João Bosco de Almeida, President, CHESF, Brazil
João Bosco de Almeida, President of CHESF, gives an overview of what he considers the most promising energies for CHESF to invest in, mainly in the Northeast of Brazil, a region where solar and wind are abundant. He also gives a strong warning about the country’s choice to use run-of-the-river dams over reservoirs.
As the president director of one of Eletrobras’ main subsidiaries, responsible for fourteen hydro power plants and one thermal power plant, what has been on your agenda to bring the company forward?
Chesf is one of the largest generation and transmission companies of the country. With 20,000 km of high voltage transmission lines and nearly 11GW of installed capacity from renewable energy projects, Chesf is a unique player in the Brazilian energy market.
Chesf has, since the beginning, focused on the Northeast part of Brazil in the Sao Francisco river basin. During approximately 55 years, Chesf has been known as a driving force developing the Northeast part of Brazil, as the region’s energy consumers have depended on our capacity to provide power. Our hydropower plants stand across the route of the Sao Francisco and Pernaiba rivers.
Given that today our SIN National Interconnected System carries power all across the country, from Rio Grande do Sul to the Northern regions, our energy system has become increasingly competitive, even more so now with the new power model which has given suppliers access to regions throughout the country. We have remained highly competitive in the North, and are open to producing in other regions if we manage to win at auction or gain new concession contracts.
Chesf has been investing in a diverse manner, and today we are extremely satisfied with our investments in wind power. We are constructing a large wind farm at this moment, promising 180 MW of installed capacity. This would be one of Brazil’s major wind investments and should be operational by the end of 2013. We are investing in partnership with other private sector actors in wind projects located in Bahia and Rio Grande do Norte regions.
Bahia region holds as well a very large reservoir, Sobradinho, and this dam, constructed by CHESF, is amongst the biggest in the world. In the area around this dam, spread over 200 km, there are very strong and steady winds, highly suitable for wind power development. Furthermore, this region has ideal solar exposure all year long, and solar investments capitalizing on this region’s unique natural resources are highly attractive. In five years, solar energy should attain business potential that wind power has today. We are slowly expanding into this niche, and we currently have a small 2.5 MW solar pilot project under construction in Pernambuco, to study maintenance costs, and gain further information on the practicalities of solar energy.
Looking to transmission, we are prioritizing expanding our assets. Total investments of USD 1.75 million from new contracted projects in generation, transmission and partnerships projects until 2014 will give us the growth we are looking for. Of these investments 70 percent will be directed to transmission and the rest to generation. These new projects include many transmission lines, substations and modernization projects, automation and digitalization. Our participation in projects such as Belo Monte, Jirau, Rio Madeira and others are part of our strategy for steady, robust growth.
With recent developments on reservoirs incapable of providing the energy needed for the country in periods of dryness, hydropower projects seem to be prioritizing run-of-the river systems which are more environmentally friendly. How is it possible to combine environmentally initiatives while at the same time ensuring the energy needed for the country?
Use of reservoirs means society will benefit from low economic costs, but may be penalized by higher environmental costs. This dilemma must be objectively considered and society must take part in this decision. Today it seems that the society prefers reducing large reservoirs and focus on run-of-the river dams which are more eco-friendly. The main issue is that even though run-of-the river dams are more eco-friendly, they are more costly and less reliable as they are susceptible to fail depending on the river’s level. This means they require costly support from thermal power plants fueled by sources such as coal, oil, diesel and natural gas, which are large contributors of carbon emissions. Today it is not possible to rely solely on wind and solar power to complement hydropower plants unable to operate at peak levels. Currently the only viable solution is thermal power plants, which are very expensive dirty sources of power. This applies particularly to coal. The only other reliable and clean source is nuclear, yet with international events highlighting recent terrible catastrophes, this source cannot stand in the front line.
Personally I defend that we should combine Brazil’s giant hydro potential with nuclear power as base load energies. They are highly efficient, reliable and cheap. These could be complemented with solar and wind power. This would allow us to maintain a highly eco-friendly matrix while at the same time managing to be efficient and reduce costs.
Transmission lines are the backbone of the national interconnected system and as the leading transmission line company with more than 18,000 km in Brazil, what are the challenges of supplying energy in such a large and diversified country?
Our transmission lines and SIN are longer than all of Europe’s transmission line systems put together. This Brazil transmission context is complex and reliability is a priority. In the future, if we are to exploit new hydro resources located in the Amazon region, new very large transmission line systems will be required to transmit energy from the river stations to the cities substations and private houses.
If our focus becomes more on thermal power plants, transmission line energy requirements will be less pressing as thermal power plants can be located close to sources of energy demand.
I believe that we will keep expanding in the Amazon region with small hydropower plants, those under 30 MW in scale. We will need to rely on robust transmission lines and construct more Direct Current transmission lines, which are not yet well established in Brazil. Finally we need to reinforce our current transmission lines as Itaipu, Brazil’s largest hydro dam, is providing energy for the southeast regions, while these same regions export energy simultaneously thousands of kilometers to power the North of Brazil.
Chesf participates and is one the main shareholder in some of the most important projects for the country, including Belo Monte, Jirau, Pedra Branca. Given that hydro represents 97 percent of the company’s total energy production and is diversifying in other areas—wind, solar, biomass—where do you see the growth coming from?
Wind primarily, and solar later on will contribute to our growth. With 250 days of sun exposure per year the northeast region is the place to invest and we have great expectations from our solar pilot project. Our large wind farm investment should give us a competitive advantage in this field in the future. Given that Brazil already has contracted over 8,000 MW and 20,000 MW of wind turbines can still be developed, the potential growth in this field is incredible. We intend to be active investors on this front and we have certainty that these sources represent the future for Brazil.
In an previous interview you mentioned, “Chesf will remain strong over the next 30 years.” How are you planning to accomplish this target?
We will become leaders in solar and wind power. These will make us highly competitive and profitable and transform us into Brazil’s most eco-friendly company.
Our operations in the Northeast will contribute further to the development of these regions, which today are growing at double digit pace. These areas are poor and lack infrastructure in comparison to the southeast of the country, but we are extremely proud to participate in their future economic prospects. Modern industries like the automotive and petrochemical industries as well as technologically oriented businesses are setting their premises in these regions following the energy sectors lead.