BRAZIL POWER MARKET OUTLOOK TO 2030, UPDATE 2014 MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0709ICR PUBLICATION DATE M ARCH 2014 BRAZIL POWER MARKET OUTLOOK TO 2030, UPDATE 2014 MARKET TRENDS, REGULATIONS AND COMPETITIVE LANDSCAPE

2 Executive Summary Hydropower is the Dominant Source of Power in Brazil Brazil derives the majority of its power requirements from hydropower, making use of its most abundantly available natural resource. In 2013, XX% of Brazil s total installed capacity was derived from hydropower. Thermal power from gas was the second largest source of power, with a XX% share of installed capacity in 2013, followed by biomass with XX% and thermal oil power with XX%. Other technologies, such as onshore wind, thermal power from coal, and nuclear power, biogas, and solar Photovoltaic (PV) contributed the remaining XX% of total installed capacity in Power Market, Brazil, Cumulative Installed Capacity by Type of Fuel (%), 2013 Wind (onshore) Oil (thermal) Biomass Coal (thermal) Nuclear Other renewables such as biogas and solar PV Continued Increase in Electricity Consumption and Generation Annual electricity consumption in Brazil increased at a Compound Annual Growth Rate (CAGR) of XX% from XX Terawatt hours (TWh) in 2000 to XX TWh in The increase in electricity consumption was a result of the growth of the economy and of the population. Annual electricity generation also increased during this period, from XX TWh in 2000 to XX TWh in 2013 at a CAGR of XX%. Power Market, Brazil, Annual Power Consumption and Generation (TWh), Annual power consumption and generation (TWh) Annual power consumption Annual power generation Gas (thermal) Hydropower Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on February 28, 2014] Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on February 28, 2014] Renewables to Account for More than XX% of Brazil s Generation Capacity by 2030 Brazil s renewable power sector is expected to grow tremendously, especially in the wind, biomass, and solar energy segments, as a result of government initiatives and increased private sector participation. Wind energy development has gained prominence in the Brazilian power market 2

3 Table of Contents 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Brazil, Power Market, Snapshot Brazil, Power Market, Macro-economic Factors Brazil, Power Market, Supply Security Brazil, Power Market, Generation Infrastructure Brazil, Power Market, Transmission Infrastructure Brazil, Power Market, Opportunities Brazil, Power Market, Challenges Brazil, Power Market, Market Analysis Brazil, Power Market, Supply Structure Brazil, Power Market, Key Market Players Financial Performance Key Financial Ratios and Inference Brazil, Power Market, Financial Deals Deal Volume and Value Analysis, Deals by Type, Brazil, Power Market, Demand Structure Electricity Consumption by Sector, Brazil, Power Market, Regulatory Scenario Brazil, Power Market, Key Electricity Policies New Model Electricity Law

4 Table of Contents New Electricity Market Regulations Continued Subsidy: Power Sector under Pressure Renewable Energy Development The Inova Program Brazil, Power Market, Foreign Investment Scenario Brazil, Power Market, Capacity and Generation Overview Brazil, Power Market, Cumulative Installed Capacity, Breakdown by Type of Power Plant, Brazil, Power Market, Cumulative Installed Capacity and Annual Power Generation, Cumulative Installed Thermal Capacity and Annual Thermal Power Generation, Cumulative Installed Hydropower Capacity and Annual Hydropower Generation, Cumulative Installed Nuclear Capacity and Annual Nuclear Power Generation, Cumulative Installed Renewable Capacity and Annual Renewable Power Generation, Brazil, Power Market, Transmission and Distribution Overview Brazil, Power Market, Transmission Overview Brazil, Power Market, Distribution Overview Brazil, Power Market, Grid Interconnection Future Developments in International Interconnections Electricity Import and Export Trends, Brazil, Power Market, Electricity Trading Brazil, Power Market, Competitive Landscape: Snapshot of Top Power Generating Companies Key Company in the Brazil Power Market Centrais Eletricas Brasileiras S.A Company Overview

5 Table of Contents Business Description SWOT Overview Key Company in the Brazil Power Market Companhia Energetica de Minas Gerais Company Overview Business Description SWOT Overview Key Company in the Brazil Power Market Companhia Energetica de Sao Paulo Company Overview Business Description SWOT Analysis Appendix Market Definitions Power Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary Research and Analysis Primary Research and Analysis Disclaimer

6 Table of Contents 1.1 List of Tables Table 1: Power Market, Brazil, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), Table 2: Power Market, Brazil, Market Share of Power Generation Companies (%), Table 3: Power Market, Brazil, Selected Financial Ratios, Eletrobras, 2012, Table 4: Power Market, Brazil, Deal Value ($bn) and Deal Volume, Table 5: Power Market, Brazil, Deals by Type (%), Table 6: Power Market, Brazil, Annual Power Consumption (TWh), Table 7: Power Market, Brazil, Electricity Consumption by Sector (%), Table 8: Power Market, Brazil, Foreign Direct Investment ($bn), Table 9: Power Market, Brazil, Cumulative Installed Capacity by Fuel Type (%), Table 10: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 11: Power Market, Brazil, Leading Active Thermal Power Plants, Table 12: Power Market, Brazil, Leading Upcoming Thermal Power Plants, Table 13: Power Market, Brazil, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Table 14: Power Market, Brazil, Leading Active Hydropower Plants, Table 15: Power Market, Brazil, Leading Upcoming Hydropower Plants, Table 16: Power Market, Brazil, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Table 17: Power Market, Brazil, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Table 18: Power Market, Brazil, Leading Active Renewable Power Plants,

7 Table of Contents Table 19: Power Market, Brazil, Leading Upcoming Renewable Power Plants, Table 20: Power Market, Brazil, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Table 21: Power Market, Brazil, Transmission Line Length (Ckm), Table 22: Power Market, Brazil, Distribution Line Length (Ckm), Table 23: Power Market, Brazil, Annual Electricity Imports and Exports (TWh), Table 24: Power Market, Brazil, Centrais Eletricas Brasileiras S.A., SWOT Profile, Table 25: Power Market, Brazil, Companhia Energetica De Minas Gerais, SWOT Profile, Table 26: Power Market, Brazil, Companhia Energetica de Sao Paulo, SWOT Profile, Table 27: Abbreviations

8 Table of Contents 1.2 List of Figures Figure 1: Power Market, Brazil, Gross Domestic Product ($bn) and Population (million), Figure 2: Power Market, Brazil, Annual Power Consumption (TWh), Figure 3: Power Market, Brazil, Market Share of Power Generation Companies (%), Figure 4: Power Market, Brazil, Deal Value ($bn) and Deal Volume, Figure 5: Power Market, Brazil, Deals by Type (%), Figure 6: Power Market, Brazil, Annual Power Consumption (TWh), Figure 7: Power Market, Brazil, Electricity Consumption by Sector (%), Figure 8: Power Market, Brazil, Cumulative Installed Capacity by Fuel Type (%), Figure 9: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Figure 10: Figure 11: Figure 12: Power Market, Brazil, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Power Market, Brazil, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Power Market, Brazil, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Figure 13: Power Market, Brazil, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Figure 14: Power Market, Brazil, Annual Electricity Imports and Exports (TWh),

9 Introduction 2 Introduction Brazil, which is a developing country with well-established agricultural, manufacturing and service sectors, is the largest and the most populous country in South America, and one of the fastest growing countries in the world. It has a democratic republican form of government, with a presidential system in place, and is a founding member of the United Nations, the G20, the Latin Union, the Organization of Ibero-American States, the Organization of American States, Mercosur, and the Union of South American Nations. The Brazilian economy is fairly liberal, and it attracts the largest amount of Foreign Direct Investment (FDI) among the South American countries. The US continues to be the primary investor in Brazil. The government is also endeavoring to strengthen existing trade relationships with other developing nations as part of Mercosur, a trade bloc of which Argentina, Brazil, Paraguay, Uruguay and Venezuela are members. In 2008, Mercosur entered into a free trade agreement with Israel, before entering into another with Egypt in Brazil and China recently reached an agreement to trade in their local currencies to the equivalent of $XX billion per year (Flak et al., 2013). With an estimated Gross Domestic Product (GDP) of $XX billion in 2013, Brazil registered a GDP growth rate of XX%, in 2013, and XX% between 2000 and The country s economy was affected by the global economic recession in 2008, which resulted in a negative annual growth rate of XX% for Following this, it registered a comparatively rapid rate of recovery following the recession. A GDP growth rate of XX% was registered in 2010 (IMF, 2013). In 2012, the services sector contributed the majority share of GDP, with an estimated XX%, followed by the industry sector with XX% and the agricultural sector with XX% (CIA, 2013). The total value of Brazil s exports amounted to an estimated $XX billion in 2012 compared with $XX billion in 2013, a reduction of XX% (MDICE, 2014). The country s major export items include aircraft, electrical equipment, automobiles, ethanol, textiles, footwear, iron ore, steel and coffee. Its major export markets are China, the US and Argentina (CIA, 2013). Economic growth and the growth of the population have led to an increase in electricity consumption in Brazil. Annual electricity consumption increased in size at a Compound Annual Growth Rate (CAGR) of XX% between 2000 and 2013 and is expected to grow at a CAGR of XX% 10

10 Introduction between 2014 and Hydropower is the source of the majority of the electricity generated in Brazil. The Ministry of Mines and Energy (MME) is responsible for overseeing the electricity sector in Brazil. The Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica: ANEEL) is a regulatory authority that functions under the supervision of MME. On August 16, 2004, the Brazilian government created the Energy Research Company (Empresa de Pesquisa Energética: EPE), a federal public company responsible for carrying out studies and research in the strategic energy sector. The unbundling and privatization of the electricity sector took place in GlobalData Report Guidance The report opens with an executive summary that captures the key growth trends in the Brazilian power market. Chapter three provides a snapshot of the key parameters affecting the power sector in Brazil and key points about the Brazilian power market. Chapter four provides a power market analysis for Brazil. Chapter five details the regulatory scenario of the power market and the inward foreign investment scenario in Brazil. Chapter six provides information regarding Brazil s cumulative installed capacity and annual generation trends as a whole and also by individual generation source. Chapter seven describes Brazil s power transmission and distribution infrastructure and includes information on interconnectors with neighboring countries. The section details electricity imports and exports and upcoming grid-related projects. Note: all 2013 market numbers provided in the report are estimates, except where actual data were available. 11

11 Brazil, Power Market, Market Analysis 4.4 Brazil, Power Market, Demand Structure Annual electricity consumption in Brazil increased from XX TWh in 2000 to XX TWh in 2013 at a CAGR of XX%. Between 2014 and 2030, the CAGR is expected to amount to XX%, with annual consumption increasing from XX TWh in 2014 to XX TWh in The increase in the rate of growth in annual consumption in the forecast period is expected to be driven by the high usage of electrical appliances by the residential sector and the growing national population. As a result, the government is now focusing on the expansion of its generation capacity, particularly hydropower capacity, in order to meet increasing power demand. Figure 6: Power Market, Brazil, Annual Power Consumption (TWh), Annual power consumption (TWh) Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on February 26, 2014] 23

12 Brazil, Power Market, Market Analysis Table 6: Power Market, Brazil, Annual Power Consumption (TWh), Year Annual power consumption Source: GlobalData, Power etrack, Capacity and Generation Database [Accessed on February 26, 2014] 24

13 Brazil, Power Market, Market Analysis Electricity Consumption by Sector, 2013 The industrial sector was the largest power consuming sector in Brazil, accounting for an estimated XX% share of total electricity consumption in 2013, followed by the residential sector with XX%. Trade, commerce, and other services contributed a further XX% of the total consumption in 201, followed by the agriculture and transport sectors with respective XX% and XX% shares. The remaining XX% was accounted for by other sectors such as the energy sector and public utilities. Figure 7: Power Market, Brazil, Electricity Consumption by Sector (%), 2013 Other Transport Agriculture Industrial Trade, commerce, and other services Source: GlobalData; MME, 2013 Residential Table 7: Power Market, Brazil, Electricity Consumption by Sector (%), 2013 Sector Industrial Residential Trade, commerce, and other services Agriculture Transport Other Source: GlobalData; MME, 2013 Electricity consumption 25

14 Appendix 9 Appendix 9.1 Market Definitions Power Power refers to the rate of production, transfer or energy use, usually related to electricity. It is measured in Watts (W) and often expressed in kilowatts (kw) or Megawatts (MW). It is also known as real power or active power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer, or the maximum rated output of a generator under given conditions. It is given in Megawatts (MW) on a nameplate affixed to the generator Electricity Generation Electricity generation refers to the process of generating electricity from other forms of energy. It also refers to the amount of electricity produced, expressed in Gigawatt hours (GWh) Electricity Consumption Electricity consumption is the sum of electricity generated, plus imports, minus exports and transmission and distribution losses. It is measured in Gigawatt hours (GWh) Thermal Power Plant A thermal power plant is a plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A hydropower plant is a plant in which the turbine generators are driven by falling water Nuclear Power Nuclear power is the energy released from the fission of nuclear fuel in a reactor. 73

15 Appendix Renewable Energy Resources Renewable energy resources are those that provide energy that is naturally replenished but limited in the amount of energy available per unit of time. Biomass, geothermal, solar, small hydro and wind are examples of renewable resources. 74

16 Appendix 9.2 Abbreviations Table 27: Abbreviations ACL Ambiente de Contratação Regulada (Regulated Contract Environment) ACR Ambiente de Contratação Livre (Non-regulated Contract Environment) ANEEL Agência Nacional de Energia Elétrica (Brazilian Electricity Regulatory Agency) BNDES Banco Nacional de Desenvolvimento Econômico e Social (National Development Bank) BRIX Brazilian Intercontinental Exchange CAGR Compound Annual Growth Rate CCEE Câmara de Comercialização de Energia Elétrica (Electric Energy Commercialization Chamber) CCGT Combined Cycle Gas Turbine Ckm Circuit kilometer CN Concrete Cogen Cogeneration EPE Empresa de Pesquisa Energética (Energy Research Company) ER Rock Fill FDI Foreign Direct Investment FINEP Financiadora de Estudos e Projetos (Brazilian Innovation Agency) G20 Group of 20 GDP Gross Domestic Product GW Giga Watt GWh Gigawatt hour HVDC High Voltage Direct Current kv kilovolt MME Ministry of Mines and Energy MW Megawatt ONS Operador Nacional do Sistema Elétrico (National Grid Operator) PG Gravity Dam PV Photovoltaic SIN Sistema Interconectado Nacional (National Interconnected System) TE Earth Fill TWh Terawatt hour Source: 9.3 Bibliography Biller, D and Lima, MS (2012). Brazil Suffers Fifth Power Outage Since Crackdown on Utilities. BLOOMBERG L.P., October 26, Available from:

17 Appendix 10-26/brazil-suffers-fifth-power-outage-since-crackdown-on-utilities.html [Accessed on February 27, 2014] BNamericas (2013). Uruguay to begin Brazil power imports next year. BNamericas, April 22, Available from: [Accessed on: February 18, 2014] BP (2013). BP Statistical Review of World Energy June 2013 [database]. British Petroleum. Available from: Review/statistical_review_of_world_energy_2013_workbook.xlsx [Accessed on February 26, 2014] Brazil Windpower. (2014). WHY MAKING PART OF BRAZIL WINDPOWER 2014? Brazil Windpower. Available from: [Accessed on February 26, 2014] CIA (2013). Brazil: The World Factbook. Central Intelligence Agency. Available from: [Accessed on February 18, 2014] EIA (2013a). Total Electricity Imports: Brazil [Database]. US Energy Information Administration. Available from: itlestr=total%20electricity%20imports%20(billion%20kilowatthours)&syid=2000&eyid=2012&f orm=&defaultid=0&typeofunit=stdunit&unit=bkwh&products= [Accessed on February 18, 2014]. EIA (2013b). Total Electricity Exports: Brazil [Database]. US Energy Information Administration. Available from: itlestr=total%20electricity%20exports%20(billion%20kilowatthours)&syid=2000&eyid=2012&f orm=&defaultid=0&typeofunit=stdunit&unit=bkwh&products= [Accessed on February 18, 2014] Flak, A et al. (2013). BRICS members China and Brazil agreed on Tuesday to trade in their own currencies the equivalent of up to $30 billion per year, moving to take almost half of their trade exchanges out of the U.S. dollar zone. Thomson Reuters, March 26, Available 76

18 Appendix from: [Accessed on February 28, 2014] Goy L. and Soto A. (2014). UPDATE 1-Brazil power regulator proposes rate hike; may stoke inflation, Thomson Reuters, February 11, Available from: [Accessed on: February 12, 2014]. IDB (2013). Four energy companies, the AFD, and the IDB agree to explore electricity interconnection of Northern Arc countries. Inter-American Development Bank, March 15, Available from: [Accessed on: February 14, 2014] IMF (2013). World Economic Outlook Database, October 2013 [database]. International Monetary Fund. Available at: [Accessed on February 18, 2014] Lima MS (2013). Brazil Energy Auction Sells 2.3 Gigawatts of Wind-Power Projects. Bloomberg L.P., December 13, Available from: [Accessed on: February 26, 2014] MercoPress (2014). Brazil current account deficit ended 2013 at its widest in twelve years. MercoPress, January 28, Available from: [Accessed on: February 14, 2014] MME (2013). BALANÇO ENERGÉTICO NACIONAL. Ministério de Minas e Energia. Available from: _Ano_Base/1_-_BEN_Portugues_-_Inglxs_-_Completo.pdf MDICE (2014). Balança Comercial Brasileira, Ministério do Desenvolvimento, Indústria e Comércio Exterior. Available from: Norton Rose Fulbright (2013). The Inova Energia Program Promoting Energy Efficiency and Renewable Energy in Brazil. Norton Rose Fulbright, May Available from: 77

19 Appendix [Accessed on: February 14, 2014] OECD (2013). FDI in Figures, April Organization for Economic Cooperation and Development. Available from: Orihuela R. (2013). Brazil's Cheaper Electricity Comes at a Cost, Bloomberg L.P., February 7, Available from: [Accessed on: February 12, 2014]. Soto A. (2014). UPDATE 1-Brazil spending on power generation may stretch budget, Thomson Reuters, February 7, Available from: [Accessed on: February 12, 2014]. 78

20 Appendix 9.4 GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with advanced statistical expertise and marketing, market research and consulting backgrounds in the energy industry. GlobalData adheres to the codes of practice of the Market Research Society ( and Strategic and Competitive Intelligence Professionals ( All of GlobalData s databases are continuously updated and revised. The following methodology has been followed for the collection and analysis of data presented in this report Coverage This report covers Brazil s power market, examining the market structure and provides historical and providing generation, capacity and consumption forecasts until It also looks at the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects Secondary Research and Analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank and statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature GlobalData s proprietary databases such as the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database Further to this, the following secondary information is collected and analyzed to project Brazil s power market scenario to 2030, analyzing factors such as: Macro-economic scenario Government regulations, policies and targets Government and private sector investment 79

21 Appendix Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations Primary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify the market numbers obtained through secondary research and obtain first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include but are not limited to C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials and industry spokespeople. 80

22 Appendix 9.5 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. This report is a licensed product and should not to be reproduced without prior permission. 81