Is Brazil reconsidering new hydro and nuclear plants to guarantee supply?

The worst energy crisis in Brazil in the last two decades has, once again, raised concerns about the security of its electric power matrix. And part of the answer could come from environmentally controversial sources, such as big hydros and nuclear power plants.  

Around 60% dependent on hydroelectric power, the country has been forced to use all of its thermoelectric resources – which are far more expensive and polluting – to guarantee supply, as well as increase electricity imports from Argentina and Uruguay. 

As a result, regulated and spot power prices have skyrocketed, adding more pressure to Brazil’s current wave of inflation. 

The situation could have been worse if it were not for the expansion of local wind and solar power installed capacity in recent years. However, the natural intermittency of these sources means a stable base of generation is needed to assure the nation’s power consumption needs are met at any time. 

Besides thermal plants, new hydroelectric projects could help fill this gap, but their potential environmental impacts have hampered greenfield developments in Brazil, mainly when it comes to large undertakings with water reservoirs. 

But even small hydro power plants can cause environmental damage by modifying the course of dammed rivers.  

“Building new large reservoirs or a series of small hydro plants makes no sense and will not get Brazil out of a new blackout. New plants of this type come with major socio-environmental impacts, especially projects in the Amazon region, and they cost more,” Larissa Rodrigues, project manager of Instituto Escolha, told BNamericas. 

She says the correct paths to be taken are to charge a price for the use of water according to the situation of water scarcity in each river basin and for all sectors of the economy and contract renewable plants such as wind, solar and biomass to complement the country's electricity generation.  

“With these two measures we would be able to increase the levels of the reservoirs and have the operation of the hydroelectric plants that already exist in the country, which total more than 109GW of installed power,” she added.

The optimization of existing hydroelectric resources is certainly on the table. In a recent interview with BNamericas, Claudio Trejger, the CEO of GE Renewable Energy's local hydropower division GE Hydro, said the company is betting on modernizing and upgrading facilities that are in operation. 

Andreas Wellmann, CEO of Voith Hydro in Latin America, believes that pumped storage hydro power plants can help Brazil improve its energy security. 

These types of plants  are designed to come online when needed, so as to quickly guarantee desired levels of generation. At the same time they are an option to store electric power, without environmental impacts, accumulating water in the upper reservoir during periods of low consumption, and generating energy from that water during periods of high consumption.

“The upper and lower reservoirs are generally quite small in size, which guarantees reduced environmental impact as well. In the Brazilian case, along the coast we also have several places with appropriate characteristics for this type of installation,” he told BNamericas. 

According to Wellmann, Brazil was a pioneer in the world in this area. In the 1940s the Traição and Pedreira reversible plants were installed on the Pinheiros River in São Paulo state. These plants were part of the complex that reversed the course of the Pinheiros River for subsequent generation of energy at the Henry Borden plant. Today these machines only pump water in the direction of the Billings water reservoir in São Paulo. 

“We've studied and identified uses for pumped storage plants with a potential of more than 142GW in 30 selected projects in Rio de Janeiro state alone,” Wellmann said.  

Paulo Arbex, president of local small hydro plant association Abrapch, says the future is hydroelectric power plants with multiple-use dams, serving both power generation and crop irrigation. 

“We see this crisis much more as an issue of water resource management than a water scarcity issue. Brazil is the Saudi Arabia of water resources, with 12% of the world's potable water, so it's absurd that we lack water for crops or to generate energy,” he told BNamericas.   

Brazil’s 10-year energy expansion plan (PDE 2030) mentions seven possible new hydroelectric plants – either run-of-river or reservoir – over the next 10 years, and 15 after 2030.  

However, the base case scenario, despite envisioning the possibility of expansion and modernization of the existing generation park, does not outline any new hydro plants in the next decade, since the supply problems have shown that it is not necessarily an economically attractive option for expansion.

Among the most attractive hydroelectric projects for the system are the Tabajara plant, which saw advances in the permitting process in the last few months of 2020, and Bem Querer. 

"Despite being listed as a project only after 2030, they're characterized by their high contribution to meet the energy and power requirements of the SIN [national power grid], by having a affluence profile complementary to the largest basins in the national grid and, with this, adding energy at times of greatest need," a spokesperson for the mines and energy ministry (MME) told BNamericas via email.  

FINANCIAL SUPPORT

Earlier this week, development bank BNDES approved the possibility of temporarily suspending debt service payments for operations supporting investments in hydroelectric energy generation (above 50MW), in the direct, indirect non-automatic and mixed modalities. 

The measure encompasses a set of 26 eligible projects, for which the bank is a relevant financier. 

"This new measure is yet another example of BNDES' timely contribution in seeking greater resilience for the national hydroelectric generation park, which is faced with an extremely atypical water situation," the director of infrastructure credit at the bank, Petrônio Cançado, said in a statement. 

NUCLEAR POWER

With regard to nuclear energy, the PDE 2030 points to the need to resume studies of potential sites for expansion.  

The MME has been striving to finish construction works on the Angra 3 plant since 2019. It is scheduled to come online in 2026. In June, BNDES signed a contract with Tractebel Engineering to structure the project for the conclusion of the plant. 

The national energy plan (PNE 2050) includes an expansion of up to 10GW in nuclear generation, which would be a five-fold increase from the current installed capacity in the Brazilian electricity matrix.

The MME spokesperson highlighted that nuclear energy has the advantages of not releasing greenhouse gases and using fuel produced domestically, which allows the reduction of vulnerabilities in supply. 

Nuclear power plants occupy relatively small areas and can be built close to large consumer centers, eliminating the need for long transmission lines.

“From the point of view of energy planning, the nuclear option will have an important role to play in the Brazilian electricity matrix, as will renewable sources,” the spokesperson added.