21/10/2014

Inter-American Dialogue – Latin America Energy Advisor

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Question:
 
Brazilian President Dilma Rousseff and opposition candidate Aécio Neves are polling neck-and-neck ahead of the country's Oct. 26 runoff election. What's at stake in the election for the country's electric energy sector? What are the greatest electricity-related challenges facing Brazil's next president? Would either Neves or Rousseff in a second term take the country's electric energy policy in a different direction?
 
Answer:
 
There is much at stake in this year’s presidential election. The next Brazilian president, be it Dilma Rousseff or Aécio Neves, will have to deal with several pressing issues to reestablish the balance to the country’s strategic electricity sector. Three of the main challenges faced are outlined below, as well as the role photovoltaic solar energy (PV) can play to help solve them:

During 2013 and 2014, due to severe draughts (contenders also blame the Federal Government for lack of planning), Brazil was forced to rely on expensive backup electricity from fossil fuel peak power plants. This amasses to an estimated R$ 60 billion (US$ 24.2 billion) in additional electricity generation fees, two thirds of which will be paid by consumers and one third by taxpayers. The future president has to decide how to phase in the resulting electricity price increases without loosing sight of the burden it could impose to economic growth, inflation rates and the country’s industrial competitiveness. As an interesting side-effect, higher electricity tariffs are dramatically improving the economics of PV throughout the country, increasing the affordability and attractiveness of the technology with each passing month. In many Brazilian regions, it has become cheaper to produce your own electricity from the sun than to buy it from the grid. Since almost 70% of the electricity generation is based on large-scale hydropower, the draughts have also endangered Brazil’s security of supply. Additionally, local electricity demand is expected to increase by 45% until 2023. To avoid shortages and reduce costs with fossil fuel power plants, the president elected will have to add 71 GW of new generation capacity by 2023. The focus must be on diversifying the electricity matrix to avoid risks. Since Brazil has an outstanding solar irradiation, there is no doubt that PV can significantly contribute to the solution at an affordable investment. The electricity infrastructure needed to expand the grid does not come cheap in a country like Brazil, with the sheer size of mainland Europe, where almost 16% of all electricity is wasted as transmission and distribution losses. To keep the electricity flowing, the new president will have to invest in new transmission and distribution lines, but also needs reduce losses of this scarce resource. By eliminating barriers to distributed generation and promoting its widespread use, the president could take advantage of several gigawatts worth of power plants to be installed directly by the Brazilian population, for example through thousands of rooftop PV systems. Additionally, this would help reduce grid losses, since the electricity produced on the rooftops would be consumed locally instead of travelling long distances. 

About the Author:
 
Dr. Rodrigo Lopes Sauaia – Executive Director – ABSOLAR
 
Co-founder and executive director of the Brazilian Photovoltaic Solar Energy Association (ABSOLAR – Associação Brasileira de Energia Solar Fotovoltaica). Brazilian representative at the International Forum of National PV Associations organized by the European Photovoltaic Industry Association (EPIA). Strategic advisor on Photovoltaics for Greenpeace Brazil.
 
His academic background includes a PhD with honours in Engineering and Materials Technology from the Pontifical Catholic University of Rio Grande do Sul (Brazil), with an international collaboration with the Fraunhofer Institut für Solare Energiesysteme (Fraunhofer ISE, Germany), a M.Sc. with honours in Renewable Energy with PV Specialisation from the EUREC Master Program, with an international collaboration with the ETH Zürich (Switzerland), and a B.Sc. with honours in Chemistry from the University of São Paulo (Brazil).
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