III  Workshop: What are the real costs and benefits of electricity generation sources in Brazil?

Meeting gathered together representatives of government agencies, electric power sector companies and associations, as well as civil society

Through a partnership with the Energy Research Enterprise (EPE) and the support of the Climate and Society Institute (Instituto  Clima  e  Sociedade) the Escolhas Institute presented the partial findings of the study exploring the real costs and benefits of assorted power generation sources in Brazil entitled: Quais  os  reais  custos  e  benefícios  das  diversas  fontes  de  geração  elétrica no Brasil? (What are the real costs and benefits of a generation sources in Brazil?)”. The research staff consists of professionals from PSR  –  Energy  Consulting  and  Analytics. Its purpose is to provide a solid set of information so that Brazilian society and its electricity sector may deal with the future challenges of electricity generation and energy security nationwide, while also evaluating a scenario where renewable sources are more important.

The findings presented at this third workshop indicate that the mix of different electricity generation sources ensures a complementarity that is crucial for ensuring the stability of the system.

This study analyzes different attributes that are specific to generation services, transmission costs, subsidies, incentives and sector-specific charges for each source. It is known that no source is self-sufficient for all attributes. Some of them are endowed with properties that can meet their needs while also providing surplus quantities for the system.  Others require that some attributes be buttressed by other sources in order to operate in a more stable fashion.

For electric power generation services, this study calculated the net balance of the modulation, seasonality and sturdiness attributes. Modulation and seasonality encompass the ability of the electricity generation source to respond to peak hour demands throughout the month, and on a monthly basis throughout the year, respectively.  Sturdiness measures the ability of a generator to produce an electricity reserve for the system.  So far, the partial results indicate that, adding all the generation services together, the sources with the highest cost are run-of-river power plants, together with small hydropower complexes. This is because these sources are subject to climate and weather variations that lead to periods of drought. All the others provide the system with these generation services at levels higher than required. Among renewable sources, solar, wind and biomass easily handle the modulation and seasonality required by hydropower plants./

For the appreciation of infrastructure costs (transportation, reserve, losses, reactive, inertia and inertia benefits) the technologies with the highest values are wind (Northeast and  South),  solar   (Northeast   and   Southeast)  and flexible open-cycle gas (Southeast).

Finally, with regard to subsidies/incentives and sector-specific levies, preliminary results show that the technologies with the largest portion of these factors tied to cost are wind (Northeast  and South),  solar  (Northeast  and  Southeast)  and Small Hydropower Stations (PCH  –  Southeast).    .

The next steps for the study include the formulation and preparation of scenarios where more important roles are played by the “new renewable sources”. This analysis is vital for the sector to evaluate the impact of including these sources in Brazil’s  electricity matrix.

At the end of this study, the Escolhas Institute will present society with an effective set of possibilities covering different combinations of various sources that will endow the electricity sector as a whole to operate with greater efficiency.