Transcript Renewable Energy Policy Brazil

Renewable Energy Policy
Brazil
Claudia do Valle
[email protected]
Background in Renewable Policy - Brazil
1940
1970
1980
1990
2000
2004
TOTAL – 106 tep
23,7
66,9
114,7
141,9
190,6
213,4
Non renewable (%)
12,8
41,6
54,3
50,9
59
56,1
Oil (%)
6,4
37,7
48,3
40,7
45,5
39,1
-
0,3
1,0
3,1
5,4
8,9
6,4
3,6
5,1
6,7
7,1
6,7
-
0,0
0,0
0,4
0,9
1,5
Renewable (%)
87,2
58,4
45,7
49,1
41
43.9
Hydraulic (%)
1,5
5,1
9,6
14,1
15,7
14,4
Wood and charcoal (%)
83,3
47,6
27,1
20,1
12,1
13,2
Sugar cane (%)
2,4
5,4
8,0
13,4
10,9
13,5
-
0,3
0,9
1,5
2,3
2,7
Natural Gas (%)
Coal (%)
Nuclear and others (%)
Others (%)
Background in Renewable Policy –
Alcohol Program
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Alcohol program – ambitious program lauched by the
Brazilan government in the seventies
Gained momentum in the eighties
Faced some problems in the nineties due
international price of sugar and reduced oil price
All gasoline in the country is blended with anhydrous
ethanol (20 to 26%)
3.5 millions cars run on pure hydrated ethanol (2004)
Alcohol Program - recently
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The new technology Flex Fuel and the oil
prices opened a new perspective for
Brazilian domestic market
Also, the Kyoto Protocol and the
commitments to reduce GHG caused a
“boom” in the alcohol market – mainly
focusing the international market (exporting)
Alcohol Program - recently
2005,
Production: 16 million m3
Capacity: 18 million m3
Plants:313
2,7 million hectare

Up to 2010
Investments of 10 billion dolar
89 new plants
Plus 8 million m3 of alcohol
Plus 2 million hectare
Country area: 851
Cultivable area: 383
Available: 91
Cultivated area for ethanol: 3
(million hectare)
Background in Renewable Policy
Hydropower
100
500
90
450
80
400
70
350
60
300
50
250
40
200
30
150
20
100
10
50
0
0
1970
1980
Hidro
1990
Termo
2000
Importada
2002
TWh
2005
TWh
(%)
Eletricity supply - Brazil
Hydropower - recently
New Power Sector Regulations (NPSR)– replaced
the wholesale energy market by a pool of consumer
power distribution concessionaires, wo are forced to
purchase new generation capacity in order to meet
the forecasted market growth
 Public biddings
 The guiding principles of theNPSR:
Recognize hydropower as the major source for
expanding electricity services

Recents Developments - Biodiesel
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Discussed since 2003
Biodiesel Program lauched December 2004
aiming to add 2% of biodiesel to diesel oil
(reaching 5% in 2013)
The program intends: Income and Job
generation focusing on family agriculture
production, particularlyin North-east region of
Brazil
Recents Developments - Biodiesel
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Tributary model established to promote social inclusion by the
production of social biodiesel from family agriculture
Tax incentives - (100% North and North-East regions from
family production; 70% other regions)
Social label – Just companies that have this seal can
participate in the auction (50% raw material from family
agriculture in North-East and Semi-Arid regions; 30% SouthSouth-East; 10% North and Middle -West
Despite Brazilian biodiesel presently having no possibilities of
entering in the European Markets, it has na enourmeous
potential in the intenal market and for exporting to countries that
have no appropriate lands
Recents Developments - Biodiesel
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Four auction – corresponding to 840 million
liters to be supplied in 2007
Petrobrás intends to contruct 3 plants in
North-East and Semi Arid region using raw
material from family agriculture – each plant
has the potential of producing 50,000 ton of
vegetable oil and include 483 municipalities
Renewable Energy Source in the
Electricity Sector
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The use of RES-E in the electricity sector such as
SHP, wind and New Biomass is small, when we
consider the huge existing potential
The small share of RES can be related to the high
generation cost of these sources when compared to
hydropower and thermopower. Furthermore
promoting RES-E still has face the challenge of the
country’s huge hydropower potential - only 26% or
the brazilian hydro potential is currently being utilized
– but most of them is located in the Amazon region –
where no studies are available to assess the share
of the hydro potential that is really feasible, bearing
in mind possible environmental impacts and the
distance from generation to consumption markets
Renewable Energy Source in the
Electricity Sector: PROINFA
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The more important regulatory framework for RES-E
was the approval of Law 10,438/2002 establishing
PROINFA – that aims to increase the share of wind,
power, biomass energy and SHP) in the supply of
the Brazilian grid system.
PROINFA is divided in two phases:
PROINFA 1 – intends to add 3,300 MW RES-E
(equally divided among wind, biomass, SHP) to the
interconnected system – by 2008.
Similar to feed-in systems – fixed premium price
established by Law with a cap of 3,300 MW
PROINFA 1
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As biomass sector resisted to participate in
PROINFA 1 (It does not appear too biomass
projects) the RES-E potential was re-divided
between Wind and SHP (1422 MW wind, 1191 MW
SHP and 685 MW biomass from bagasse)
144 contracted projects – but up to now only two
wind energy projects (a total of 200 MW) and about
300 MW from SHP began their construction phases
PROINFA 2
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PROINFA’s second phase was projected to
ensure that after 20 years, wind energy,
biomass and SHP would supply 10% of the
annual electric power consumption of Brazil.
Public calls for bids would be made ensuring
that a minimum of 15% of the annual power
market growth would be supplied from these
three sources.
PROINFA 2
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As the law that launched PROINFA was an initiative
of the previous government, the new regulations of
the power sector, introduced by the new
administration that took office in 2003, changed
PROINFA 2. A possibility being considered is that
new renewable energy (biomass, wind and SHP)
enter in the power pool and their additional cost be
diluted through the average energy price in such a
way that the average price of energy for end
consumers should increase up to a cap of 0.5%
(annual) and 5% in the periodo (20 years).
In this way, the promotion instruments will change
from Feed-in system to a tendering system
Barriers
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Premium price insufficient to remunerate
biomass electricity generation – In fact the
amount negotiated (price) in the electricity
auction (electricity pool) for thermopower
was higher than the premium price
established in PROINFA for biomass. And, in
this case, the biomass producers
(entrepreneurs) preferred to offer biomass
electricity in the pool of conventional
electricity (auction)
Barriers
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Initially, the wind energy producers also complained
about Proinfa’s premium price, but since last year
the “exchange” is positive for Brazilian currency, and
then, there has been no more complains. Anyway
there is still risk of not commissioning of some
projects due financial and investments constraint.
Also due efficiency, because of the selection criteria
was by the date of environmental license - what
favored projects with a low capacity factor.
Uncertainty of PROINFA 2, which does not attract
new investments as establishment of wind energy
manufacturers in Brazil.
Perspective for RES-E in Brazil
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PROINFA was adopted during a political period that
was favorable to expanding the use of RES with the
aim of making the best use of the Brazilian potential
of these sources, disseminate the technology
nationwide and, encouraged mainly by some pilotprojects in wind energy in the northeast of Brazil and
in the use of sugarcane bagasse in the sugar-alcohol
industry. Further contributing to this scenario were
the difficulty in obtaining credit for the construction of
large hydropower plants, the price of the natural gas
imported from Bolivia, the global trend, particularly
European, of supporting clean energies, and the
concerns related to the Kyoto Protocol.
Perspective for RES-E in Brazil

Nevertheless, there is always a basic question when
thinking about the Brazilian case: How strongly do
the government and policy makers really want to
promote RES-E? With the adoption of the New
Power Sector Regulations and the tendency of RESE entering into the Pool and participating in the
tendering procedures only the most competitive
sources will be able to take a share of this market.
This can be true if we see the price of thermopower
in the new energy auction and considering some of
the existing incentives for SHPs (outside PROINFA).
But, mainly wind energy will suffer a major negative
impact and will have problems ti ensure its economic
feasibility.
Conclusion
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Large hydropower – main electricity source in the
NPSR
Ethanol – Increasingly production
Biodiesel – Market being structured
RES-E
Biomass from sugar cane can participate in the
competitive market
SHP – there are incentives outside PROINFA
Wind - the price is still not competitive and will suffer
if the government do not establish a clear policy to
this source
1.200
1.000
TWh
800
600
400
200
0
2006
2008
2010
2015
2018
Hidro
PCH fora PROINFA
Termo
Biomassa fora PROINFA
importação
Outras
PROINFA 1
PROINFA 2
2022
2027
Simulações PROINFA 1 e 2
2008-2027
14,00
12,00
8,00
6,00
4,00
2,00
Cenário 2
Cenário 2A
20
26
20
24
20
22
20
20
20
18
20
16
20
14
20
12
20
10
0,00
20
08
(%)
10,00
Cenário 2B
Simulações PROINFA 1 e PROINFA 2
(somente energia eólica e PCH)
12,00
10,00
6,00
4,00
2,00
0,00
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
(%)
8,00
Cenário 3
Cenário 3A
Cenário 3B
Simulações do PROINFA 1 e PROINFA 2
(somente com geração de energia eólica)
8,00
7,00
6,00
4,00
3,00
2,00
1,00
Cenário 4
Cenário 4A
20
26
20
24
20
22
20
20
20
18
20
16
20
14
20
12
20
10
0,00
20
08
(%)
5,00
Cenário 4B
Simulações do "preço premium" PROINFA 1 e 2
para que o impacto ao consumidor final não
ultrapasse 5%
6,00
5,00
4,00
3,00
2,00
1,00
Cenário 3D (variação de 1,8%)
2027
2026
2025
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
0,00
Cenário 4D (variação de 3,6%)