The market structure for small hydro electricity in Brazil

Transcription

1 The market structure for small hydro electricity in Brazil DECEMBER 2012

2 Brazilian Interconnected System (2012) Source: ONS (National Electricity System Operator)

3 Evolution of the Installed Capacity by Source Brazil National Interconnected System (SIN) December / 2011 Nuclear; 2% Thermal; 15% Small Hydro; 4% Biomass; 7% Wind; 1% December / 2021 Nuclear 2% Thermal 14% Small Hydro 4% Biomass 7% Wind 9% Hydro; 72% 117 GW Hydro 64% 182 GW Source: EPE (Brazilian Energy Research Company) (PDE 2021) It is estimated that the total installed small hydro power (SHP) capacity will increase from 5 to 7 GW up to 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.

4 Brazilian classification of Hydro Power Project by its generating capacity 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) *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 )

5 Brazilian Incentive of Small Hydro Power Plants Programs Important Brazilian Incentive 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 , 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)

6 Incentive Programs for Small Hydro Power Plants Incentive Program for Alternatives Sources of Energy 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, 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. The total SHP capacity installed by PROINFA up the year of 2011 correspond to 25% of the total SHP capacity installed in Brazil. MW PROINFA - Installed capacity and total of plants in , , ,54 963,99 685, , SHP Wind Plant Biomass Planned Installed

7 Power Sector Players

8 Trading Environments ACR ACL Regulated Contracting Environment Distribution Utilities (Captive Consumers) Spot Market $ Free Contracting Environment Free Consumers Energy Traders Selfproducers MWh Auction $ Competition PGU & IPP MWh $ Free Negotiations

9 Contracting Environments Regulated Contracting Environment (ACR) Free Contracting Environment (ACL) Generator Generator Generator Generator Generator Prices defined by Government auctions Prices freely negotiated Distributor Distributor Traders Regulated Tariffs Prices freely negotiated Captive customer Captive customer Free customer Free customer

10 Alternatives of Trading for SHP Free and Special Customer - ACL Free Customer Special Customer contracted demand than 3 MW. contracted demand > 500 kw from incentivized energy source (solar, wind, biomass, hydro and cogeneration with installed capacity 30 MW). 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% Regulated Auction - ACR Renewable Energy New Energy Reserve Energy promotion of renewable energy sources by exclusive auctions. amount of energy declared by the distribution utilities in order to meet demand growth in the regulated market. supplementary energy to increase the system s reserve margin.

11 Alternatives of Trading for SHP Free and Special Customer - ACL Distributed Generation - ACR Regulated Auction - ACR Financiability Flexibility Price

12 Incentivized Energy Law 9427 ANEEL Res. 77 ANEEL Res.247 Law ANEEL Res.376 Law MP Consumers demand 500 kw 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

13 Incentivized Energy CGH SHP Small Power Plants Biomass, Wind, Solar Plants Qualified Cogeneration installed capacity 1MW installed capacity >1 and 30 MW reservoir area < 3 km² installed capacity 30 MW Special Incentivized Energy Purchasing Contract (CEIE) Special Incentivized Energy Purchasing Contract for Qualified Cogeneration (CCEICQ) Special Customer Free Customer ANEEL Resolution nº 376/2009

14 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 1 PIE - Independent Power Production

15 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)

16 Procurement of Energy from New Projects Auctions of A-5 and A-3 (15 to 35 years) A-3 Amount of contracted energy to be delivered 3 years ahead the auction year A-3 purchase limited to 2% of A-5 load A-5 Amount of contracted energy to be delivered 5 years ahead the auction year A-5 A-4 A-3 A-2 A-1 A Auction year Auction year

17 New Energy and Reserve Energy Auctions 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 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/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) Aug/09 8º New Energy Auction (A-3) Dec/09 2º Reserve Energy Auction

18 New Energy and Reserve Energy Auctions 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) 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 MW of new capacity (include Nuclear Power Plant Angra 3): Hydropower plants MW Small Hydro plants 523 MW Conventional thermal MW Biomass MW Wind power plants MW Source: EPE (M. Tolmasquim Seminário Internacional ) Dec/12 14º New Energy Auction (A-3) Dec/12 15º New Energy Auction (A-5)

19 01/ / / /2008 Reserve 02/2008 A-3 03/2008 A-5 02/2009 A-3 03/2009 Reserve 03/2010 A-5 04/2010 A-5 05/2010 Reserve 07/2010 Alternat 02/2011 A-3 03/2011 Reserve 07/2011 A-5 52,69 58,36 69,78 98,98 104,00 101,90 96,97 95,00 91,20 102,18 125,90 132,80 135,00 125,35 130,73 122,69 140,00 146,00 130,43 144,00 134,47 144,60 137,92 148,39 153,73 Energy Auctions Average Prices (R$ / MWh) R$/MWh 200,00 Auction Average Prices by source (R$ / MWh) 175,00 150,00 125,00 100,00 75,00 50,00 25,00 0,00 Auctions Hydro New Hydro Small Hydro Wind Thermal Biomass Source: CCEE

20 Energy Relocation Mechanism (MRE) 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.

21 Spot Market Short Term Spot Verified Energy PPA CCEE accounting is based on differences between the amount of contracted energy and the amount of verified energy

22 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

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