Brazil is heavily dependent on hydroelectric power. In 2006, 9l.9% of the electric power produced in the country was from hydro. Thermal sources contributed the other 8.1%: nuclear energy 3.3%; natural gas 3.1%; coal 1.6%; and the various oil by-products the rest.

The predominance of hydroelectricity in Brazil is unique in the world. It is a gift of nature, but in some respect a curse, as it at the mercy of nature’s whims. A crucial aspect of the predominance of hydro in Brazil is the evolution of the storage capacity of reservoirs of hydroelectric plants and the hydrological risk connected with it.

Since the 1950s, there have been two major increases in the volume of Brazil’s reservoirs: one in the 1960s and the other starting in the second half of the 1970s and finishing at the beginning of the 1980s. Since then, the volume of reservoirs available has only grown marginally, whereas the installed capacity is increasing at a more rapid rate.

As a result of this discrepancy, the risk of a deficit worsens. Although the system has the required installed capacity for now, being at the mercy of droughts could lead to supply crises similar to those of 2001.

The storage capacity of dams, which had once amounted to a two-year supply of energy, dropped to 5.8 months in 2003. A self-regulating system to cope with a dry year such as 2001 requires at least five months of stored hydroelectric energy. Hydroelectric plants programmed to enter into operation will have an accumulation-to-production ratio of two months. As a result, the ratio for Brazilian hydroelectric plants will continue to drop.

The need of thermal plants for generating electric power in Brazil is not only due to the fact that its hydro potential is expected to run out in the medium term, but also to overcome hydrologic risks. The building of new hydroelectric plants with large accumulation reservoirs has been severely curtailed as a result of environmental restrictions.

Thus, the national electric power system is undergoing a transition from a practically 100% hydroelectric setting to a hydro-thermal one. In this new setting, hydroelectric generation will continue to dominate, but it will operate side-by-side with a major thermoelectric component. This will ensure that reservoirs maintain the level necessary for a number of years, thereby minimising the related hydrological risks. Thermal plants will also supplement the installed capacity to provide a safe supply of electric power capable of meeting sustained economic development.

In Brazil, hydroelectricity will continue to be the main component of the portfolio of electric power generation sources for many decades to come. It must, however, be supplemented by thermal sources – uranium, coal, biomass, natural gas and oil by-products derived from petroleum – in this order of importance, due to aspects connected with availability within the country, costs, impact on the environment and other uses.

Considering Brazil’s desired sustainable economic development, consumption of electric power is expected to continue at a high rate of growth, generally above that of the GDP. Over the next ten years, this growth is expected to be at the level of 4-5% per annum, according to studies included in the 2006-2015 Decennial Plan for the Increase of Electric Power by the government’s ministry of mines and energy.

Based on this growth rate, Brazil should have an installed capacity of approximately 150GW by 2015. Today, it has at its disposal approximately 100GW, considering installed capacity plus the portion that the national power system imports from neighbouring countries. Brazil will, therefore, have to install approximately 50GW over the next five years, which will demand a significant mobilization of national resources.

The growth rate between 2015 and 2025 will be strongly influenced by the growth in the GDP. A forecast of this rate will be conditioned by a variety of major uncertainties. Nevertheless, based on an average 4% p.a. for this period, 230GW installed capacity will be needed to meet the growth of consumption, requiring the installation of an additional 80GW.

One of the greatest challenges that Brazil will have to face over the next twenty years is how to expand the installed capacity of its electric power system at the lowest possible cost and in an environmentally friendly manner, while guaranteeing the safety and reliability of the system, and, at the same time, the availability of supply and moderate tariffs charged users.

All thermal options are available in Brazil, but its major potential is nuclear, coal-driven and biomass energy, the latter mostly originating from sugar bagasse.

The essential participation of coal and nuclear energy must, however, take economic and environmental aspects into consideration, as well as the potential for integration of such plants to the grid. This applies especially to coal from the southern region, due to the geographical location of Brazil’s reserves, and to nuclear energy in the southeastern and northeastern regions where the remaining hydroelectric potential is practically exhausted.

There is also room for biomass (sugar cane and other vegetable residues) which have the additional advantage of being able to make a substantial contribution to the regulation of the system since its production is concentrated in the dry period of the year when water to replenish the hydroelectric reservoirs is scarce. However, the area of arable land required for this purpose limits the availability of biomass: an area of 3000 to 5000 square kilometers is needed to produce 1000MWh of electricity.

It would not be advisable to rely on significant contributions from oil and natural gas. Their availability in Brazil is limited and priority is assigned to their use in other more sophisticated areas such as transportation and the chemical industry. There is, moreover, their environmental impact to be considered.

It should be stressed that, unlike fossil fuels, nuclear fuel – uranium – of which Brazil possesses one of the largest reserves in the world has currently no industrial use other than the generation of electric power.

A major effort has been made over the last decade to use renewable energy such as solar and wind power. These sources have, however, a certain disadvantage that impacts on their cost and intensive use, although they are excellent options for low power capacity locations. Solar and wind are intermittent and, therefore, not always available. They must, therefore be associated with permanently available thermal or hydro sources. Consequently, they cannot make a major contribution to the national electric power system, which requires continuous generation. Another disadvantage inherent to these renewable sources is that they are spread out throughout Brazil. In order to produce a significant quantity of electricity by solar or wind power, you need large areas. For example, to produce an installed capacity of 1000MWe, you need an area of 50 to 60 square kilometers of solar panels or wind turbines. It is therefore difficult to make these energy sources economically competitive for large volumes of energy demand.

Some people may feel that nuclear energy was implemented prematurely in Brazil, before any real need had arisen. However, using nuclear technology requires advanced technological qualifications. This supposed premature introduction of nuclear energy in Brazil has, therefore, had a beneficial impact. Brazil now has the necessary capability to allow for a rapid and efficient expansion of nuclear power, at a lower cost.

In conclusion, the management of the expansion of a national electric power system is similar to the management of an investment portfolio. Management risk principles call for a strategy of diversification in order to guarantee profitability. There is no one single source of energy that represents a long-term sustainable solution for a country. The very example of Brazil, whose electric power system was originally based almost exclusively on hydroelectric power and is today diversifying to include thermal sources such as nuclear power, only reinforces this thesis.

Author Info:

Othon Luiz Pinheiro da Silva is chief executive officer of Eletronuclear. Leonam dos Santos Guimarães is head of the presidential office. Eletrobrás Termonuclear S.A. Rua da Candelária 65 – 10th floor, Rio de Janeiro – 20091-020, Brasil

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