With the eighth-largest economy in the world, Brazil has a clear need for power, but balancing supply and demand has proven tricky in recent decades. Even in a country where over 80% of generation capacity comes from renewables, planning for future capacity additions isn’t straightforward or easy.
On the night of Nov. 10, 2009, 18 of Brazil’s 26 states were abruptly plunged into darkness. For more than two hours, the failure of three transmission lines that deliver power from Itaipú dam — a 14,000-MW hydroelectric power plant that straddles the border between Brazil and Paraguay (Figure 1) — created a domino effect. The outage took some 28,800 MW out of the system — nearly 50% of the power available on the grid at that time — blacking out the country’s largest cities, including São Paulo and Rio de Janeiro.
1. The day the giant fell. Brazil relies on the mammoth 14,000-MW Itaipú hydroelectric power plant on the Paraná River, bordering Paraguay, for 20% of its electricity. Built from 1975 to 1991 in a joint development venture with Paraguay, the 8,000-meter-long and 146-meterhigh dam features 14 segmented sluice gates with a total potential discharge rate of 62,000 cubic meters per second. No one could have anticipated total shutdown of the world’s biggest dam after China’s Three Gorges—but it happened, on Nov. 10, 2009, for the first time in its 25-year-history. Short circuits on surrounding high-voltage transmission lines, triggered by bad weather, have been blamed for the blackout. Courtesy: Itaipú Binacional
Tens of millions of people were affected — and not just in Brazil. All of Paraguay briefly lost power, as did parts of Argentina. People were trapped in elevators, stranded on commuter trains. Hospitals were forced to use emergency generators. Thousands swarmed roads, walking alongside chaotic traffic. Rather than be stuck in sweltering apartments, others took to bars to drink by the light of their cell phones. When power was restored just before dawn, as a BBC radio listener reported, cheers resounded from every window — it was almost as if Brazil had scored a soccer goal, he said.
The world watched warily as the event raised doubts about the reliability of the country’s energy infrastructure. Some analysts pointed to underinvestment; others claimed the grid had been compromised by hackers. It was implied that Latin America’s powerhouse, whose robust economy had weathered the global crisis, was unready to host two major global events: the World Cup in 2014 and the Olympics in 2016.
A Dark Age: The 2001 Power Crisis
For Brazilians, the Nov. 10 blackout brought flashbacks of an energy crisis that had almost crippled the nation’s development. On June 1, 2001, the government of then – Brazilian President Fernando Henrique Cardoso ordered a 20% electricity consumption cut to avoid an uncontrolled collapse of the national grid from a shortage of electricity. As the country reluctantly introduced rationing, the shock of the draconian measure shook the world.
Even at the beginning of the decade, as they published dire forecasts that the crisis could wipe out up to 20 or 30 years of economic growth in as little as a year, Brazil’s media were calling for the government to confront the crisis, beginning by admitting its cause. As one of Brazil’s largest weeklies, Istoé, observed just as the 2001 crisis began, "arriving at the blackout took a lot of time and obstinacy." Others said that the fateful crisis was the result of a deliberate policy — one that achieved an intended result; it had stemmed from two decades of the interwoven policies of privatization, environmentalism, and International Monetary Fund debt looting.
Case studies of the Brazilian crisis in subsequent years revealed that it had its roots in worsening mismatches between the expansion of electricity supply and demand throughout the 1990s. Despite market-oriented reforms implemented after 1996 that were aimed at boosting private investment, installed capacity expanded only 28% from 1990 to 1999, whereas electricity demand increased by 45%, says a 2005 study from the Organisation for Economic Cooperation and Development.
Recognizing the need to tackle the supply constraint — because an investment in new hydropower plants was unlikely to compensate for delays that took place in the late 1980s and early 1990s — the government launched the Programa Prioritário de Termoeletricidade (PPT) in 2000. This program was designed to encourage investment in gas-fired power plants and develop the market for natural gas. However, because of regulatory uncertainly and the high cost of gas — imported from Bolivia — the PPT failed to provide strong enough incentives for new investment. Of 49 planned power plants, only 15 were built, adding about 4 GW in new capacity. Most of these plants came online too late to avoid the power shortage in 2001.
In addition to the supply shortfall, the country, which today relies on hydropower for more than 80% of its generation, suffered an unusually long drought. As water volumes in Brazilian dams, after years of overuse, fell to their lowest in two decades, the already overstretched power system collapsed.
Among the government’s first actions to manage the crisis was appointing a special commission, Câmara de Gestão da Crise de Energia Elétrica. That group recommended and helped implement a price-based rationing program — rejecting the more common solution of rolling blackouts. Referred to as the quota system, the program was based on historical and target consumption levels. It had high penalties for excess consumption, bonuses for energy savings, and some freedom for large users to trade their quotas in a secondary market.
Owing largely to the semi-voluntary quota system — coupled with a television information campaign and US$200 million in government bonuses to residential, industrial, and commercial customers — electricity consumption dropped by 20%.
At the same time, however, the Brazilian government engaged in drastic interventions on the supply side, implementing an emergency program for power generation and creating additional incentives for investment in short-term power supply projects. The government also created a special company, Companhia de Geração Térmica de Energia Eléctrica (CGTEE), for buying electricity on an emergency basis. These measures produced proposals for 117 new generating units with a total capacity of 4 GW. The company eventually purchased 2.1 GW of capacity, mainly from small-scale diesel-powered generators and small power plants firing sugar cane residuals (known as bagasse). The average contract price for some of these power sources has been cited at US$100/MWh — nearly three times the price commanded by the quotas trading in auctions at that time.
Rationing was finally lifted at the end of February 2002, but even by 2003, consumption did not rebound. This persistent reduction in demand, along with the increase in installed capacity after 2001, created excess supply, which adversely affected generators and some distribution companies. The situation was eventually amended with government-approved tariff increases — some as high as 140%, between 1995 and 2002.
Email
Comments
Print
Reuse
