Given Brazil’s substantial size, vast natural resources and high energy demand growth, the energy sector in Brazil has attracted significant investment from both local and international sources. Although Brazil contains the second largest oil reserves in South America (8.1 billion barrels), the country remains a net importer, especially for specialty oil products. The National Petroleum Agency regulates the petroleum sector, which is dominated by the state-controlled company Petrobrás. Brazil has natural gas reserves of 8.2 trillion cubic feet, but has recently sought additional gas from neighboring countries with greater gas reserves, via international pipelines.
Brazil has about 80 GW (June 2001) of installed generation capacity, about 90% of which comes from hydro. Although hydro is a very cost-effective source, the recent droughts in 2001 left the country with a power shortage and forced energy rationing. This situation can partially by attributed to under-investment in the sector; from 1990 to 1999, electricity demand grew by 55% while capacity increased by only about 25%. While most of the electricity distributors have been privatized, some of the key generation assets still remain part of Eletrobras, the government electricity company.
As a result of the shortage, the energy sector has received a greater level of interest from the Government and investors. Meanwhile, the regulatory framework is still being evaluated to determine what changes should be implemented. In this context, the sustainable energy represents a significant market opportunity in Brazil, as it can cost effectively add capacity, especially in remote areas where grid expansion requires subsidies. In addition, with growing concerns regarding the environment and incentives such as carbon credits being created to stimulate such investments, the market opportunity increases. Moreover, sustainable energy sources are often the most practical solution for the approximate 20 million Brazilians who lack access to modern energy sources.
|Brazil Energy Market|
|General Information on Brazil|