The Brazilian Committee of the World Energy Council (CBCME) is a non-governmental and non-profit organisation that represents Brazil in the World Energy Council. It has both corporate and individual members. CBCME works in conjunction with the World Energy Council to promote access, availability and acceptance of energy through: publication of its annual report, Brazilian Energy Statistics; identification of energy issues and policy recommendations; advising decision makers in both government and industry; facilitating dialogue between decision makers, experts and civil society; and implementation of action plans locally and regionally.
Mr. Pedro L O Jatoba Graduated in Electrical Engineering, in 1980, at the Federal University of Bahia State, Brazil, where he specialized in Telecommunications and Production Engineering.
Since 1980, he has been working in areas such as system control and protection for transmission companies, operation and dispatch, telecommunication systems and operation projects; general and financial management in distribution companies and business development at the Eletrobras group’s companies.
Since 2009, he has been heading the international department of Eletrobras, where business opportunities in renewable generation and transmission systems in South America, Central America, USA and Africa are evaluated and strategies are developed for international action and for conducting the business structuring process.
In 2014, he was named Superintendent of Foreign Operations at Eletrobras, position that which he still holds today.
Energy in Brazil
Three critical uncertainties identified by Brazil’s energy leaders in this year’s Issues Monitor are (i) IoT/Blockchain, (ii) Economic Growth and (iii) the Market Design of the power sector. Those issues show the effects of the three-year economic recession faced by the country from 2013 to 2016. These issues also illustrate the slow recovery from recent events such as the 2012 power sector reform, the critical hydrological period and the of liquidity crisis in the wholesale market. This crisis compromised the government’s funding capacity to play a strategic role in the development of new power generation capacity and transmission lines projects. Unfortunately, the electricity market structure was not prepared to deal with the sudden removal of the state’s financial support and, at the same time, to mitigate the effects of demand downturn related to the economic recession. This context led to uncertainties among energy stakeholders and investors and forced the new government to adopt an emergency plan in 2017/2018. The political effects of the recent impeachment process and new corruption investigation cases against some new government members have eroded the government’s capacity to succeed in approving the proposed sector’s adjustments in the Congress.
The position of IoT/Blockchain as one of the key critical uncertainties is emblematic of the existent gap between the Brazilian and other developed countries’ energy markets. Energy leaders in Brazil are concerned about the emergence and dissemination of new disruptive technologies without previous planning and changes in the market’s regulatory framework. There are also uncertainties related to the Economic Growth issue and to the implementation of a new Market Design.
On the other hand, three action priorities are highlighted in the Issues Monitor: (i) Renewable Energies, (ii) China and (iii) Digitalisation. Those issues reflect how stakeholders from the private sector are reacting to the crisis through the improvement of investments in new renewables electricity sources that can be funded by private capital markets as wind and solar sources, mainly considering the likely subsidy reduction. This is also closely related to the raising participation of transnational players in the marketplace, specifically with Chinese investors playing an important role in the adoption and dissemination of digital technologies and efficiency improvement.
IoT/Blockchain technology promises a disruptive future in the business model of energy trading. The fine tracking of the electricity flows, when associated with the Internet of Things – IoT, will boost the alternatives for trading and give new dimensions for electricity as a product. To secure all benefits from this new environment, it will be necessary to adjust regulation and consequently to change the business model of the electricity distribution and trading companies. The lack of a clear policy framework for this transition raises the uncertainty about the impacts of the application and dissemination of this set of technologies.
The recent Brazilian economic crisis was a result of a combination of economic policies that reduced the country’s potential economic growth and of a fiscal crisis that led to unsustainable growth of public sector debt. Brazil will only be able to resume its growth once it solves the fiscal problem. The country’s current huge overcapacity will sustain an initial recovery and boost development during the first years. However, in order to increase long-term GDP growth, the Brazilian economy requires productivity-enhancing policies.
The current regulatory framework of the Brazilian electric sector comes from the last reform made in 2004. After that, several changes have affected the market environment: the electrical sector reform accomplished in 2012, the critical hydrological period, the liquidity problem in the wholesale market, the inclusion of wind power in the electricity generation matrix, the adoption of new and more restricted environmental requirements for hydropower plant and dam constructions and the rising the penetration of distributed power generation in the grid. Energy leaders tend to agree that the existent market design cannot cope with all those changes and assure a good performance in the future considering the emerging disruptive events, such as the massive dissemination of electric mobility and distributed generation and the adoption of IoT/Blockchain.
Renewable energies offer a range of options to meet the growing demand for energy, particularly in the context of the pursuit of economic development, which takes into account social and environmental issues. Brazil has abundant natural sources of renewable energy, such as wind and solar power, hydraulic energy, small hydroelectric plants, ethanol and bio-diesel. These sources form part of the Brazilian strategy aimed at satisfying the growing demand related to the economy recovery. As such, their development may be sensitive to subsidy reductions. Investments made by Chinese companies in Brazil over the last 10 years amounted to US$55 billion, according to a survey conducted by the Brazil-China Business Council (CEBC). Chinese investment in Brazil’s electrical system is being done by big companies including State Grid, Three Gorges, Shanghai Electric and Spic Pacific Energy. These companies bring new elements to the local market as new technology providers. Access to Chinese capital market and new entrepreneurial practices that will contribute to improving the efficiency as a whole.
Fast-paced innovations have been disrupting several industries over the last decades. Despite having changed little in the last century, experts agree that on the next few decades it will be the energy sector’s turn. Companies will have to adapt to the increasingly complex supply chain, as variable and decentralised energy sources will become more relevant. The new generation sources (wind and solar) provoke the biggest impact on the sector, as they increase daily variability and reduce predictability into levels never seen before. In Brazil, growing relevance of wind and solar power also raises the challenge of aligning several new decentralised plants spread across the territory. Matching supply and demand has never been so complex. Fortunately, to withstand this complexity, digitalisation is also changing the operations landscape. Smart meters, remote controls, automated systems, real-time simulators, and other new technologies have increased their capability to predict, track, and respond to changes.
The election of a new Brazilian government provided the political conditions to address the energy sector’s critical uncertainties and action priorities. It has also laid the ground to developing publics polices that are expected to drive the Brazilian energy sector to a new era of higher efficiency and greater benefits to the society. The recovery of the Council’s Brazilian Member Committee and its participation on the discussions, studies, workshops, seminars and Congress will be very important for Brazil develop its energy sector, improving its safety, equity, environmental sustainability, governance and management.