BRAZIL POWER MARKET OUTLOOK TO 2025, UPDATE 2015 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

Transcription

1 REFERENCE CODE GDPE0782ICR PUBLICATION DATE M AY 2015 BRAZIL POWER MARKET OUTLOOK TO 2025, UPDATE 2015 MARKET TRENDS, REGULATIONS, AND COMPETITIVE LANDSCAPE

2 Executive Summary Brazil s Power Market Outlook Brazil s economy is one of the fastest growing in the world, and well-placed services, manufacturing, and agricultural sectors mean that it is the largest in South America. It has steadily stabilized its economy since the early 2000s, with Gross Domestic Product (GDP) growing from $XX billion in 2000 to $XX billion in 2014 at a Compound Annual Growth Rate (CAGR) of XX%. This has driven power consumption in the country, which also increased at a CAGR of XX% during the same period, from XX Terawatt hours (TWh) in the same period. Power Market, Brazil, Gross Domestic Product ($bn) and Annual Power Consumption (TWh), The increase in electricity consumption was a result of growth of the economy and the population. Annual electricity generation also increased during this period, from XX TWh in 2000 to XX TWh in 2014, 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 Source: GlobalData, Power Database [Accessed on April 28, 2015] GDP ($bn) Annual power consumption (TWh) Brazil derives the majority of its power requirements from hydropower, making use of its most abundantly available natural resource. In 2014, XX% of Brazil s total installed capacity was derived from hydropower. Thermal power from gas GDP (constant prices) Annual power consumption 2014 was the second largest source of power, with a XX% share in 2014, followed by biomass with XX% Source: GlobalData; IMF, 2014 and thermal oil power with XX%. Other technologies, such as onshore wind, thermal power from coal, nuclear power, biogas, and solar Photovoltaic (PV) contributed the remaining XX% of total installed capacity in

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, Opportunities Brazil, Power Market, Challenges Brazil, Power Market, Market Analysis Brazil, Power Market, Supply Structure Brazil, Power Market, Key Market Players Brazil, Power Market, Financial Deals Deal Volume and Value Analysis, 2004 March Deals by Type, Brazil, Power Market, Demand Structure Power Consumption by Sector, Brazil, Power Market, Regulatory Scenario Brazil, Power Market, Key Electricity Policies New Model Electricity Law New Electricity Market Regulations Continued Subsidy: Power Sector under Pressure Renewable Energy Development The Inova Program Brazil, Power Market, Capacity and Generation Overview

4 Table of Contents 6.1 Brazil, Power Market, Cumulative Installed Capacity by Fuel Type, 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 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

5 Table of Contents 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 ($bn), Population (million), and Annual Power Consumption (TWh), Table 2: Power Market, Brazil, Market Share of Power Generation Companies (%), Table 3: Power Market, Brazil, Deal Value ($bn) and Deal Volume, 2004 March Table 4: Power Market, Brazil, Deals by Type (%), Table 5: Power Market, Brazil, Annual Power Consumption (TWh), Table 6: Power Market, Brazil, Power Consumption by Sector (%), Table 7: Power Market, Brazil, Cumulative Installed Capacity by Fuel Type (%), Table 8: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Table 9: Power Market, Brazil, Leading Thermal Power Plants, Table 10: Power Market, Brazil, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Table 11: Power Market, Brazil, Leading Hydropower Plants, Table 12: Table 13: 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), Table 14: Power Market, Brazil, Leading Renewable Power Projects, Table 15: Power Market, Brazil, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Table 16: Power Market, Brazil, Transmission Line Length (Ckm), Table 17: Power Market, Brazil, Distribution Line Length (Ckm), Table 18: Power Market, Brazil, Annual Electricity Imports and Exports (TWh), Table 19: Power Market, Brazil, Centrais Eletricas Brasileiras S.A., SWOT Profile,

7 Table of Contents Table 20: Power Market, Brazil, Companhia Energetica De Minas Gerais, SWOT Profile, Table 21: Power Market, Brazil, Companhia Energetica de Sao Paulo, SWOT Profile, Table 22: Abbreviations List of Figures Figure 1: Power Market, Brazil, Gross Domestic Product ($bn), Population (million), and Annual Power Consumption (TWh), Figure 2: Power Market, Brazil, Market Share of Power Generation Companies (%), Figure 3: Power Market, Brazil, Deal Value ($bn) and Deal Volume, 2004 March Figure 4: Power Market, Brazil, Deals by Type (%), Figure 5: Power Market, Brazil, Annual Power Consumption (TWh), Figure 6: Power Market, Brazil, Power Consumption by Sector (%), Figure 7: Power Market, Brazil, Cumulative Installed Capacity by Fuel Type (%), Figure 8: Figure 9: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Power Market, Brazil, Cumulative Installed Thermal Capacity (GW) and Annual Thermal Power Generation (TWh), Figure 10: Power Market, Brazil, Cumulative Installed Hydropower Capacity (GW) and Annual Hydropower Generation (TWh), Figure 11: Power Market, Brazil, Cumulative Installed Nuclear Capacity (GW) and Annual Nuclear Power Generation (TWh), Figure 12: Power Market, Brazil, Cumulative Installed Renewable Capacity (GW) and Annual Renewable Power Generation (TWh), Figure 13: Power Market, Brazil, Annual Electricity Imports and Exports (TWh),

8 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 attracts the largest amount of Foreign Direct Investment (FDI) among the South American countries. The US is the primary investor in Brazil, but the government is endeavoring to strengthen existing trade relationships with other developing nations as part of Mercosur, a trade bloc of which Brazil, Argentina, Paraguay, Uruguay and Venezuela are members. In 2008, Mercosur entered into a free trade agreement with Israel, before entering into another with Egypt in Additionally, Brazil and China reached an agreement to trade in their local currencies to the equivalent of $XX billion per year in 2013 (Flak et al., 2013). With an estimated Gross Domestic Product (GDP) (at constant prices) of $XX billion in 2013, Brazil registered a GDP growth rate of XX%, in 2014, 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 However, it registered a comparatively rapid rate of recovery following the recession; a GDP growth rate of XX% was registered in 2010 (IMF, 2014). In 2014, 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%. The total value of Brazil s exports amounted to an estimated $242.7 billion in 2014, compared with $XX billion in 2013, an increase of XX%. 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, 2014). Economic and population growth have led to an increase in electricity consumption in Brazil. Annual electricity consumption increased at a Compound Annual Growth Rate (CAGR) of XX% between 2000 and 2014, and is expected to grow at a CAGR of XX% between 2015 and Hydropower is the source of the majority of the electricity generated in Brazil. 9

9 Introduction 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, both 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 also details electricity imports and exports and upcoming grid-related projects. Note: all 2014 market numbers provided in the report are estimates, except where actual data were available. 10

10 Market Analysis Deals by Type, 2014 Debt offerings were the preferred means of raising finance in 2014, and this type of financing accounted for XX% of the total deal value for this year, followed by asset transaction deals with XX%, acquisition deals with XX%, and equity offerings with XX%. There were also five partnership deals completed, which were of an undisclosed value. Figure 4: Power Market, Brazil, Deals by Type (%), 2014 Equity offerings Acquisition Debt offerings Asset transactions Source: GlobalData, Power Database [Accessed on April 27, 2015] Table 4: Power Market, Brazil, Deals by Type (%), 2014 Deal type Debt offerings Asset transactions Acquisition Equity offerings Source: GlobalData, Power Database [Accessed on April 27, 2015] Share 19

11 Capacity and Generation Overview 6.2 Brazil, Power Market, Cumulative Installed Capacity and Annual Power Generation, Brazil s cumulative installed capacity increased from XX GW in 2000 to XX GW in 2014 at a CAGR of XX%. This can be attributed to the growth witnessed in the renewable, thermal and hydropower sectors between 2000 and During the forecast period from 2015 to 2025, Brazil s cumulative installed capacity is expected to grow at a CAGR of XX% to XX GW. Although hydropower sources are expected to contribute the majority of Brazil s total installed capacity, the relative share held by these sources is expected to have declined to XX% by 2025, from the present share of XX%. This will be caused by increases in the contributions made by renewable energy, particularly wind plants. From 2015 to 2025, renewable power sources are expected to grow at a CAGR of XX%. The total amount of electricity generated in Brazil in 2014 amounted to an estimated XX TWh. Of this total, hydropower accounted for XX%, or XX TWh. Thermal power made the second highest contribution, accounting for a relatively low share of XX%, or XX TWh. Renewable and nuclear energy sources contributed respective totals of XX% or XX TWh, and XX% or XX TWh. Between 2015 and 2025, Brazil s total electricity generation is expected to increase at a CAGR of XX% to reach XX TWh. The share of hydropower generation is expected to decline to XX%, while the share of renewable power is expected to increase to reach XX%. 29

12 Capacity and Generation Overview Figure 8: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Cumulative installed capacity (GW) Annual power generation (TWh) Cumulative installed capacity Source: GlobalData, Power Database [Accessed on April 27, 2015] Annual power generation 30

13 Capacity and Generation Overview Table 8: Power Market, Brazil, Cumulative Installed Capacity (GW) and Annual Power Generation (TWh), Year Cumulative installed capacity Annual power generation Source: GlobalData, Power Database [Accessed on April 27, 2015] 31

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. 67

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. 9.2 Abbreviations Table 22: 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 EPE Empresa de Pesquisa Energética (Energy Research Company) FDI Foreign Direct Investment FINEP Financiadora de Estudos e Projetos (Brazilian Innovation Agency) GDP Gross Domestic Product GW Gigawatt 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) PV Photovoltaic SIN Sistema Interconectado Nacional (National Interconnected System) TWh Terawatt hour Source: GlobalData 68

16 Appendix 9.3 Bibliography Biller D and Lima MS (2012). Brazil Suffers Fifth Power Outage Since Crackdown on Utilities. BLOOMBERG. Available from: [Accessed on April 27, 2015] BNamericas (2013). Uruguay to begin Brazil power imports next year. BNamericas. Available from: [Accessed on April 28, 2015] BP (2014). BP Statistical Review of World Energy June 2014 [database]. British Petroleum. Available from: /BP-Statistical_Review_of_world_energy_2014_workbook.xlsx [Accessed on April 27, 2015] Brazil Windpower (2014). Why Making Part of Brazil Windpower 2014? Brazil Windpower. Available from: [Accessed on April 26, 2015] CIA (2014). Brazil: The World Factbook. Central Intelligence Agency. Available from: [Accessed on April 28, 2015] 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. Available from: [Accessed on April 28, 2015] Goy L and Soto A (2014). UPDATE 1-Brazil power regulator proposes rate hike; may stoke inflation. Thomson Reuters. Available from: [Accessed on April 28, 2015] 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 April 28, 2015] 69

17 Appendix IMF (2014). World Economic Outlook Database, October 2014 [database]. International Monetary Fund. Available at: [Accessed on April 28, 2015] Jiménez R et al. (2014). Sizing Electricity Losses in Transmission and Distribution Systems in Latin America and the Caribbean. Inter-American Development Bank. Available from: Lima MS (2013). Brazil Energy Auction Sells 2.3 Gigawatts of Wind-Power Projects. Bloomberg. Available from: [Accessed on April 26, 2015] Norton Rose Fulbright (2013). The Inova Energia Program Promoting Energy Efficiency and Renewable Energy in Brazil. Norton Rose Fulbright. Available from: [Accessed on April 26, 2015] Orihuela R (2013). Brazil's Cheaper Electricity Comes at a Cost. Bloomberg. Available from: [Accessed on April 27, 2015] Soto A (2014). Update 1 Brazil spending on power generation may stretch budget. Thomson Reuters. Available from: [Accessed on April 27, 2015] 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. 70

18 Appendix Coverage This report covers Brazil s power market, examining the market structure and providing historical 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, ministry websites, industry associations, the World Bank, IMF, and statistical databases Company websites, annual reports, financial reports, analyst 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 2025, analyzing factors such as: Macro-economic scenario Government regulations, policies and targets Government and private sector investment Contract and deal announcements Utility expansion plans The sector s historical 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 71

19 Appendix 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 power producers, 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 spokespersons. 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. 72