Sector Overview Aumentar Diminuir

The Brazilian electricity sector is divided into four submarkets interconnected by the transmission system: North, Northeast, South and Southeast/Midwest.
The Ministry of Mines and Energy (MME) is the primary Government regulator of the Brazilian electricity sector. After the adoption of the Act on the New Model of the Electricity Sector (2004), the Brazilian government, acting primarily through the MME, has assumed certain obligations that previously constituted the responsibility of ANEEL, including the guidelines presiding the granting of concessions and the issuance of instructions for the bidding process, in concessions related to public services and assets.

The National Energy Policy Council (CNPE) is a body created in August 1997 to provide advice to the President regarding the development and creation of the national energy policy. The Minister of Mines and Energy is the president of CNPE, with nine of its minister members at the Federal Government and three of its members chosen by the President of the Republic. The CNPE was created to optimize the use of Brazil’s energy resources and ensure the supply of electricity for the country.

ANEEL is an independent federal body whose primary responsibility is to regulate and supervise the electricity sector, according to the policy determined by the MME and answer questions delegated to it by the Federal Government and the MME. ANEEL’s current responsibilities include, among others, (i) administering concessions for the generation, transmission and distribution of electricity, including the approval of electricity tariffs, (ii) enacting regulations for the electricity sector, (iii ) implementing and regulating the exploration of energy sources, including the use of hydroelectric power, (iv) promoting the public bidding process for new concessions, (v) solving administrative disputes between agents and between these agents and consumers of electricity, and (vi) defining the criteria and methodology for determining the transmission and distribution tariffs.

The National System Operator (ONS) is responsible for the planning and scheduling of the operation and centralized dispatch of generation with a view to optimization and reliability of the National Interconnected System – SIN.

The Electricity Compensation Chamber (CCEE) is the body responsible for energy accounting in all submarkets, implementing and disclosing the trading rules, as well as calculating the energy price per week in each submarket, by means of ANEEL’s approval.

On August 16th 2004, the Brazilian government created the Energy Research Company (EPE), a federal public company responsible for conducting strategic research in the energy sector, including electricity industries, petroleum, natural gas, mineral coal and renewable energy sources. The studies and research carried out by the EPE subside the formulation of the energy policy by the MME.

The Act on the New Model of the Electricity Sector created the Monitoring Committee of the Electricity Sector (CMSE), which operates under the coordination of the MME. CMSE is responsible for monitoring the system’s supply conditions and the indication of the measures to be taken to correct existing problems.

Generation Capacity

The total capacity of installed power generation in Brazil, in September 2015, is 138.625 megawatts (MW) of installed power produced by 4.266 operating enterprises (Source: ANEEL/BIG – Generation Information Bank).

In the Ten Year Plan for Energy Expansion – PDEE 2015-2024, approved by the MME, the expansion of the planned installed power will add 73,569 MW to SIN, representing a 55% increase in electricity supply this decade. There are generation facilities already contracted and been deployed of approximately 41,500 MW (representing 56% of the expansion of the ten-year horizon). The offering to be made feasible in future auctions, expected to start operations in this period, is approximately 32,700 MW (44% of the expansion) (PDE 20124). (Source: EPE – Ten Year Plan for Energy Expansion 2024 – Final Report).

The hydroelectric projects contained in this Plan amount to 28,349 MW, the feasibility of these projects will add 23,209 MW by December 2024. The large hydroelectric plants participation will decrease 8.8% in the period, despite the increase in its installed capacity of about 9 GW in the planning horizon.
The expansion of the thermoelectric generating facilities will add about 10,500 MW by 2024. The thermoelectric plants powered by fossil fuels maintain their participation in the matrix, ranging from 12.4% to 14.4% during the study period. In the case of nuclear power plants, the percentage corresponding to their contribution to the total supply of SIN energy also has little variation, from 1.2% to 1.6%, due to the operational start of the Angra 3 plant.

In relation to other renewable generation sources (wind, PCH, thermoelectric and biomass and solar), there is an average annual growth of about 10% of the total installed capacity of these sources. This expansion of other renewable sources of energy-biomass, PCH, wind and solar – makes the participation of these sources in the SIN’s generation park increase from 21% in 2018 to 27.3% in 2024.

SIN will go from an installed capacity of approximately, in September 2015, 138,625 megawatts (MW and will reach about 206 GW at the end of 2024.

Approximately 34% of the installed capacity of power generation in Brazil is currently owned by Eletrobrás, a mixed capital company controlled by the Federal Government. Through its subsidiaries, Eletrobrás is also responsible for about 50% of the installed capacity of the country transmission (Source: www.eletrobras.com.br). Besides, some Brazilian states control companies engaged in the generation, transmission and distribution of electricity. These include, among others, CESP, Copel and CEMIG.

Electricity Consumption in Brazil

Power consumption in Brazil recorded in 5 (until February 2016) a total of 456,300 GWh, a figure 3.0% lower than 2014, which was 470,265 GWh. For the coming years, it is expected that the growth in energy consumption remains correlated with the country’s economic performance (Source: EPE – Statistical Yearbook 2014).

Between 2014 and 2020, the average rate of growth of consumption projected in the network is 3.4% per year, reaching 539 TWh, and the commercial class presents the highest expansion, followed by the residential class (Source: EPE – Ten Year Plan for Energy Expansion 2024 – Final Report; 1 Quarterly Review of the Electricity Demand Projections of the National Interconnected System, 2016 to 2020).

Concessions

Companies or consortia that wish to build and/or operate facilities for hydroelectric generation, transmission or distribution of energy in Brazil should participate in bidding processes. Companies or consortia wishing to work in marketing or thermal generation must request permission or authorization to MME or to ANEEL, as appropriate. Concessions grant the right to generate, transmit or distribute energy in a given concession area for a specified period. This period is limited to 35 years for new generation concessions, and 30 years for new transmission or distribution concessions. Existing concessions may be renewed at the sole discretion of the granting authority, only once for a period of 30 years, provided that there is public interest and all obligations relating to the concession agreement have been met and the renewal is required in accordance with the legal terms (advance of 60 months).

The Concession Law establishes, among other matters, the conditions that the concessionaire must comply with when providing electricity services, consumer rights, and obligations of the concessionaire and of the grantor. In addition to the Concessions Law, the electricity concessionaires must also comply with the regulation issued by ANEEL and MME. The main provisions of the Concession Law in relation to electricity concessions are: (i) adequate service; (Ii) easements; (Iii) objective liability; (Iv) changes in the controlling stake; (V) intervention by the granting authority; (Vi) early termination of the concession; (Vii) termination for the sake of lapse of deadline; and (viii) penalties.

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