Run-of-the-river hydro in Brazil: a viable alternative?
While reservoir hydro facilities guarantee a steady power supply, they often wreak serious environmental damage. Run-of-the-river facilities are an alternative, but they are costly and don’t guarantee the same steady supply of electricity. However, in Brazil, companies are beginning to take advantage of the Amazon’s potential.
Considering Brazil’s size and population, one would never imagine such a country being 64 percent reliant on hydro for its electricity; this is according to the National Agency for Electric Energy (ANEEL). However, Brazil made the choice to focus on renewable energies and capitalize on its natural resources, and in some ways at least, the strategy is paying off.
Brazil is home to the second largest hydroelectric dam in the world, Itaipu, with an installed capacity of 14 GW; although it is some way behind China’s Three Gorges dam, with its installed capacity of 22.5 GW. Such large-scale projects share one thing in common: they are reservoir-based. Reservoirs flood large areas of land and are therefore accompanied by an array of environmental and social issues, although they also serve a very important purpose in that they can store significant quantities of water that can be used to produce electricity in periods of drought.
In Brazil, environmental organizations have severely criticized these traditional reservoir-based projects, so in response the government decided to focus more on run-of-the-river hydro facilities, which are more environmentally friendly but less reliable because of a highly limited or non-existent water storage capability.
Eduardo de Melo Pinto, president director of Santo Antonio Energia, the company that operates the Santo Antonio hydroelectric dam, brings a technical perspective to this issue and discusses the challenges of locating non-reservoir based facilities in the lively waters of the Amazon.
“Although this new method [run-of-the-river] has a better environmental footprint, its power generating capacity is much more limited than traditional approaches, especially in the unpredictable Amazonian rivers, such as the Madeira River, where water flow can fluctuate anywhere between 4,000m3/s. and 38,000m3/s; such variations demand great flexibility.”
This is exactly the situation facing Belo Monte (11.2 GW), Jirau (3.75 GW) and Santo Antonio (3.5 GW), all of which are located in the Amazon region. Implementing such large-scale projects in the Amazon has always been a logistical nightmare. Duilio Diniz de Figueiredo, President of Norte Energia, the operator of Belo Monte, says: “To give a clear impression of the scale of this project, our two power plants are separated by 50km. In order not to impinge on indigenous territory we built a channel and reservoir by the Xingu River to channel the water needed for smooth plant operations [this channel is 16 km long, 25m deep and 210m wide].
“This region is logistically challenging, given that the river does not have a linear shape and is surrounded by dense tropical forest. To ease the movement of materials, we constructed a port to help reduce the costs incurred by transporting goods over ground.”
While the installed capacity of these hydroelectric dams is remarkable, their physical output guarantee or the actual amount of electricity produced can oscillate between 40 percent and 70 percent of their installed capacity.
De Melo Pinto also raises an interesting point. “In terms of investments and power generating capacity, building one hydropower plant with a large reservoir can be less expensive and more productive than building two similar-sized run-of-the-river plants.”
Ultimately, by building more of these run-of-the-river plants to compensate for the lack of power generation, Brazil may not be making the right choice. Not only is it important to decide what kind of hydropower plant to construct, it is more crucial to understand how this influences other variables such as environment and cost.
Albert C. Geber de Melo, General Director of Eletrobras’ Research Centre (Cepel) claims: “In 2007, we released the new manual of Hydropower Inventory Studies to correlate power generation potential and social and environmental impacts, as well as multiple uses of water.
“Through this methodology we can assess, for example, the trade-off between constructing one hydro plant of 10 MW or five hydro plants of 2 MW, taking into account costs, efficiency rates, social and environmental impacts, to find the best option.”
Simultaneously, Brazil has been developing its arsenal of small hydroelectric power plants (SHPP). These power plants tend to have an installed capacity ranging from 1 MW to 30 MW. To-date, 462 of them are spread across the country, representing a total installed capacity of 4.6 GW, says ANEEL. Although they can be rapidly implemented because of their small size, obtaining environmental licenses still remains a burden similar to that for large hydroelectric facilities.
Victor Paranhos, President Director of Energia Sustentavel do Brasil (ESBR), the operator of Jirau, clarifies: “I think environmental licensing should be simplified. A project like Jirau for instance, demands over 20 environmental licenses, which need to be annually renewed. In Germany, only three licenses are needed for a hydro project. I believe we can keep the same amount of environmental and social protection without requiring so many licenses.”
In addition to licensing, Paranhos highlights other issues. “Federal taxes in combination with state taxes such as Tax on Circulation of Merchandise and Services [ICMS] represent 50 percent of the cost of Jirau’s energy. We need to implement stable and fixed rules from the beginning of a project and avoid changing existing measures that can cause significant increases in a project’s cost. For example, Jirau faced a new problem when the state government decided to change the ICMS tax rate, increasing our cost by $200 million.”
SHPP also struggle to remain afloat. Valmor Alves, President Director of Electra Power explains: “being competitive at energy auctions and offering low-cost energy is a challenge that the sector has not been able to resolve. Currently, the price per MWh offered for SHPPs during an auction is $65. My perspective is that this price should be 15 percent higher, to make us competitive.”
The debate about having auctions by source and region to increase the competitiveness level of different energy sources has been taking place within the industry over the last few years. ANEEL and the National Operator of Electric Systems (ONS) are strongly in favor of it.
“None of the non-conventional renewable sources alone will be the solution to accommodating the increasing electricity demand of the country. To resolve this issue we strongly recommend having energy auctions by source and region,” says Hermes J. Chipp, ONS’ General Director.
Similarly, Romeu Donizete Rufino, General Director of ANEEL stresses: “managing auctions in this manner is fundamental to the sustainability of our energy matrix”.
On the performance side, Brazil has managed to build a high level of technical expertize and safety in the hydro sector. Since every dam is unique, their designs are complex. However, several players have managed to excel in this field.
Intertechne, a highly specialized design company from Curitiba, has been heavily involved in the design of the majority of Brazil’s hydroelectric dams. Its Chief Executive Officer, Antonio Fernando Krempel, declares: “We participate in nine out of 16 projects under construction, which represents a 56 percent market share. We are proud to be the design leaders of Brazil’s most significant projects such as Belo Monte, Santo Antonio and Teles Pires.”
Intertechne’s success is not only a consequence of 25 years of experience in the field with the largest projects, but reflects the company’s unique technical expertise within Brazil. “Our projects are 100 percent designed with 3D modeling software, while our competition is still limited to creating 2D plans. This makes our designs far more complete and valuable to our customers,” confirms Fernando Krempel.
Norte Energia’s Figueiredo also believes in Brazil’s capacity for innovation and claims: “At the beginning of my career, Brazil lagged behind, both in technology and innovation, but today I can proudly say that we have the most advanced technology and are capable of managing some of the most complex hydro projects civilization has ever witnessed.”