Brazil reneges on non-fossil promise

• 13 years ago (2011-02-04)
• Junior Isles

North America 998 Renewables 751

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Brazil is seeking proposals for natural gas power plants barely two months after releasing an official energy plan that said the country would not build new electricity projects powered by fossil fuels.

The Ministry of Mines and Energy will hold an auction for renewable energy next quarter, which will include natural gas projects along with wind, biomass and hydroelectric plants.

This contradicts the ministry’s official 10-year National Energy Expansion Plan, released in December, and comes as the country prepares to tap offshore reserves of oil and gas that were discovered in 2006.

“It was announced at the end of last year there wasn’t going to be any more thermal generation plants” that use fossil fuels, Fabio Dias, director of Associacao Brasileira dos Pequenos e Medios Produtores de Energia Eletrica, a Brazilian power-industry trade group, said.

Brazil’s about-face may be an effort to take advantage of the Santos Basin oil and gas reserves, about 300 km (186 miles) offshore, according to Liana Coutinho Forster, strategic planning analyst at Sao Paulo-based energy consulting company Excelencia Energetica. Large-scale production from those sites is expected to begin in the next two to three years, she said.

“Developers of natural gas projects that sold electricity in past auctions had difficulties securing firm contracts for the fuel because there wasn’t enough gas”, she said. “That’s changed with the offshore reserves.”

Energy companies must prove they have a supply of natural gas to take part in this year’s auction. Brazil’s production of natural gas may more than double to 231 million cubic meters a day by 2019 with a “significant contribution” coming from the Santos Basin reserves, the ministry said in its energy plan.

Dias said that depending solely on renewable energy sources, with their unpredictable output, would be a challenge, and including natural gas in the auctions gives the country’s energy grid more flexibility to respond to changing demand since it doesn’t “depend on the weather or wind.”

Brazil’s decision is not a U-turn on renewable energy, he said. “It’s not a sign we’ll reduce the amount of wind farms that will be developed,” he said.

Participants in the auction will bid for 20-year power contracts for wind, biomass and natural gas-fuelled energy projects and 30-year contracts for hydroelectric ones. The facilities must go into operation by Jan. 1, 2014, the ministry said.

Different energy sources will participate in the same auction, without being pitted against each other, Forster said. “They’ve all got their own quota of contracts to bid for,” she said.

The ministry will hold a further separate auction for 20-year power contracts for wind and biomass projects that must come online by July 1, 2014, and will provide backup power for the grid.