Escolhas presents partial findings of the Study on Real Electricity Generation Costs and Benefits in Brazil
Third event in this series gathers together Stakeholders and Representatives of Brazil’s Electricity Sector
On Tuesday, July 27, the Escolhas Institute met with representatives of Brazil’s electricity sector in order to present the partial findings of a study exploring the actual costs and benefits of electricity generation sources in Brazil entitled: “Quais os reais custos e benefícios das fontes de geração elétrica no Brasil?”. The research team consists of professionals working with PSR – Energy Consulting and Analytics, with the intention of offering a solid set of information that will help Brazilian society and the electricity sector to deal with future energy security and electric power generation challenges nationwide, while also assessing a context of including a broader range of renewable energy sources.
This occasion gathered together representatives of government agencies such as Brazil’s Electric Power Sector Regulator (ANEEL), the Energy Research Enterprise (EPE), the National Grid Operator (ONS) and the Ministry of Mines and Energy (MME). Also present were representatives of associations linked to a wide variety of electric power generation sources, such as the Brazilian Wind Power Association (ABEeólica), the Brazilian Electricity Producers Association (APINE); the Brazilian Solar Power Association (ABSOLAR); the Brazilian Small Hydro-Power Plants and Hydro-Generation Stations Association (ABRAPCH); as well as the Brazilian Banks Federation (FEBRABAN); the Brazilian Consumer Protection Institution (IDEC); Greenpeace and the World Wildlife Fund (WWF).
The workshop opened with a presentation of the findings to date by Bernardo Bezerra and Mário Veiga (PSR), followed by Q&A rounds hosted by the Escolhas Institute Executive Director Sérgio Leitão. Discussions explored the three groups of attributes that have already been identified and analyzed by this study: generation services; infrastructure costs; and subsidies and incentives
The participants offered significant contributions and underscored the importance of the study. For the Generation Services Regulations Superintendent at ANEEL, Cristiano Vieira, this study is very welcome and its findings spotlight the importance of identifying electricity generation source attributes, while drafting agreements that are tailored more closely to individual realities. “The reform [of Brazil’s Electricity Sector] is often discussed only on qualitative bases, but it is vital to include quantitative developments in the discussion, assessments that allow not only analyses of specific perceptions to materialize, but also whether certain paths or criteria that are being conceptualized are actually the best to be established through legislation,” affirmed Cristiano.
The Managing Director of the ONS, Luiz Eduardo Barata feels that the study findings are of the utmost importance for the Brazilian Electricity System, which has been subject to sweeping changes, while keeping an eye on the potential of renewable sources. “Over the next few years, we will have a huge range of opportunities for inclusion in our matrix. It is important that it is constructed not only with the theoretically cheapest source, but that it also takes into account all its attributes – and this study is where we will effectively evaluate the costs of these attributes,” he stresses.
Environment and Energy Savings Director at EPE, Amilcar Guerreiro underscores the importance of the study for future changes in the current context: “Each source has its own characteristics and is entering the system with a role to play. What is important is knowing the real costs for the system resulting from the impacts of the arrival of a specific source, whichever it may be.
Among the representatives of associations linked to the many different sources for the electricity sector, there is a unanimous awareness of the relevance of this study, as it lays the foundations for the initial steps towards a change in this sector: “These findings show that we are following an appropriate pricing path for these attributes. This is something that is a major challenge for us, in the electricity sector. The energy sector must rethink its calculation methodology, focusing not only on costs, but instead conducting a more complete analysis of its economic efficiency,” affirmed the Executive President of ABEeólica, Elbia Gannoum.
The Managing Director of APINE, Guilherme Velho, feels that this is a trail-blazing effort, in terms of quantifying electricity sector attributes. He also comments on how the study could influence the electric power sector reform, with a warning of the danger of assigning higher priority to one specific source, to the detriment of others in the process: “For example, we were discussing here how to use this work when signing agreements for the expansion process. Contracting sources out on the basis of their real cost to consumers, while always bearing in mind its dynamic aspects. Once the price of the source is known, it is contracted out to an increasing extent, and this may then mean that the calculated costs alter.”
For Rodrigo Sauaia of ABSOLAR, the concept of evaluating the attributes, costs and benefits of the many different sources is very timely. However, he feels that there are issues on which the study could be improved: “Aspects such as tax exemptions and incentives that are commonplace today throughout the entire fossil fuels segment are not addressed in this document,” he notes.
The launch of this study is scheduled for October, and the next steps will focus on simulating scenarios with more “new renewable sources” inserted in 2026, which is the reference year for the Ten-Year Energy Expansion Plan. This analysis is vital for the sector to assess the impacts of including them in Brazil’s Electricity Matrix.