Brazil has the largest installed hydropower capacity in South America, and comprises two thirds of the continent’s installed capacity, at 100,273 MW. The sector makes up 64 per cent of total Brazilian energy capacity and meets more than three-quarters of electricity demand.
The year 2017 marked the fourth consecutive year of a severe drought in many parts of the country, which impacted reservoir levels. To compensate, thermoelectric power plants, which are more expensive than hydropower, and imports from Uruguay and Argentina, have reinforced electricity supplies. Conversely, due to heavy rainfall in southwest Brazil in October 2017, Itaipu Binacional was able to boost hydropower production, meaning it could guarantee and exceed energy supply at a crucial time.
Large hydropower remains the major source of electricity supply, with other renewable energies representing about 10 per cent. Wind, solar and small hydro (defined as less than 50 MW in Brazil) have increased their share of the energy mix since energy sector reforms in 2012 that were enacted under the presidency of Dilma Rousseff.
Despite its contribution to electricity generation, the hydropower sector, which is mainly publicly owned, has struggled financially in recent years. The 2012 energy sector reforms were not welcomed by many large companies, especially state-owned companies that had to accept controversial terms seen as unprofitable. Others, like CEMIG from Minas Gerais state, refused to accept the conditions and, as a result, when the concession of some plants expired, the government auctioned the licenses.
In September 2017, the operating rights of four plants that belonged to CEMIG were auctioned. The 424 MW Jaguara and the 408 MW Miranda plants were acquired by Engie, the 380 MW Volta Grande was awarded to Enel and China’s State Power Investment Corp took over the operations of the 1,710 MW São Simão plant.
The new government of Michel Temer has proposed a new legal framework to modernise and liberalise the energy market to attract private investments. Among the proposed measures are: opening the market to new customers, the gradual ending of subsidies, maximising the cohesion between energy prices and operations, introducing a capacity remuneration mechanism, and resolving judicial disputes related to hydrological risk for hydropower plants. The Ministry of Mining and Energy is planning the privatisation of Eletrobras, the state-owned company that developed the main large hydropower projects such as Belo Monte, Jirau and Santo Antônio. The privatisation is expected to go through in 2018.
With Brazil moving away from large hydropower projects in favour of decentralised renewable energy, there are fewer major hydropower projects being prepared in the 10-year pipeline of the Ministry of Mining and Energy.
The 11,200 MW Belo Monte project, in northern Brazil, could be the country’s last mega project. When completed, it will become the third largest hydropower plant in the world. The first turbine was commissioned in 2016, and it is expected to become fully operational in 2020.
The 700 MW São Manoel hydropower plant saw its first turbine enter into operation in December 2017. The plant is located over the Teles Pires, a tributary of the Amazon river, that flows along the border of the state of Mato Grosso and Pará. Earlier in the year, in July 2017, works were temporally halted by protests demanding indigenous rights.
As large assets are ageing, major modernisation works are either planned or underway at hydropower projects across the country, including the 3,440 MW Ilha Solteira (1973) and 1,551 MW Jupia (1969) plants, both of which were privatised in a 2015 power auction. The 14,000 MW Itaipu Binacional (1984) plant, which in 2016 hit the record of generation over 100 TWh of annual production, is investing USD 500 million in a 10-year upgrade plan.
This country profile is featured in the 2018 Hydropower Status Report. Download the full report here.
This profile was last updated in June 2018.