An evaluating of the regulation of Incentives for Alternative Electricity Sources in Brazil

Dr Élbia Melo, CCEE -Brazil

The reduction of the greenhouse gas emissions is one of the major challenges that has been faced by the humankind nowadays. This challenge is straight related to the electricity energy production, considering that this sector is in front line of the greenhouse gas emissions. In this sense, the search for alternative ways to produce electricity energy is one of the main objectives of the 21st century.

Brazil presents an unique scenery in the worldwide electricity industry. The Brazilian electricity generation matrix may characterize the power industry as a renewable one. The Brazilian interconnected system which accounts for about 98% of the Brazilian electricity market has an installed capacity of near 107 GW, with the hydro system responsible for 71% of the total installed capacity. Thermal generation main includes nuclear, natural gas, coal, oil plants and biomass.

When we focus on alternatives energy sources we figure out a huge unexploited potential in Brazil: 143.5 GW related to wind power and 12.3 GW related to small hydro plants. In the case of biomass source by sugar cane, we can see a rising potential in Brazil: 9,642 MW average (2013 year), 11,484 MW average (2016 year), followed by 14,379 MW average in 2021.

Although Brazil has a great hydro generation potential to explore (estimated in approximately 60% of the overall hydroelectricity potential), the cost of developing new hydro plant is rising. The remaining potential is mainly in Amazon region, far away from the major consumption markets, demanding substantial investment in transmission lines. Environmental licensing of hydro generation plants has faced severe environmental regulations and it is becoming a real and uncertain challenge to the governments and investors.

Due to these facts other expensive and more polluting sources of generation is becoming crucial to complement the energy supplying in Brazil such as coal, diesel, fuel-oil, and gas-fired power plants that are noted responsible of greenhouse gas emissions. This evidence has been proved from the results of the last new plants auctions, where the selling of these kinds of thermal plants was predominant.

Although Brazil, as a developing country, does not have commitments to reduce or limit its emissions of greenhouse gases, it gives full importance to the problem of the greenhouse gas emissions, considering that it is a crucial issue for the future generations of all nations. There are many programs in the country that result in a considerable reduction of greenhouse gas emissions.

This work aims at focusing on some discussions about the regulation of the alternative sources commercialization and some successful initiatives undertaken in Brazil that allows the reduction of the greenhouse gases emissions such as: the Program of Incentives for Alternative Electricity Sources (PROINFA), and more recently, the establishment of specific auctions for alternative energy and the creation of a incentivized market that considers a discount in the payments of the electricity transport tariffs for buyers and sellers of alternative sources.

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