 of Feb 1, 2011) authorises ANEEL, the national electricity regulator, to organise alternative energy auctions, and sets pre-qualification criteria for developers participating in the auctions. The Government has also sought to reform the biodiesel auction framework to include a resubmission procedure to stimulate competition, and an updated IT framework for ANEEL to process bids more efficiently, including a web-based bidding process.

Brazil has already awarded more than 3GW of renewables capacity in 2013, with 15GW of wind and 3GW of solar projects registered for November’s A-3 auction and more than 20GW of renewables projects competing in December’s A-5 tender. With average wind prices less than US$50/MWh, this is welcoming result for the fledgling solar sector along with possible solar-only auctions in 2014. More than 150 companies have entered the market in anticipation of a solar boom, though Government support remains critical.

Current energy debates or legislation: 

Major energy studies: 

IEA 2013 World Energy Outlook Chapter 10 – Brazil’s Energy Sector. (November 2013)

IEA Partner Country Series (2013): Energy Investments and Technology Transfer Across Emerging Economies: The Case of Brazil and China.

Role of government: 

The institution responsible for energy issues in Brazil is the Ministry of Mines and Energy (Ministerio de Minas e Energía –MME). This Ministry through the Secretary of Energy (Secretaria de Energía – SEN) formulates the guidelines and policies for the national energy sector and coordinates and supervises their execution.

Energy Planning is undertaken by Empresa de Pesquisa Energética (EPE). The final approval of Energy Planning is the responsibility of the National Council of Energy Policy (NCEP).

The Comitê de Monitoramento do Setor Elétrico (CMSE) monitors trends in power supply and demand. If any problem is identified, CMSE will propose measures to avoid energy shortages, such as special price conditions for new projects and a reserve of generation capacity. The Ministry of Mines and Energy host and chair this committee.

Government agencies in sustainable energy: 

The Ministry of the Environment holds the environmental responsibilities in Brazil. One of its associated institutions is Ibama, the Brazilian Institute for the Environment and Renewable Natural Resources, which is in charge of executing the environmental policies dictated by the Ministry.

The Power Research Company (EPE, was created in 2004 with the specific mission of developing an integrated long-term plan for the power sector in Brazil. Its work serves as input for the planning and implementation of actions by the Ministry of Energy and Mines in the formulation of the national energy policy.

Energy planning procedures: 

The Brazilian National Energy Plan for 2008-2017, recently published by the Ministry of Mines and Energy, aims at increasing the energy capacity from 99.7 MW to 154.7 MW.

The National Energy Plan for 2030 ( sets forth long-term government strategies to meet the country’s energy needs in a sustainable way.

The annual Ten Year Energy Development Plans work with macro-economic, environmental, social and technological variables to assess the most sustainable course of action to meet Brazil's future energy needs. The Plans indicate the appropriate deadlines for the implementation of new projects, and provide forecasts of supply and demand levels for the period covered.

Energy regulator Date of creation: 

National Electric Energy Agency (ANEEL) created in 1996.

National Agency of Petroleum, Natural Gas and Bio-diesel (ANP) created in 1997.

Degree of independence: 

The Board of the ANEEL is composed of five Directors, including a General Director appointed by the President after being approved by the Senate.

The Board of the National Agency of Petroleum, Natural Gas and Bio-diesel is composed of four members appointed by the President and ratified by the Congress.

Regulatory framework for sustainable energy: 

PROINFA is considered a milestone in the regulatory framework applicable to renewables in Brazil, and remains the dominant piece of legislation relating to renewable energy regulation.

Regulatory roles: 

National Electric Energy Agency (ANEEL):
Regulation of prices and other aspects of the electricity industry, concession granting for the operation of electricity companies, supervision of concession agreements.

National Agency of Petroleum, Natural Gas and Bio-diesel (ANP):
The ANP is responsible for all matters relating to the regulation of the upstream and downstream oil, natural gas and bio-diesel sectors, including an oversight role in the oil and gas bidding rounds.

Role of government department in energy regulation: 

Regulation of prices is delegated to the specific regulatory institutions in the electricity and petroleum industry.

Regulatory barriers: 



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