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The market structure for small hydro electricity in Brazil
DECEMBER 2012
Source: ONS (National Electricity System Operator)
Brazilian Interconnected System (2012)
Evolution of the Installed Capacity by Source Brazil – National Interconnected System (SIN)
It is estimated that the total installed small hydro power (SHP) capacity will increase from 5 to 7 GW up to 2021. According to EPE (Brazilian Energy Research Company) the renewable sources (SHP, biomass and wind power plants) share of the total installed capacity will increase from 13% in 2011 to 20% in 2021.
Source: EPE (Brazilian Energy Research Company) (PDE 2021)
Nuclear
2% Thermal
14%
Small
Hydro
4%
Biomass
7%
Wind
9%
Hydro
64%
182 GW
December / 2021
Hydro;
72%
Wind;
1%
Biomass;
7%
Small
Hydro;
4%
Thermal;
15%
Nuclear;
2%
117 GW
December / 2011
Brazilian classification of Hydro Power Project by its generating capacity
*According to ANEEL (National Electric Energy Agency): Small Hydroelectric Power
Plant (SHP) are hydro power plants with installed capacity greater than 1 MW and less
or equal to 30 MW with reservoir area of less than 3 km². (Independent Power
Production or Self-Production )
Installed
capacity
(MW)
Reservoir
area (km²)
Others
Requirements Classification
≤ 1 - CGH Hydroelectric Generating
Station
>1 and ≤ 30 < 3
Independent
Power Producers
or Self-Producers
PCH* Small Hydroelectric Power
Plant (SHP)
>30 - UHE Hydroelectric Power Plant
Source: ANEEL (National Electric Energy Agency)
Important Brazilian Incentive Small Hydro Power Plants Programs:
Brazilian Incentive of Small Hydro Power Plants
Programs
PCH-COM
PCH-COM Small Hydro Power Development and Commercialization Program
Launched in 2001 by Eletrobras in partnership with BNDES.
Objective: stimulating the installation and reactivation of grid-connected
small Hydropower plants (SHP) by private entities.
Goal:1200 MW of capacity installed during 2001-2003, in blocks of 400
MW / year.
•The purchase of the power generated - guaranteed by Eletrobras
•The project financing – by BNDES (National Bank of Economic and Social Development)
1.191,24
1.422,92
685,24
1.152,54963,99
533,34
0
500
1.000
1.500
SHP Wind Plant Biomass
MWPROINFA - Installed capacity and total of plants in 31-12-2011
Planned Installed
63 59 54 41
27 19
Incentive Programs for Small Hydro Power Plants
Launched in 2004 by the Brazilian government.
Objective: increasing in 3,300 MW the participation of wind, small hydropower (SHP) and biomass plants in the national interconnected system.
The energy purchase is ensured through a 20-year contract by the Eletrobras.
Goal: Implementation of 144 selected plants corresponding to 3,299.40 MW
capacity.
Results in 31/12/2011: 119 new plants representing 2.649,87 MW of installed capacity and a generation of 10,690 GWh of an annual clean energy.
Incentive Program for Alternatives Sources of Energy
The total SHP capacity installed
by PROINFA up the year of 2011
correspond to 25% of the total SHP
capacity installed in Brazil.
Power Sector Players
• Distribution Utilities
(Captive Consumers)
Regulated Contracting
Environment
ACR
PGU & IPP
Competition
MWh
$ Free
Negotiations
MWh
$ Auction
$
Spot Market
Free Contracting
Environment
ACL
• Free Consumers
• Energy Traders • Selfproducers
Trading Environments
Contracting Environments
Generator Generator Generator
Regulated Contracting
Environment (ACR)
Captive
customer
Captive
customer
Distributor Distributor
Prices defined by Government auctions
Regulated Tariffs
Prices freely negotiated
Generator Generator
Free Contracting
Environment (ACL)
Free
customer
Free
customer
Traders
Prices freely negotiated
Alternatives of Trading for SHP
Regulated Auction - ACR
Renewable Energy
New Energy
Reserve Energy supplementary energy to increase the system’s reserve
margin.
amount of energy declared by the distribution utilities in
order to meet demand growth in the regulated market.
promotion of renewable energy sources by exclusive
auctions.
Distributed Generation - ACR
Not included in this classification: I – Hydropower plant with a installed capacity > 30 MW; II – Thermal power plant / cogeneration - with energy efficiency <75%
Free and Special Customer - ACL
Free Customer contracted demand ≥ than 3 MW.
Special Customer contracted demand > 500 kW from incentivized energy
source (solar, wind, biomass, hydro and cogeneration
with installed capacity ≤ 30 MW).
Alternatives of Trading for SHP
Financiability
Flexibility
Price
Regulated Auction - ACR Distributed Generation - ACR
Free and Special Customer - ACL
Consumers demand ≥ 500 kW
Incentivized Energy
Generators with a 50% discount on their grid usage fee (TUSD/T)
Special Customer
SHP, CGH (≤ 1MW), Solar, Wind or Biomass Plants up to 30 MW
Generators without a discount on their grid usage fee (TUSD/T)
Hydro* (>1 and ≤ 50 MW ), Solar, Wind or Biomass Plants with a
installed capacity >30 and ≤50 MW
* Hydroelectric Plant that doesn’t comply with SHP classifications requirements
Law 11943
2009
ANEEL Res. 77
2004
ANEEL
Res.247
2006
Law 9427
1996
Law MP579
2012
ANEEL Res.376
2009
CGH
installed capacity ≤
1MW
Special Customer Free Customer
Special Incentivized
Energy Purchasing
Contract for Qualified
Cogeneration (CCEICQ)
Incentivized Energy
ANEEL Resolution nº 376/2009
Special Incentivized
Energy Purchasing
Contract (CEIE)
Biomass, Wind,
Solar Plants
installed capacity ≤ 30
MW
Qualified
Cogeneration
SHP
Small Power
Plants
installed capacity >1
and ≤ 30 MW reservoir
area < 3 km²
1PIE - Independent Power Production
Incentivized Energy
Sellers Agents: • Generators (PIE)1; • Self producers; • Traders.
Buyers Agents: • Free Customers; • Special Customers (demand ≥ 500 kW)
Agents that apply the discount on the grid usage fee (TUSD/T): • Distribution companies; • Transmission company (ONS).
Agents that calculate the discount on the grid usage fee: • CCEE
Distributed Generation
It is defined as the connection of small power generation equipment to the buyer utility
distribution system. According to ANEEL resolution qualifying small distributed
generators include:
Distributed
Micro generator
Distributed
Mini generator
Any energy-generating facility with a
installed capacity ≤100 kW that utilizes
an incentivized energy source and is
interconnected at the concessionaire’s
distribution network through
consumer-installed systems.
Any generating-facility with a installed
capacity >100 kW and <1 MW that
utilizes an incentivized energy source
and is interconnected at the
concessionaire’s distribution network
through consumer-installed systems.
CGH
SHP
SOLAR
WIND
BIOMASS
BIOGAS
COGENERATION
According to ANEEL, qualifying small distributed generators do not include:
I – Hydropower plant with a installed capacity > 30 MW; and
II – Thermal power plant / cogeneration - with energy efficiency <75% (exception for
biomass plants)
A A-1 A-2 A-3 A-4 A-5
“A-3” purchase limited to
2% of “A-5” load
Auctions of “A-5” and “A-3” (15 to 35 years)
Procurement of Energy from New Projects
“A-5” Amount of contracted energy to be delivered
5 years ahead the auction year
“A-3” Amount of contracted energy to be delivered
3 years ahead the auction year
Auction year Auction year
Dec/05 – 1º New Energy Auction
Jun/06 – 2º New Energy Auction (A-3)
Oct/06 – 3º New Energy Auction (A-5)
Jun/07 – 1º Renewable Source Auction
Jul/07 – 4º New Energy Auction (A-3)
Oct/07 – 5º New Energy Auction (A-5)
Dec/07 – 1º Auction PE UHE Santo Antônio
May/08 – 2º Auction PE UHE Jirau
Aug/08 – 1º Reserve Energy Auction
Jul/08 – 6º New Energy Auction (A-3)
Oct/08 – 7º New Energy Auction (A-5)
2005 2006 2007 2008 2009
Aug/09 – 8º New Energy Auction (A-3)
Dec/09 – 2º Reserve Energy Auction
New Energy and Reserve Energy Auctions
• NEW energy auctions - contract an
amount of energy declared by the distribution
companies in order to meet demand growth in
the regulated market (ACR),
• RESERVE energy auctions - contract
supplementary energy to increase the
system’s reserve margin (ACR).
May/10 – 3º Auction PE UHE Belo Monte
Jul/10 – 10º New Energy Auction (A-5)
Aug/10 – 3º Reserve Energy Auction (OFR)
Aug/10 – 2º Renewable Source Auction
Dec/10 – 11º New Energy Auction (A-5)
2011 2010 2012
Aug/11 – 12º New Energy Auction (A-3)
Aug/11 – 4º Renewable Source Auction (OFR)
Dec/11 – 13º New Energy Auction (A-5)
Since 2005, the 22 New energy auctions have
contracted 503 new projects corresponding to
64.472 MW of new capacity (include Nuclear
Power Plant Angra 3):
Source: EPE (M. Tolmasquim – Seminário Internacional – 17-04-2012)
New Energy and Reserve Energy Auctions
Dec/12 – 14º New Energy Auction (A-3)
Dec/12 – 15º New Energy Auction (A-5)
Hydropower plants 33.620 MW
Small Hydro plants 523 MW
Conventional thermal 18.663 MW
Biomass 4.908 MW
Wind power plants 6.758 MW
Energy Auctions Average Prices (R$ / MWh) 125,9
0
98,9
8
69,7
8
104,0
058,3
6
91,2
0
135,0
0
144,0
0
153,7
3
130,7
3148,3
9
122,6
9
130,4
3
96,9
7
102,1
8
132,8
0
125,3
5
140,0
0
101,9
0
52,6
9
146,0
0
144,6
0
134,4
7
137,9
2
95,0
0
0,00
25,00
50,00
75,00
100,00
125,00
150,00
175,00
200,00
01
/20
07
02
/20
07
03
/20
07
01
/20
08
Re
serv
e
02
/20
08
A-3
03
/20
08
A-5
02
/20
09
A-3
03
/20
09
Re
serv
e
03
/20
10
A-5
04
/20
10
A-5
05
/20
10
Re
serv
e
07
/20
10
Alt
ern
at
02
/20
11
A-3
03
/20
11
Re
serv
e
07
/20
11
A-5
R$/MWh
Auctions
Auction Average Prices by source (R$ / MWh)
Hydro New Hydro Small Hydro Wind Thermal Biomass Source: CCEE
Energy Relocation Mechanism (MRE) is a financial mechanism based on the transfer of exceeding energy generated by all MRE members to those members who do not reach their corresponding assured energy.
Objectives of this mechanism:
• sharing the hydrological risk among the MRE participants;
• optimizing energy supply of the National Interconnected System.
The Assured Energy of a hydroelectric plant is issued for each plant by Ministry of Mines and Energy, and serves essentially to:
• establish an upper limit for energy supply contracts;
• define the share of each generating plant on the total amount of energy generated in the system by hydro plants.
Energy Relocation Mechanism (MRE)
Verified Energy
Short Term Spot
PPA
CCEE accounting is based on differences between the amount of contracted energy and the amount of verified energy
Spot Market
Alternatives of Trading for Small Hydropower Plants (SHP)
Contracting Environment Financiability Flexibility Price
Distributed Generation - ACR High Medium Medium
Regulated Auction - ACR High Low Low
Free and Special Customer - ACL Medium High Medium
