Transcript Slide 1

19th World Energy Congress – 2004
Round Table 1 – Non Fossil Fuels:
Will They Deliver?
Jerson Kelman
President, Brazilian Water Agency - ANA
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Area: 8,5 million km2
Hydrological variability
Federative Republic:
- 26 States + 01 Federal District
- 5,561 Municipalities
13 River major basins
BRAZIL
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BRAZILIAN POWER SYSTEM
 Hydroelectric share:
90% of 85,000 MW
96 Hydropower plants > 30 MW
57 Regulating reservoirs
 Hydropower plants and regulating
Thermal power plant
Hydro power plant
reservoirs in the same river basin
are owned by different companies
 Country is interconnected by 80,000
km of high-voltage lines
 Centralized energy dispatch
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FIRST POWER SECTOR REFORM (1996)
Rationale:
– Public sector had no $ to invest
– Promote economical efficiency
Guidelines:
– Private investment and competition in energy
generation and retailing
– Transmission and distribution would remain
regulated, with provisions for open access
– Short-term energy prices would provide the
signals for new investment
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FIRST POWER SECTOR REFORM (1996)
Reforms based on the same principles
had worked in countries based on thermal
production.
Would it work in a country like Brazil,
based on hydro?
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SOUTH-SE System
Energy Wholesale Market Prices (US$ / MWh)
350
300
US$/MWh
250
Problem: spot prices are usually too
low; when they increase sharply, it is too
late for new investments
200
150
100
50
0
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FIRST POWER SECTOR REFORM (1996)
The reform process failed to provide the
required incentive for the construction of
additional generation capacity
(Partly) because of this market failure, the
country faced a severe rationing in 20012002
20% reduction on overall electricity
consumption, for nine months
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SECOND POWER SECTOR REFORM (2004)
• Under the new regulation, distribution
companies contract new capacity five years
in advance, through a public auction scheme:
– 20-year contracts are offered
– Selection is based on smallest tariff
• The awarded contract gives security to
investors and serves as a guarantee for the
project finance
• In the coming months, electricity produced
by existing hydro power plants (~55,000 MW)
will be auctioned
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Which are the alternatives to increase electricity
production?
Estimated cost of new electric energy (US$/MWh)
Hydro
34
Thermal (gas fired)
40
Sugarcane biomass
40
Wind*
70
* Brazilian Government provides subsidies
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1.0
3.6
0.8
70%
72%
North
America
Europe
Asia
21%
Africa
1.0
South
1.6 America
33%
6%
The use of hydro
power potential
Potential (millions Gwh/year)
Used
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Amazon Region
12
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ENVIRONMENTAL MANAGEMENT
Concern: The social and environmental impacts
caused by large hydroelectric projects
implemented in the 70s and 80s. What’s new?
Methodology to screen out, at the river basin
scale, the sites for construction of hydroelectric
power plants which would not be social or
environmentally feasible.
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ENVIRONMENTAL MANAGEMENT
• Brazil needs to ensure a sustainable growth
of energy supply.
• Hydroelectricity cannot be spared.
• The strategy is to select a set of sites that
would cause minimum environmental and
social impacts.
• However, we are not seeking for a set that
would cause no impact.
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SUGAR CANE IN BRAZIL
• 5 millions of hectares
• Sugar cane: 360 millions tons/year
• Ethanol: 14 million m3/year
• Cars run with 75% gas and 25% ethanol
• Flex fuel
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SUGAR CANE IN BRAZIL
• Power produced by sugar cane biomass:
2,100 MW (2/3 self consumption)
• Share of electricity surplus can be
increased through the use of better
technology
• Total reduction of CO2: 46 million tons/year
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