· Português 
Search OK
CCBC Site
Home
Edição nº 33
Edição nº 32
Edição nº 31
Edição nº 30
Edição nº 29
Edição nº 28
Edição nº 27
Edição nº 26
Edição nº 25
Edição nº 24
Edição nº 23
Edição nº 22
 · Cover Story
 · Article
Edição nº 21
Edição nº 20
Edição nº 18
Edição nº 17
Edição nº 16
Edição nº 15
  Edition nº 22

Cover Story

Energy for growth

With plans to increase its electric power potential and to diversify its generation sources, Brazil creates new business opportunities for Canada, nowadays one of the main producers of energy in the world

Louis Génot, do Rio de Janeiro

Canada, the world’s sixth largest electric power producer, faces generation and supply challenges similar to those of Brazil. Among them, the continuous increase in demand, the dependency on power for growth and the intensive consumption of electric power to extract natural resources. Similarities also include long transmission lines and the prevalence of hydroelectric plants, which bring the two countries even closer together. Companies of the industry and authorities understand the situation and are beginning to take advantage of business opportunities, partnerships and exchange programs in different areas, with more interest. “For example, we have already celebrated agreements with Canadian universities that send technical teams to assess the national generation capacity using small hydroelectric plants. There is much potential to develop joint projects”, states Ubirajara Rocha, technology director of Eletrobrás.

Data in the 2008 National Energy Balance of the Ministry of Mines and Energy (MME) shows that, from 1970 to 2007, the trend has been for global consumption to grow, including oil, natural gas and electric power, among others. From 1990 to 2007 alone, the total increase was 69%. More recently, in October, Brazilian residential and commercial electric power consumption approached the level of industry, changing the country’s supply profile. Social aspects have also contributed, with higher income and access to credit fostering the purchase of home appliances. Furthermore, one should expect excess demand due to the preparatory activities leading up to the 2014 World Cup and the 2016 Olympics.

The industrial sector is among the most adversely affected by the lack of national strategies. Without adequate and stable supply, machines require preservation or even need to be switched off, increasing production costs. In order to cope with the future, the federal government needs to invest approximately US$ 800 billion until 2030, according to the National Energy Plan (PNE - Plano Nacional de Energia), a study conducted at the request of the MME, with long term suggestions to expand Brazilian energy supply by 2030. In Canada too such concerns are topics for debating. Reformulating and building generation, transmission and distribution infrastructure is budgeted at US$ 185 billion by 2030, according to the International Energy Agency (IEA).

In the fight against time to adopt measures of great complexity, the two countries may take advantage of the reciprocal need to renovate and innovate. “Canada has always invested here, but there are increasingly new opportunities. The market grows with new needs in technology and human resources, mainly as concerning renewable sources. That is why technological transference may be important for future business”, assesses Alberto Guerreiro, director of Empresa de Pesquisa Energética (EPE).

Quebec is a reference for suppliers and investors from all over the world. In a recent visit to Brazil, the minister of International Relations, Pierre Arcand, pointed out that 95% of the province’s total electric power generation, with a capacity of 47,000 MW, comes from hydroelectric generation, representing half the national production and ranking the province fourth in the world. “Canada and Brazil share a common characteristic: a strong hydroelectric base. Furthermore, Canadians could play a distinguished role in the development of our long distance transmission lines, a field in which they have much experience”, analyzes Rui Guilherme Altieri da Silva, the superintendent of Generation Services Regulation of the National Electric Power Agency (Agência Nacional de Energia Elétrica - Aneel).

According to him, it will be necessary to invest in other sources to avoid future shortages in supply caused by depletion or unpredictable factors, such as the blackout on the past 10th of November that affected mostly the southeastern region and a part of Paraguay. In this context, renewable energy comes into the spotlight. In December, the federal government staged the country’s first wind energy auction. The MME believes that by using state-of-the-art equipment the potential may reach 300,000 MW, exceeding that of the hydroelectric plants. In total, 441 companies, of 11 States, submitted projects that total 13.34 GW – the Itaipu plant, responsible for 20% of the whole system’s supply, has an installed capacity of 14 GW. Presently, the 35 Brazilian wind energy parks, concentrated in the south and southeast, produce 547 MW.

Initiatives such as these have put dynamism into business. “We are betting a lot on the complementarity between energy sourced from wind and in hydroelectric plants. In Brazil, the periods when the hydroelectric plant reservoirs are at their lowest capacity coincide with the months when winds are the strongest for the generation of power from wind”, says Michael Morgenroth, partner and director of the Mechanical area at Hatch, a Canadian consulting firm specializing in this field, which has operated in Brazil for 10 years.

Canadá ranks 12th in the world in terms of installed wind power capacity and the percentage of electric power produced from wind. This resource supplies 1% of the country’s demand, lighting approximately 860.000 homes. “With the growth in 2009, we are close to reaching the target of supplying 20% of all of the country’s electric power by 2025. Meeting this objective is expected to generate approximately 80 billion Canadian dollars in investments and to create more than 50,000 jobs”, explains Robert Hornung, president of the Canadian Wind Energy Association (CanWEA). Also in other segments the experience of many decades favors the planning of new joint projects.

Canadian company Telvent, with a staff of 200 people in Brazil, is upholding its market expectations, notwithstanding the unknowns brought by the international financial crisis. “We supply automation supervision programs, both for generation and distribution. The company Light, for example, uses one of our systems in its control center. For many reasons, we have an excellent medium and long term outlook in Brazil, which has the advantage that it offers a greatly diversified market”, points out Leandro Mendonça Caram Santos, business manager of the Energy and Environment Division.

In coming years, this diversification will increase even more. According to PNE, 45% of all the power distributed to Brazilian consumers will be renewable by 2030. To that end, the use of sugarcane to produce ethanol, and the waters of Amazonia, may play a fundamental role. The study showed the MME that thermal generation (nuclear, natural gas and mineral coal) will double its share in the energy matrix by 2030, from the current 8% to almost 18%. By the same token, non-hydric renewable sources, such as urban residues, sugarcane biomass and wind energy plants will also require considerable growth, reaching the 5% level of domestic electric power supply.

In view of this outlook, the companies most accustomed to the Brazilian market also show interest in investing. Such is the case of Timberland Equipment, headquartered in Woodstock, in the province of Ontario. “Our main business deals were closed for Petrobras oil platforms. However, we want to be more present in the electric power area. We took a major step forward in 2008, with the sale of equipment to be used in the transmission system of the power plants on the Madeira River”, comments Tim Rivard, Product manager. In turn, consultancy firm Axys uses the same tactics to expand based on prior experiences. “We supply software that helps operators monitor water flow management. That is why we can have many opportunities in the hydroelectric field”, predicts Jeremy Hancyk, director of International Business Development in the hydrology area.

Red tape – Among large groups, Brookfield Renewable Energy, with 34 hydroelectric plants built in the country, has its goals clearly defined. “We noticed a favorable environment and therefore did not give up on investing. Two new plants are being built, one in Santa Catarina, the other in Minas Gerais. In the electric power area alone we are 220 employees”, emphasizes Geraldo César Mota, of the Investment and Sales Division. Three other facilities are planned to be built still in 2010 – of the approximately US$ 90 billion managed by the company worldwide, US$ 9 billion are set aside for projects in Brazil. However, the executive mentions some difficulties in doing business. Among them, the lack of clear rules for the auctions and red tape. “We face problems with licenses due to changes in environmental norms. For big projects regulatory stability is important”, states Mota.

Lack of financing, according to Mota, is another obstacle to be overcome. On the Canadian side, Export Development Canada (EDC), the official credit agency for Canadian exporting companies, believes it is strategic to encourage bilateral trade relations in this field. “Our infrastructure and environment area, which includes investments in electric power, has a portfolio of US$ 450 million. Companies in our country are capable of supplying all kinds of services and products, from small parts to the construction of entire plants. However, we have not explored everything this area has to offer in Brazil. We intend to encourage them to invest more here”, assures Walt Hutchings, vice-president of International Business Development. In 2008, funds destined to the Brazilian economy registered a 131% increase, to 3.4 billion Canadian dollars.

In turn, the National Economic and Social Development Bank (BNDES) is also a source of financing, but a foreign company must get a taxpayer registration. “We prioritize infrastructure investments, whereas for the construction of a plant, a project must have 60% of what we call “local content”. In other words, this share of goods and services must be purchased from Brazilian suppliers”, explains Ricardo Cunha da Costa, advisor on Infrastructure. In order to bypass situations such as these, some Canadian entrepreneurs seek other means to have their products purchased by Brazilian trade partners.

Specialized in the manufacture of heat transference systems in hydroelectric plants, the company Enerfin, of Quebec, celebrated partnerships in your country so as to not lose sales. “We closed deals with large international groups because they are used to supplying equipment to Brazilian plants. These multinational companies are used to including our technology in their “packages”. We intend to have our quality standard recognized, so as to come into Latin America”, states Claude Dugré, the company’s president.

Due to the industry’s technological complexity, Costa sees the possibility of Canada – recognized for its innovations in this field – standing out in coming years. According to him, available funds only tend to increase. “In 2008, we granted more than R$ 17 billion for electric power. By August 2009, we had reached R$ 11 billion. Apart from that, we always attempted to encourage the use of renewable sources, such as hydroelectric, wind and biomass. However, in recent years, it became clear to us that Brazil will have to diversify as much as possible, including implementing thermoelectric plants”, explains Costa.

This is the same assessment of Dilcemar de Paiva Mendes, member of the Board of the Brazilian Association of Independent Electric Power Producers (APINE). According to him, opportunities are open for who, from Canada, wishes to do business in Brazil. “To guarantee our independence in energy supply we will require a lot of local and foreign investment. It will also be necessary to adapt our suppliers to long term strategies. I do not doubt that this may be a good opportunity for Canadian companies”, concludes Mendes.

Translation to English: BeKom Comunicação Internacional

Looking for investors

In December 2009, three auctions organized by the Ministry of Mines and Energy (MME) showed Brazilian and foreign groups the federal government’s interest in attracting investors for the electric power industry. See the characteristics of each auction below:

Wind energy
The first auction in the country to select the best projects, it encompasses the supply of 13.34 GW for 11 States. The contracts run for 20 years, with the supply expected to begin on July 1, 2012.

New Energy A-5
Auction for the distribution of electric power, in 2014, resulting from new projects. In total, 81 plants were registered, representing 19,168 MW of installed capacity. The contracts run for 30 years for Small Hydroelectric Plants (Pequenas Centrais Hidrelétricas – PCH) and Hydroelectric Plants (Usinas Hidrelétricas – UHE) and for 15 years for other generation sources, such as bioelectricity.

Belo Monte hydroelectric plant
Located on the Xingu River, in Amazonas, this megaproject will have an installed capacity of 11,233 MW. It will be the second most important hydroelectric plant in Brazil, after Itaipu, and the third in the world. The contracts will run for 30 years and supply is planned for 2014.

Historical presence

The creation in 1899 of Anglo-Canadian São Paulo Tramway, Light and Power Company, in Toronto (Ontario), initiated the long trajectory of relations between Brazil and Canada in the electric power and transportation sectors. Responsible for production, distribution and sale of electric power in the city of São Paulo – the first public electric lights were installed on Barão de Itapetininga street in 1905 –, the company also managed the city’s tramcars, at a time when the city gave signs of imminent urban and population growth. In Rio, the Rio de Janeiro Tramway, Light and Power Company, founded on June 9, 1904, managed the introduction of electric tramcars in the city in the beginning of the 20th Century, in addition to generating, distributing and selling electric power. Its arrival was accompanied by a number of technological innovations, which reflected in the urban setting. Along the rail tracks, Light’s engineers and specialists redesigned streets and districts, directly influencing the dynamics of what was then the federal capital.


Next >>