Lewes, DE -- (ReleaseWire) -- 03/04/2014 -- Research is maintaining 2014 forecasts and long-term forecasts for power generation in Brazil, as assumptions remain relevant. Hydroelectric power accounts for, and will continue to account for, the key source of power supply in Brazil. Representing 78.89% of electricity generating capacity of the country, hydroelectricity remains unreliable - with generating capacity fluctuating between wet and dry years and controversial - with stoppages commonplace - as illustrated by recent court rulings. In addition, many of Brazil's rivers are far from populated cities, adding expense to projects as lengthy transmission networks are required. It is of little surprise, then, that the government is seeking to diversify the electricity mix. That said, we believe that although the share of hydropower in the energy mix will decline by the end of forecast scenario, it will be continue to be the dominant fuel for electricity generation of the country.
With Brazil facing a key power deadline - the country will host both the FIFA World Cup and the Olympic Games in the next three years - the government is keen to invest in its power sector to ensure that its electricity sector is up to the challenge of being under a global spotlight. It has launched a series of tenders for power auctions during 2013, and will finish the year with six hydroelectric power projects, opening for bids in December. We stress, though, that the repeated delays to other hydroelectric power projects in the country may deter potential bidders - Brazil's complex bureaucratic processes will do little to attract investors.
Inquire about this report: Brazil Power Report Q2 2014
The report forecasts Brazil's power sector will continue to post strong demand, even though some risks remain, with growth in consumption expected to average 3.79% between 2013 and 2023. Research estimates that total generation capacity in 2013 stood at 570.26 terawatt hours (TWh). Report also forecasts that this will increase to 690.20TWh by 2018 and to 817.31TWh by the end of our forecast period in 2023. This equates to an annual average growth rate of 3.64% between 2013 and 2023.
Key developments in Brazil's power sector:
>> Record heat in the country is putting pressure on energy prices. At the end of January 2014, people with air conditioning drove nationwide energy consumption to an all-time high. The strong demand, which is being met partly through increased use of thermoelectric power, means spot energy prices are set to double in coming days to record levels beyond 800 reais ($326.50) per kilowatt-hour. Those prices could affect energy bills for customers and factories - a threat to economic growth already expected to be just 2.3%in 2014. according to our Country Risks forecast.
>> The long-delayed and controversial Belo Monte hydroelectric power plant was subjected to yet another setback this quarter, when a judge ruled that work be halted because Norte Energia had not met its environmental commitments. Work restarted five days later. Tele Pires, another large-scale hydroelectric power plant faced a similar delay, with a judge suspending work claiming that the developers had not completed social impact studies.
>> The development of the transmission system for the Belo Monte dam complex on the Xingu River - the first direct current ultra-high-voltage line (800 KV) in Brazil - will be auctioned in February 2014. The winner will be required to build two conversion stations, sub stations and 1,300-miles of transmission wires connecting Altamira in Par with Estreito in Minas Gerais in the south. The cost of the investment is estimated at USD2bn. A consortium composed of China State Grid and Eletrobras is considered the favourite in the bid.
>> Two power auctions have held by the Government in November and December 2013. In the first, Brazil sold the rights to build new wind farms worth $3.4bn(£2.1bn). In a second auction, Brazilian wind-farm developers won contracts to sell energy from 97 planned power projects with 2.3 gigawatts of capacity, the most of any generating technology in a government-organised auction. Small hydro-power plants sold 700MW of capacity, while biomass plants sold 162MW.
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