Spotlight: Brazil’s small, mini hydroelectric outlook

Brazil’s small and mini hydroelectric projects are likely to have a new chance to compete in a regulated tender in 2025, Alessandra Carvalho, president of the industry's association Abrapch, told BNamericas. 

"We're hopeful about [mines and energy minister Alexandre] Silveira's governance, because he says that small hydro plants will have their place," she said, adding that the segment continues to suffer from "excessive environmental demonization." 

So far, the ministry has announced one tender for 2024, basically focused on thermoelectric and, possibly, battery projects. 

Carvalho advocates that small and mini hydro plants play a key role by delivering constant energy in a scenario of strong growth of intermittent sources, namely solar and wind power. 

Nevertheless, the undertakings have struggled to obtain construction licenses, while facing what Carvalho refers to as unfair competition with solar and wind projects, which are subsidized. 

“Small and mini plants deliver firm energy, ancillary services, build their transmission lines, without passing this on to the consumer. All this needs to be properly remunerated by the government,” she argued.  

The Abrapch president recalled that Brazil's hydroelectric reservoirs could not handle the water crisis in 2021 and criticized the increased use of thermoelectric plants.  

"Thermal power goes against the grain of the decarbonization discourse and commitments that Brazil has made internationally. Of course, some flexible, strategic thermal plants are necessary. But they should only be a backup for hydroelectric plants, which are the system's natural battery." 

Potential socio-environmental impacts of large plants with reservoirs have hampered the development of greenfield undertakings in the country in recent decades.

Even more recent projects, such as Belo Monte, Santo Antônio and Jirau in the Amazon region that do not have large reservoirs, have been the subject of environmental controversy.

But events such as the 2021 drought sparked debate about the resumption of such undertakings.

There are 75 small – and a minor portion of mini – hydroelectric projects totaling 1GW capacity that are in the initial phase of environmental studies, as well as around 500 in the advanced phase totaling 7.5GW and potential for another 5GW.  

"So we're talking about 14GW, which is equivalent to an Itaipu hydroelectric plant, with the potential for more than 100bn reais [US$19.3bn] in investments," Carvalho said.  

Brazil’s electric power watchdog Aneel has three classifications for hydro plants: mini hydroelectric generating units (CGHs) with up to 1MW installed capacity, small hydro plants with between 1.1MW and 30MW, and plants with more than 30MW.

According to Roberto Corrêa, vice president of Abrapch, CGHs continue to suffer from lengthy environmental licensing processes, even though they are run-of-river projects, i.e. with small or no reservoirs. 

He said that CGHs account for no more than 2% of the distributed generation matrix, which is dominated by solar energy. 

“There are more biomass thermal plants in distributed generation than CGHs, although there are many more CGH projects under study,” Corrêa told BNamericas. 

“We have huge potential, with huge gains for the matrix, because we can generate constantly, but we haven't managed to develop the projects at the right speed.”