The Use of Wind Energy for Electricity Generation in Brasil

The Use of Wind Energy for Electricity Generation in Brasil
The Use of Wind Energy for
Electricity Generation in Brazil
A thesis submitted for the degree of
Master in Science
In
Energy Systems and the Environment
Vanessa Reich de Oliveira
University of Strathclyde
Department of Mechanical Engineering
September 2002
i
The copyright of this thesis belongs to the author under the terms of the United
Kingdom Cpoyright Acts as qualified by University of Strathclyde Regulation 3.49.
Due acknowledgemnt must always be made of the use of any material contained in,
or derived fro, this thesis.
ii
Acknowledgments
On the completion of this project, there are a number of people whom the author
feels indebt for their help. First, I would like to thank my supervisor Dr. Andrew Grant
for his time, advice, and assistance during this thesis work.
I would also wish to thank the Energy Planning Group from Federal University of Rio
de Janeiro for their help, specially Dr. Mauricio Tolmasquim and Ricardo Dutra, the
Electric Research Centre for the supply of electric data, CEMIG, COPEL and SEMC
(Energy secretariat of RS) for the supply of wind data. I would also like to extend my
thanks to a number of persons from different wind developers companies, who,
patiently attended my interviews, answering my questions and providing me an
updated view of the wind market in Brazil: Patricio Junqueira and Wagner Ksenhuk,
from Marubeni Corporation, Emmanuel Simon, from Siif Energies do Brasil, Paulo
Mauricio, from Light, Andre Leal de Sa, from Seawest Windpower do Brasil and
Maria Regina Araujo, from Enerbrasil.
Finally, I would like specially to thank the British Council and British Gas, for
providing me with the scholarship which enabled this project.
My final words go to my parents and my fiancée, for the trust and support. I will never
be able to reattribute everything they have done for me.
iii
Abstract
This thesis report investigates ways of incorporating the use of wind energy in the
Brazilian Energy Matrix and the conditions required for the creation of a local wind
power market. The report details the current situation with wind power worldwide,
with focus in markets where wind power has a major contribution to electricity
generation. Those examples and the conditions that created such development
degree are analysed more carefully.
The position of the Brazilian Government regarding renewables is discussed and the
current market mechanisms are explained. Also an analysis of the actual electricity
market in Brazil and the restructuring process it has been undergoing in the last
years is conducted to understand how wind power would fit in this new scenario.
Finally, some case studies are presented to analyse the technical and economic
feasibility of wind power generation for Brazil, covering all the aspects of developing
this industry in the country.
iv
Table of Contents
Copyright .…………...………………………………………………………………………ii
Acknowledgments ...………………………………………………………………..iii
Abstract ……………………………………………………………………………...iv
Introduction …………………………………………………………………………v
Chapter 1 – World Wind Market Overview ...………………………………….1
1.1 – Wind in Europe ……...………………………………………………..3
1.2 – The Wind Market in Denmark …….....…………………….…….….6
1.3 – The Wind Market in Germany ……………………………………..17
1.4 – The Wind Market in Spain …………………………………………24
1.7 – Support Mechanisms – Main Conclusions ……………………… 29
Chapter 2 – Electricity market in Brazil and the Potential Use of Wind
Power Generation ..………………………………………………31
2.1 – Brazilian Energy Balance ……..……………………………………31
2.2 – Energy Matrix ……………………..…………………………………33
2.3 – Electricity System in Brazil ……………………………………...…34
2.4 – The Use of Renewables Sources fo Electricity Generation in
Brazil……………………………………………………………...… 44
2.5 – Wind Energy in Brazil ………………………………………………45
2.6 – Conclusions ………………………………………………………....65
Chapter 3 – Case Studies ………………………………………………………67
3.1 - Procedures for the Evaluation of Wind Sites and the Use of
Computational Tools……………………………………………………….67
3.2 – State of Rio Grande do Sul ……………………………………..…76
3.3 – Morro do Camelinho – State of Minas Gerais ……...……………88
3.4 – State of RN – Macao ……………………………….………………89
3.5 – Economical Feasibilty ……………………………….……………..91
Chapter 4 - Conclusions ……………………………………………………….94
References ………………………………………………………………………..96
Bibliography ………………………………………………………………………97
v
Introduction
Several countries in the world are looking with increasing interest at wind energy,
both for its use in an environmentally sustainable supply, and for its potential to
create new economic activity.
Today, wind prospecting, research and development, turbine manufacturing, and
installation employs more than 35,000 people worldwide, and the industry has
become a 1.5 billion (USD) dollar world industry [1]. The growth rate of the Danish
and German part of the industry within the past five years even exceed the growth
rate of Nokia, Europe’s largest mobile phone manufacturer, or the number of server
on the Internet. [2]
Generating electricity from the wind makes economic as well as environmentally
sense. Wind energy is already competitive with coal or nuclear power across most of
Europe, especially when the cost of pollution is taken into account. What is more, the
cost of wind energy is falling, whilst other energy technologies are becoming more
expensive.
Brazil’s wind potential is far better than Europe’s, according to companies interested
in the Brazilian market, such as Asea Brown Boveri (ABB). High stable offshore
winds are close to population centres and the windly season is complementary to the
rainy season, so wind power would work well in conjunction with the country’s
hydroelectric resources. Given this potential, this thesis aims to:
•
•
•
Look at the conditions for the creation and establishment of a local wind market,
covering the economical, social and environmental impacts;
Discuss the energy policy and market mechanisms that will allow such
development;
Show the benefits of integrating wind power generation with Brazilian
hydroelectric system
First, a closer look is given to countries where the wind industry is well established to
understand the market conditions that allowed this position, like Denmark, German,
and Spain. The UK market is also analysed understand the difficulties faced for the
deployment of wind energy in a restructured market and to get the lessons learned
from it.
An analysis is conducted to current Brazilian situation, willing to identify what
effective mechanisms and energy policy instruments could be replicated and
exposing the initiatives done so far.
To achieve an effective integration of wind generation in the local market, the
structure of the Brazilian energy matrix is explained and an overview of the electricity
market is shown. A special attention is given to the restructuring process of this
sector, to analyse the sustainability of wind in an “open” market.
The need for investments in new generating capacity in Brazil was reinforced last
year, with the outage period the country faced, and the need for diversification of the
actual hydro-based energy matrix to create new options emerges as one more
reasoning for the development of wind energy in the country.
At last, case studies for different regions are presented, assessing the technical and
economic feasibility of wind power generation.
vi
Chapter 1 - World Wind Market Overview
Some 6,500 megawatts (MW) of new wind energy generating capacity were installed
worldwide in 2001, amounting to annual sales of about $ 7 billion. This is the largest
increase ever in global wind energy installations, well above the capacity added in
2000 (3,800 MW) and 1999 (3,900 MW). The world’s wind energy generating
capacity at the close of 2001 stood at about 24,000 MW1.
30000
25000
Wind Energy Capacity
(in MW)
Additions in year
20000
15000
10000
5000
0
1995
1997
1999
2001
Years
Figure 1 – World Wind Energy Capacity
Germany alone set a world and national record of more than 2,600 MW of new
generating capacity installed during the year. Germany, Denmark, and Spain are
demonstrating that wind can reliably provide 10% to 25% and more of a region or
country’s electricity supply.
In the United States, the wind energy industry left previous national records in the
dust with a blowout year in 2001, installing nearly 1,700 megawatts (MW) or $ 1,7
billion worth of new generating equipment. The new installations account for close to
a third of the world wind energy generating capacity added in 2001.
270
240
835
Germany
2659
United States
Spain
Italy
India
1659
Figure 2 - Largest Addition to generating capacity in 2001 (in MW)
Europe currently accounts for over 70% of the world’s wind power. European
countries made up two-thirds of the 2001 addition.
1
11%
17%
Europe
United States
Rest of the World
72%
Figure 3 - Cumulative capacity at end of 2001, by region
The global wind energy market continues to be dominated by the “big five” countries
with over 1,000 MW of generating capacity each: Germany, the U.S., Spain,
Denmark and India. The number of countries with several hundred megawatts is
growing larger, and it may be that in the next several years other potential countries like Brazil and the UK – will see their own wind generating capacity achieve this level.
Table 1- Wind Energy Marktes
2
1.1 – Wind in Europe
The installation of new wind power capacity has been growing at an average of over
40%, over the last 8 years. In Europe, this market development has been driven by
government policies, which were intended to allow wind energy to compete with
existing established technologies, recognizing the various benefits of wind power that
are largely not accounted fro in the electricity prices paid by consumers.
European Union wind energy market: sustained growth
Over the past 10 years, cumulative installed wind power capacity has increased at a
rate of over 32% per year, to give a total installed capacity of around 33,000 MW for
Europe at the end of 2000. The rate at which new capacity is being installed has in
fact been increasing at an average of well over 40% per year over the same period.
In 2000, the European Wind Energy Association (EWEA) increased its target for
installed wind power capacity in the European Union (EU) from 40 GW to 60 GW by
the year 2010. This increase reflects the trend towards continued strong growth in
new capacity installed; to attain (but not exceed) 40 GW by 2010 would actually
require a drop in the present rate of installation of new turbines in Europe. The 60
GW target implies a slight increase in rates of installation for a few years, followed by
stabilization of this rate.
Historically, the wind power industry has shown progress ratios of 0.85 to 0.8. A
progress ratio of 0.8 implies that a costs decrease by 20% every time the number of
units produced doubles. And there is potential for further progress leading to cost
design optimisation.
However, the patterns of market development vary greatly between European
countries. To a very large extent, within the EU this development ahs taken place in
three countries: Germany, Denmark and Spain. The developments that have taken
place reflect the successful wind energy policies introduced by those governments.
EU Policy Context
Moves towards the liberalization of the electricity sector in the EU have had a strong
influence on the design of renewable energy policies. The 1996 Directive on the
creation of an internal market for electricity (96/92/EC) set a timetable for opening
markets to a minimum of 30% liberalization by 2003. In practice, wind energy
developments in the EU take place within markets at various stages of liberalization,
from completely open markets in Finland, Germany, Sweden, and the UK, to markets
with only 23-26% market opening, as in Greece, France and Portugal. The directive
also includes provisions for transparency in energy markets, with flexibility as to how
provisions can be applied; this leads to different approaches to third party access and
regulation in the different European countries. In March 2001, European Commission
(EC) published a proposal to speed up the opening of European power markets. This
proposal, if it is accepted, will allow consumers to choose their electricity supplier by
2005.
While liberalization improves the opportunities fro wind energy developments, such
as through ensuring third party access to the grid, it is well recognized that market
failure occurs in liberalized markets. Energy prices do not reflect the true social costs
3
of different forms of generation. European wind energy generators compete against
large, polluting, fossil fuel and nuclear electricity generators, which do not pay the full
cost of damage they may cause. On top of that, many of these conventional
generators receive very substantial additional subsidies, estimated at Euros 15 billion
(US$ 13 billion)1 per year in direct subsidies alone2. So far, it has proved impossible
to reach politically acceptable solutions that address many of these market
distortions. Taxes on carbon dioxide (CO2) emissions, for example, exist in a number
of countries, although with exemptions for categories of large polluters to mitigate
any possible impacts on the competitiveness of domestic industries. So far, all
attempts to introduce a CO2 and/or energy tax at EU level have failed. Similarly,
despite calls from the organization for Economic Co-operation and Development
(OECD), from non-governmental organizations, and from the clean industries, there
are no signs of move to address subsidies paid to conventional generators.
Nevertheless, new promising renewable energy technologies are penalized by these
market failures. Solutions must be found to allow the penetration of such
technologies into the newly liberalized electricity markets, in which they are in
competition with established generators and technologies, which were introduced
and developed under monopoly market conditions.
The EU regulates public spending by member states under state-aid rule enacted to
avoid subsidies that may give national companies an advantage over their European
counterparts. The interpretation of these rules and the development of guidelines for
environmental protection by the member states are important factors that influence
the design and implementation of renewable energy policies by these states. The
recently published EC guidelines on State Aid for Environmental Protection allow
certain types and levels of support for renewables to be provided by EU member
states, in conformity with the provisions of the draft directive on electricity from
renewable sources. In March 2001, The European Court of Justice ruled that the
German Feed-in Tariff does not constitute state aid, as no transfers from the public
purse are involved. This decision provides clear assurance that obligations imposed
alongside a minimum price guarantee can be in compliance with state aid rules.
In the past years, the focus of EU energy policy has shifted back to the issue of
security of energy supply. A green paper on the issue, published on November 2000
has gained additional importance following the oil and gas price fluctuations that
occurred in 2000. While the green paper recognizes the potential benefits of
renewable energy, it is pessimistic in its estimation of renewable energy costs and
the potential to contribute to energy supply, and limited in its strategic vision.
Finally, climate change in proving an important driver, as it focuses the attention of
governments on the role of renewables to help address this problem. Recent
Intergovernmental Panel on Climate Change reports re-emphasize the necessity fro
action well beyond that required in the Kyoto Protocol. At the same time, the EC’s
consultation to set priorities for measures under the European Climate Change
Programme was issued in July 2001. The EC is backing the development of
1
Sutdy by Vrije University, Amsterdam, for Greenpeace, quoted in European Parliament Report on
Electricity from renewable sources and the internal electricity market.
2
The indirect subsidies are also very large. A 1992 study for the German Ministry of Economics by the
Swiss Prognos Institute estimated the indirect subsidies paid to the German nuclear industry in the form
of Civil Liability Guarantees amounted to DM 3.60/kWh (US$ 1.60/kWh). In addition, the tax-free setasides on provisions fro decommissioning and waste disposal are estimated at DM 70 bilion (US$ 30
bilion).
4
emissions trading at the EU level. This will result in some benefit for wind energy
projects, and interactions with measures designed specifically to promote renewable
energy.
National policy trends to renewables
Member states of the European Union have each developed a series of policy
measures to promote renewable energy use, with the stated aim of meeting various
multiple objectives. Those policy measures and the status of wind industry at the
main countries are detailed below.
5
1.2 - The Wind Market in Denmark
Denmark, which in the early 1970s was extremely dependent on (imported) oil,
pursed a very active policy of energy savings, increasing self-sufficiency, and
diversification of energy sources until the mid 1980s. Since then, energy policy has
increasingly promoted the use of renewable energy to ensure environmentally
sustainable economic development. [3]
Long term planning is considered to be important, with a planning horizon presently
set at the year 2030 in the Government policy document “Energy 21”. [4] The reason
for this very long term planning is to ensure consistency in policy, and to send strong
signals to market actors about the policy scenario in which they will operate. In the
electricity sector, plant and equipment have long lifetimes (e.g. transformers,
transmission systems and generating plant). One important aspect of present
planning is to ensure that the future electricity system will be able to accommodate a
very long share of intermittent renewables.
Since the mid 1980s, the country has had an official goal of meeting 10 per cent of
Danish electricity consumption by wind in the year 2005, implying an installed base of
1,500 MW of installed wind capacity. [5] It now seems likely that the target will be
reached by the year 2000, and new ambitious Government plans in the “Energy 21”
policy document indicate that around 50 per cent of electricity consumption should be
recovered by wind by 2030, most new installations being located offshore.
1.2.1 - The Energy Policy Role of Power Companies
The Danish Government has very wide-ranging powers to regulate utilities.
Regulation takes many forms, including energy efficiency and demand-side
management (DSM) measures. Integrated Resource Planning (IRP) is an integral
part of the procedure through which power companies obtain permission to install
new generating capacity. Other measures include price and accountancy controls3.
The Government has ordered the utilities to install 400 MW of wind power on land to
date. The first two orders of 100 MW each were issued in 1985 and 1990. The latest
onshore order for 200 MW to be completed before 2000 was issued in 19964.
Competitive public tendering fills wind turbine orders from power companies.
Formerly the tenders were based on power companies doing an extensive part of site
prospecting, installation, and service work. Lately, turnkey contracts with
manufacturers have become the rule, since they are expected to be significantly less
expensive for the power companies.
The use of turnkey tendering makes the process more similar to the NFO or SRO
system used in the UK that what is generally realised.
3
Permission to install new capacity are subject to strict environmental criteria. E.g. coal has been
outlawed as a fuel for new generating facilities. Danish power companies (mostly co-operatives) are
tax exempt, provided their annual account show no profits. Accountancy rules, however, provide
generous depreciation allowances, which allow power companies to depreciate 75% of the cost of new
5 years prior to investment. [6] This effectively allows power companies to collect funds for
investments from electricity consumers before investments are made. [7]
4
This of course, in addition to the existing and future cooperatively- and privately-owned turbines,
which account for the amrjority of wind generation in Denmark. In 1998, a new order was issued for
750 MW of offshore wind power.
6
1.2.2 - Power Companies’ Ownership of Wind Power
Danish utilities are mostly non-profit co-operatives owned by the electricity
consumers in each area, although some municipalities in the larger cities are the
owners of distribution companies. Ownership of distribution companies cannot be
traded, but is implicitly held by the property owners who consume electricity.
Governing boards are elected locally. The distribution companies jointly own
transmission and generating companies.
The many local power companies operate an internal sharing arrangement for their
wind energy deployment, which means that they effectively pool their wind energy
investments to ensure that wind energy is deployed primarily in good, windy areas.
1.2.3 - Attitudes to Wind Energy in Power Companies
Danish development of wind power could probably have been carried through with
private (non-power company) investment only, like in Germany. The primary
advantage of power company participation from a political point of view has been to
ensure that expertise and renewable energy commitment within power companies
has been much larger than what would otherwise have been the case. Until recently,
however, there was a dividing line between an overall positive attitude at the
technical level, dealing with practical wind power implementation, and a more
reserved attitude at the political level of utility boards, basically resenting cost and
tariff increases due to (costlier) renewables.
The improving economics of wind energy has changed this: Power companies today
realise that wind is the cheapest option for meeting the (legal) environmental
requirements for power companies, the objectives of which are likely to remain on the
political agenda for the foreseeable future5. In this situation, the power companies
have urged that the Government leave wind development to power companies only,
since with the present energy tax refund system, it is far cheaper for power
companies to produce their own wind power than to buy it from independent
generators. The average cost for power companies’ own wind generation is around
0.28-0.34 DKK/KWh (0.04 USD/KWh). But since they get a CO2 tax refund of 0.10
DKK/KWh, their generating cost is really 0.18 – 0.24 DKK/KWh, versus 0.30 to 0.37
DKK/KWh (0.05USD/KWh)6 for energy purchased from independents. [8]
It should be realised however, that these power company’s costs are quoted on the
basis of a 5 to 6 per cent real rate of interest, and a 20-year project lifetime, and that
the costs do not include grid reinforcement. It should be noted, that Danish
infrastructure is characterised by a strong electrical grid, and widespread local
expertise in installation and planning. The extensive 20-year experience with wind
energy is indeed reflected in lower installation costs than elsewhere in Europe. [9]
The strengthened commitment of Danish power companies to wind energy can be
seen in their eagerness to develop the first 750 MW of offshore wind power, where
applications for planning permission were launched even before the actual
Government order was issued.
1.2.4 - Public Service Obligation
5
6
Cf. Numerous press statements from the President of the ELSAM Utility Group, Egon Sogaard.
All figures are 1998 based
7
The European Union directive on the liberalisation of electricity markets allow
members countries to impose a “public service obligation”(PSO) on electricity
suppliers, which are allowed to shift the cost burden onto customers. The obligation
may, for example, be related to ensuring universal service to all consumers in a
region at the same tariff, meeting obligations in relation to environmental policy, or
funding research.
In regard to renewables, the Danish legislation ensures that all electricity consumers
effectively have to share the excess cost, if any, of using renewables in the electricity
system, in order to avoid distortion of competition between suppliers. In practice, this
means that electricity generated using renewables, or all forms of combined heat and
power production (CHP) has a priority access to the grid7
1.2.5 - Municipal Planning
The policy of installing 1,500 MW onshore in Denmark has been considered a
challenge for municipal and regional planning, given the country’s high population
density8. For the past few years’ Danish municipalities have been required by a
planning directive from the national Government to make plans for wind turbine
siting. [10]
Although no specific quotas were set by the national Government, most regions
(countries) have required municipalities with good wind resources to provide suitable
sites for turbines. After the recent round of planning with extensive hearing
procedures for local residents, sites for more than 2,600 MW have been made
available. [11]
The Danish system has inspired a similar system, which is being implemented in
Northern Germany. [12]
1.2.6 - Advanced Wind Resource Mapping
To assist municipalities carrying out planning for wind turbines, a national wind map
based on rough manually prepared estimates was made available in 1991. [13]
A new and much more advanced method is being employed in 1997-98: Using the
European Wind Atlas Method (Wasp) developed by Riso National Laboratory,
software from the leading commercial wind software vendor Energy & Environment
Data, and detailed digital maps, a very detailed, automated analysis of the entire
country (divided into cells of 100 by 100 metres, with automatic assessments of
terrain roughness out to 20 km distance) is being prepared.
The system already includes an exact mapping of all 4,800 wind turbines in the
country, and the results will be calibrated by production data from more than 1,500
wind turbines reporting to the monthly statistics system run by the software vendor
for the Danish Wind Turbine Owners’ Association.
7
It is up to utilities to implement a tariff structure which implements this. In the eastern part of the
country, the transmission company ELTRA has implemented this using a tariff which reflects the
energy mix during each period. In winter, when there is a lot of CHP-generated electricity and much
wind, tariffs tend to be slightly higher than in summer. Large customers who have their right to
purchase electricity from any generator in Europe effectively have to buy a mixture of locally made
prioritised electricity and imported electricity (plus transmission fees). [10]
8
It is in fact a testament to wind power’s general acceptability that it has developed so powerfully in
density populated countries like Denmark, Germany and the Netherlands (the second most densly
populated country in the world , after Bangladesh).
8
1.2.7 - Market Development Schemes
In the beginning of the 1980s the Danish Government instituted a number of
successive market developing schemes, originally funding 30 per cent of investments
in new wind turbines, but gradually lowering this support until it was abandoned in
1989 (it was 10 per cent by then). [14]
1.2.8 - Pricing of Wind Energy from Independent Power Producers
Power companies are by law required to pay for electricity from privately owned wind
turbines at the rate of 85 per cent of local the local, average retail price for a
household with an (high) annual consumption of 20,000 kWh (effectively allowing a
gross 17.6% mark-up on sales of electricity from this source). [15] (The reason for
the 20,000 KWh rules is that electricity prices in most areas include rental fees for
meters, but the tariff structure varies with the local distribution company).
The electricity price paid by power companies for wind energy from privately owned
wind turbines vary between 0.25 and 0.35 DKK/kWh (0.036 to 0.05 USD/kWh),
reflecting the varying prices of electricity from different local distribution companies.
The price is not substantially different from what would have been obtained under the
time tariff system applied to other independent power producers. Under that system
the generators is paid different rates, depending on whether deliveries are made
during peak, medium load or low load hours. Since wind energy production in
Northern Europe tends to be highly correlated with demand (more wind at day than at
night, much more wind in winter than summer), wind is actually some 40 per cent
more valuable in the grid, than if production were purely random. [16]
Originally the pricing arrangement was negotiated between the Danish Wind Turbine
Owner’s Association and the Association of Danish Power Companies. In 1992 the
power companies terminated the agreement, and subsequent negotiations with the
turbine owners failed to reach a compromise. After this, the Government and
Parliament intervened and made a general law on renewable energy, including a
purchasing obligation with the tariff mentioned above9.
1.2.9 - Partial Refund of CO2 and Energy Tax
Households in Denmark pay vary high electricity prices, even though Denmark has
some of Europe’s lowest generating cost for thermal plant. The reason is an
extremely high indirect taxation of electricity, as shown in the graph below. [17]
This political reasoning behind the high taxation is to reduce pollution emissions and
encourage energy savings. (The fiscal motive plays a role as well, of course: voters
less resent “Green” taxes than other taxes).
9
The events are described in detail in an article by the Danish Wind Turbine Owners’Association,
Flemming Tranas, posted at the internet address http://www.windpower.dk/articles
9
Figure 4 – Electrcity Price Structure at Denmark
The electricity tax is collected on all electricity sold to households, service business,
etc. Only manufacturing industry is to a certain extent exempt from this taxation10.
Electricity from renewable sources gets a refund of the 0.10DKK/kWh
(0.014USD/KWh) CO2 tax [18]. This refund is paid regardless of whether the
generating equipment is owned by power companies, firms or households. This
particular tax is called the CO2 tax. (The labelling of different electricity taxes is
historically somewhat random, depending on whether the originally declared political
aim was environmental or fiscal).
1.2.10 - Special Rules for Private (Individual or Co-operative) Owners
Wind turbines owned by non-power companies, i.e. other firms, individually or cooperatives, in addition to get a refund of 0.17 DKK/kWh (0.024 DKK/kWh) of
electricity tax. [19] The size of the refund has been set to ensure a reasonable profit
for wind turbine owners, given existing tax regulations. On the other hand, there is
currently some political concern that the profitability of wind energy is “too high” on
the very best sites. [20] Some future adjustment, primarily concerning these sites
cannot be excluded.
Total remuneration for private (non-power companies) wind turbine owners varies
between some 0.5 and 0.62 DKK/kWh (0.071 to 0.089 USD/kWh).
The basic reason for treating power companies and other turbine owners differently
is that power companies in Denmark are tax free, provided that they do not make a
profit. (Generous accounting rules allow power companies advance depreciation,
which effectively ensures, that they are tax free, “non profit” institutions. They are
allowed to collect investment financing in their tariffs, before investments are actually
made, thus obviating the need for shareholders or other external sources of finance).
1.2.11 - Grid Connection, Grid Reinforcement
According to the Executive Order on Grid Connection of Wind Turbines of 1996 [20],
local power companies are obliged to provide grid connection facilities at any site
10
Under very complex rules which graduate the tax according to the use of energy. Heating is taxed
like household use, while process use is taxed very highly. Companies which embark on particular
energy savings programmes may be partially exempted from the tax.
10
which in municipal planning has been seen set aside for the development of at least
1.5 MW of wind power (rated generator power).
In other cases, power companies are obliged to allow grid access to the local 11-20
kV grids, but the turbine owner is responsible for paying for the extension of the grid
to the site in question. The power company has to pay for the entire grid extension,
however, if the cabling can be used for other purposes in the normal extension of its
grid facilities.
The power company pays for the necessary reinforcement of the grid, unless the
power company can prove that the reinforcement in the area is particularly
uneconomic. The Danish Energy Agency (part of the Ministry of Energy and the
Environment) is the authority to which prospective turbine owners may appeal power
company decisions of these matters.
Wind turbines owners have to pay for the transformer to connect to the 11 Kv grid. In
addition, a fee for the rental of electricity meters applies. (Reactive power
consumption is not charged, but turbine generally has to observe a certain phase
angle [21]).
1.2.12 - Tax Treatment Of Wind Turbine Investments
Wind turbines are treated like machinery in industry, i.e. a declining balance 30%
annual depreciation is allowed.
Wind turbine owners may alternatively (once and forever) opt for a simplified tax
system, being taxed on 60% of gross revenues from electricity sales exceeding 3,000
DKK/year (450 USD/year) without any depreciation allowance or any deduction of
other costs. This means that people who only own a few shares in a wind turbine cooperative are not taxed on their wind turbine income.
1.2.13 - Limitation on Private Ownership
The private (non-power companies) ownership of wind turbines in Denmark is limited
by regulation in the executive order on national grid connection rules, meaning that
members of wind co-operatives be resident in the municipality where the wind turbine
is located, or in a neighbouring municipality. [22] Municipalities make exceptions for
individual wind turbine projects, but exceptions are fairly rare.
The regulation also limits the number of shares residents may own in a wind turbine
co-operative to an annual production of 30,000 kWh per (adult) person,
corresponding to a total investment of some 120,000 DKK (17,000 USD).
These restrictions were allegedly made to “prevent the misuse of Government
support schemes for wind energy” (quote from the Minister for Energy and the
Environment in Parliament), But the basic political aim are to probably to preserve
local ownership of the exploitation of a natural resource, much like is practised in
Danish agricultural legislation which requires that farm owners be resident on their
farms.
Individual may own one wind turbine located on the same property on which they are
resident (no size limit). The ownership of a complete wind turbine and co-operative
shares are mutually exclusive.
11
The quantitative restrictions on independent power production were likely imposed as
a result of visibly strong pressure from power companies11.
1.2.14 - Turbine and Component Suppliers
All of Denmark’s 4,800 wind turbines (end 1997) have been manufactured
domestically. Denmark hosts five of the world’s largest wind turbine suppliers: NEGMicon, Vestas Wind System, Bonus Energy, Nordex and Win World. The first three
companies account for more than 50 per cent of world production of wind turbines
measured in MW. Most of three companies have a background in agricultural
machinery manufacturing, with the exception of Wind World, which was founded on
gearbox and marine technology manufacturing.
Competition in the Danish market is definitively the toughest in the world, making the
market rather uninteresting to foreign turbine suppliers. Another problem facing some
foreign suppliers may be the very stringent safety regulations which e.g. require two
independent failsafe systems on turbines, one of which must be aerodynamic, or
providing equivalent safety.
The Danish component industry includes I.M Glasfiber, which
motor blade manufacturer, with an employment of more
manufacturers of electronic turbine controllers likewise have
share world wide. Other component manufacturers include
systems, hydraulics, etc.
is the world’s largest
than 1,000 Danish
a very large market
suppliers of braking
1.2.15 - Employment
Denmark is home to 60 per cent of world’s wind turbine manufacturing capacity.
Presently 2/3 of production is exported. The Danish wind turbine manufacturers
presently employ some 2,200 persons in Denmark, while domestic component and
service suppliers employ another 10,000 people (1991).12
In addition, another 4,000 – 5,000 jobs are created abroad through deliveries of
components, and installation of Danish turbines. These figures do not include
assembly work, etc done in foreign subsidiaries or license of Danish firms.
1.2.16 - The Home Market’s Role in Industry Development
The Danish home market is what created the modern Danish wind industry originally,
and gave it the testing ground to sort out both wind technology and manufacturing
technology, including important issues of quality control.
When the Great California Wind Rush started in the early 1980s, the Danish
companies were practically the only ones in the world with a substantial track record.
The result was that investors tended to prefer Danish machines, which in the end
made up around half of the capacity installed in California. The importance of the
learning process within the major Danish manufacturing companies from
manufacturing for the California market cannot be overestimated.
11
It is somewhat doubtful whether these regulations are in accordance with EU rules on the free
movement of capital, since they effectively prevent cross-border ownership.
12
These figures are a cautious estimate updating an extensive input-output analysis study conducted in
1995 by the Danish Wind Turbine Manufactures Association. [23]
12
1.2.17 - The Danish Concept
The track record of the early Danish machines in California has in general been
better than those of the competitors, leading to yet another track record advantage.
The result is, that the so called “Danish Concept” in its newer and more refined
versions today dominates the international wind turbine market more than ever,
despite occasional revolutionary technology predictions in the press.
The last company manufacturing vertical axis machines (Flowind) went bankrupt in
1998, and manufacturers who used to stick firmly to a two-blade concept (WEG,
Nedwind and Lagerwey) have all launched new three bladed designs.
The “Danish Concept”, consisting of a three bladed upwind designs with fixed speed
operation and direct grid connection rules about 75 to 80% of the market. [24] This
design dominance resembles the status of the 4-stoke petrol engine, which has
actually been around since 1856.
Whether other designs (full variable speed operation, indirect grid connection) will
penetrate the market is largely a matter of component costs, in particular the costs of
power electronics. There is, of course, a bit of circularity in this argument: Cost will
decline with large scale manufacturing, so nothing is given about future technology in
this area. It seems likely, that the present basic design will dominate the market well
into the next century.
1.2.18 - Can the Danish Industrial Success be replicated?
The Danish success in wind energy is not easy to replicate elsewhere, and certainly
not with the same means. Technology development is different today, markets and
competition are different, and in some sense the Danes were fortunate enough to be
in the right place with the right concept.
Starting from scratch is much more difficult today, when the largest market segments
have tougher competition, with a more mature and reliable technology. The same
market segment requires large machines with larger capital requirement and higher
development risks.13 Furthermore, there currently are no fundamentally turbine
technology in sight, i.e. demonstrably economically superior technologies, although
there are many for further development and cost cutting within the major variants of
present technology [25].
Manufacturers in several countries have chosen to link up with Danish manufacturers
in a variety of joint ventures. This coupling has included significant technology
transfer to local companies, and developed local manufacturing. Most of the licences
have a machinery and equipment manufacturing background. The primary
advantages of a technology link to an existing manufacturer is to acquire proven
technology, and the possibility of being able to offer a more complete and
continuously optimised model range.
1.2.19 - Origin and Mainstay of the Market: Private Citizens
Denmark is somewhat unique among wind turbine markets, since the market really
grew out of a popular interest in alternative generating technologies, partly in
13
The technological innovation process and different design strategies in the wind turbine industry are
thoroughly analysed in [24]. A summary of the major design options can be found on the web site of
the Danish Wind Turbine Manufacturers Association, http//www.windpower.dk/tour/design
13
opposition to the use of nuclear power, partly as a result of the energy supply crisis in
the late 1970s, when oil prices skyrocketed due to OPEC action and political and
military unrest in the Middle East.
Private individuals, either as members of wind energy co-operatives, or as whole
owners of a wind turbine (farmers) account for about 80 per cent of installed wind
power capacity in Denmark. (Almost about 900 out of 1100 MW of installed wind
power capacity at the end of 1997). 100,000 families in Denmark own shares in a
local wind turbine, and almost 2,000 wind turbines are owned by individuals.
Wind co-operatives are organised as unlimited partnerships, but since the turbine
and its installation is usually completely paid up, partnerships have no loans (joint)
risk in this respect.
1.2.20 - The Benefits of Through Statistical Coverage
Wind turbines are highly organised in the Danish Wind Turbine Owner’s Association,
which publishes a monthly magazine production figures and notes on technical
failures for more than 1,500 turbines. This excellent statistical data base, plus user
groups, and technical consultancy services for members has been a very important
instrument to ensure a transparent market with tough competition between
manufacturers.
Turbines are usually sold with 5 years guaranteed production (insured with insurance
companies). This makes all manufacturers keen on not overstating expected
production, as this would bounce back in the form of a higher risk premium for that
particular brand from insurance companies.
1.2.21 - The Role of Publicly Financed R&D
In stark contrast to Germany, Sweden, the USA, Canada and the UK, publicly
financed R&D projects played a relatively minor role in initiating the early
development of the Danish wind turbine industry [26]. The early stimulus came in the
form of investment grants, supporting market development to small scale privately
owned turbines, (5 to 11 Kw) which typically covered their owner’s annual electricity
consumption, by a factor of 2 to 4.
Later, the Danish Government and the European Union have financed a significant
number of basic research projects, and given some support to development projects.
It is estimated that a staff of about 60-80 people in Denmark (including both
researchers and administrative staff) work on (partly) publicly financed R&D. Danish
wind turbine manufacturers have a staff of about 100 people working on technology
development. Total public support for this work is below 2 million USD/year.
1.2.22 - Type Approval Requirements
In the late 1970s Riso National Laboratory (whose original task was nuclear
research) was charged with type approval of wind turbines, which could be installed
with public investments grants. The type approval process was extremely useful for
weeding out low quality potentially dangerous products, and put a pressure on
manufacturers to upgrade their design and manufacturing skills [27].
Riso’s very safety requirements, its demands for physical testing of rotor blades, and
conservative norms for load calculations, indirectly saved the core Danish
manufacturers from the fate of many foreign competitors whose turbines collapsed in
14
these early days. The result was sturdy and stable, but rather heavy machines. (The
potential for weight saving has in fact been so large, that Danish wind turbines have
shed half their weight per Kw power installed during the past 5-10 years, despite a 50
per cent growth in their physical size).
1.2.23 - The Role of Riso National Laboratory and Others
Riso has been since the early eighties evolved to become probably the foremost
international research institute on basic research in wind turbine technology and wind
resource assessment.
A much smaller, complementary Institute of Fluid Dynamics developed at the Danish
Technical University. Its parallel development of turbine design software has served
As a commercial tool in many companies, and as an important tool to ensure mutual
verification of its own and Riso’s methods aero elastic analysis.
1.2.24 - The Role of Power Companies in R&D
Danish power companies played a pioneering role in the early technology
development of wind energy. When the Danish Government instituted a publicly
financed wind energy research programme in the mid 1970s, the power companies
once again became involved in wind power research, concentrating on relatively
large machines for their time (630 kw), and building two experimental wind turbines
near the town of Nibe around 1979 (one pitch, one stall controlled). In the early
1980s another group of five 750 Kw machines were built, and during the 1990s
another two experimental machines of 1 and 2 MW were built.
The primary aim of these ventures appeared to be training and development of inhouse wind energy expertise in the power companies, rather than aiming at
commercially relevant equipment.
1.2.25 - Is The Danish Market System an Economic Success?
The Danish market system for wind energy has been a popular success in regards to
public’s possibility of direct involvement in energy policy.
The power company share of the market (determined by Government orders to
power companies) has worked reasonably well, except for the fact that power
companies have been three years behind schedule in fulfilling their obligations (with
no consequences for them)14.
The refund of 0.10 DKK/kWh (0.014 USD/kWh) for power companies has apparently
been based on mostly on political considerations of the name “CO2 levy” which was a
convenient amount of refund. Since the SO2 taxes have been implemented without
any talk of a similar refund to wind. Today the 0.10DKK/kWh roughly compensates
for the difference in average generating costs between wind and fossil fuel plant.
14
The first two orders to power companies were not legally executive orders, but the power companies
“volunteered” to put up two times 100 MW and entered into an agreement with the Ministry of Energy
without a penalty clause, thus avoiding a legally enforceable executive order. The power companies
say that difficulties in obtaining planning permission was the reason for their late compliance. The
present 200 MW order and the 750 MW offshore order are in fact executive orders, but are referred to
as agreements in power company publications. The reason for using executive others (other than
enforcement aspect) is the EU directive on the free electricity market, where it is important that the
utilities have the legal right to consider excess costs of renewables as a “Public Service Obligations”,
whose cost may be included in electricity tariffs.
15
1.2.26 - Rationing Gives Questionable Market Efficiency
The Danish wind energy support system has lately come under political attack for
being too generous to private wind turbine owners, and conversely unnecessary
expensive in terms of energy tax refunds.
The timing of the attack is directly related to the discovery of the regulatory loophole
described above, which created a record boom in turbine investments in Denmark.
(The boom was reinforced by the fact that the authorities by accident warned about a
change in regulations beforehand, thus creating a virtual “buying panic before closing
time”).
This has been a clear demonstration of the fact that the “segregation policy” which
had effectively excluded anyone but farmers from owning their own wind turbine, has
the effect of keeping less risk averse (and more bankable) investors out of the
market, and of keeping yield requirements (on the windiest sites) higher than
necessary.
Like wise, the apparently acceptable price differential between negotiable shares in
wind co-operatives and non-negotiable shares gives an indication of the liquidity
premium paid for the “localness” of wind turbine ownership.
16
1.3 – The Wind Market in Germany
1.3.1 – Wind Resources
Germany generally has modest average wind speeds around 4m/s at 10m heights,
but a few areas with good wind speeds in the coastal regions of Northern Germany in
Schlewig-Holstein, and part of Niedersachsen. Inland, however, it is possible to find
good locations for wind turbines in areas with hilly terrain, where one can rely on
speed-up effects. An important offshore resource may be found along the short North
Coast, and along the Baltic coast. [3]
1.3.2 – The Role of Government: Market Development Schemes
Both the federal Government and the individual states (Länder) have operated
support schemes for the investment in wind turbines. The most important stimulus on
the federal level came from the 250 MW programme. This was a national support
programme introduced in 1990, originally with a 100 MW target. In March 1991, after
the first year of existence of the programme, the original target was exceeded, and
therefore the programme was extended to 250 MW. [28]
The highly successful feature of this Government wind energy programme was an
additional 0.06 DEM/kWh (0.034 USD/kWh) on top of the payments from power
companies, according to the Electricity Feed Law (Stromeinspeinsungsgesetz). This
helped to kick-start the market until it expired at the end of 1995.
Some additional 60 wind energy projects had been supported by a follow-up
investment grant programme from the Federal Ministry of Economic Affairs between
1994 and 1997. Apart from the Federal support programmes for wind energy, several
German Länder (states) introduced, during the 1990s, their own support schemes.
Most of these support schemes have been phased out in later years, and the
remaining systems are almost symbolic.
1.3.3 – Good Statistical Reporting Increases Transparency
An interesting and useful feature of the German market development support
schemes has been the requirement under the 100/250 MW Programme to report
production, technical reliability, etc. closely for the supported turbines. This has lead
to an interesting set of annual statistics published by ISET.15 The reports are
concerned with machine reliability, causes and effects of failures, plus verification of
wind climates assessments and power curves. Another statistical database reporting
on the production of wind turbines, comprising more than half of all operating turbines
is managed by the independent engineer’s office IWET. In many ways this database
resembles the system operated by the Danish Wind Turbine Owner’s Association,
and it has been a good way of increasing market transparency. [29]
Like Denmark, Germany has a very strong free trade tradition, and its carefully
planned support system did not (and does not) discriminate in favour of domestic
suppliers. Its market development programme, however, has been well coordinates
with its R&D support programme, and its subsequent Eldorado export promotion
programme to support developing countries, and has created a viable industry, as
explained later. Under the Eldorado programme some 22 million USD had been
spent for wind energy between 1991 and 1997. [29]
15
Institut Für Energiversorgungstcchnik, Verein and der Universität Gesamthochschule Kassa c.V.
17
1.3.4 – Energy Policy for Wind
Contrary to the Danish long-term policy approach, there has been no coherent official
German policy for renewable energies. The main reasoning for a pro-active approach
on renewable is Germany’s strong commitment to cut carbon dioxide emissions by
25 per cent between 1990 and 2005. Speaking on the importance of the Electricity
Feed Law, the German Ministry of Economic Affairs writes: “An official bonus may be
granted to environmentally friendly energy sources. This is possible…. By introducing
a legal obligation whereby electricity generated from renewable energy must be
purchased by the utilities at a fixed price, which is higher than the costs incurred by
the purchasing utilities”.16
1.3.5 – Pricing of Wind Energy: The Electricity Feed Law
The Electricity Feed Law from1991 requires Germany to pay 90 per cent of the
average retail electricity price for final consumers (household, commercial, industrial)
(ex.tax) for wind (or solar) generated electricity supplied to the grid17. [30]
Since electricity prices in Germany are very high18, electricity tariffs for wind energy
are quite high. These tariffs are sufficient to ensure profitability of wind energy on a
good site in the coastal regions, and increasingly even with the moderate speeds
prevailing in the inland areas. However, most turbines in the inland areas need some
additional financial support due to the low wind speeds.
1.3.6 – Grid Connection, Grid Reinforcement
Contrary to Danish regulations, turbine owners in Germany have to pay for any costs
incurred by grid reinforcement or extension caused by wind power. These costs can
be quite substantial, especially in the rural areas of Northern Germany with a
comparably better wind regime than inland. Due to the lack of legislation for grid
reinforcement and grid extension costs, as in Denmark, and due to low transparency
of the German utilities in regard to transmission and distribution costs, many
projected wind farms in the Northern Germany have problems getting started.
1.3.7 – Tax Treatment of Wind Turbine Investments
Wind turbines are treated like any other investment in Germany, including higher
depreciation allowances in the initial years. General (non-wind specific) incentives
for investments in Eastern Germany applied until the end of 1998.
1.3.8 – Favourable Financing Schemes
Agricultural financing institutes, which offer low interest loans for agricultural
investments, may frequently be able to finance 90% of a farmers’ wind turbine.
16
The German Ministry of Economic Affairs is known as the first and foremost bastion of free market
in Europe. This quote is politically remarked in the sense that it justifies tinkering with the market
mechanism. Germany, like Denmark, has in principle favoured a universal European Union wide
energy/CO2 tax.
17
The remuneration rate is lower between 60 and 80 per cent, for other renewable technologies,
including small hydro, landfill gas and various biomass sources and technologies.
18
This is mainly due to monopolistic structure of the electricity industry for more than half a century,
although also an historical preference for domestically mined coal for power generation. [ 29]
18
German investors offered several favourable loan facilities to attract capital for wind
power and other renewable energy projects.
The Deutsche Ausgleichsbank (DtA) Is a Federal institution under public law with the
majority of its share owned by the European Recovery Programme (originally the
“Marshall”) Fund (EPR). The DtA/EPR Fund has granted low-interest loans to small
and medium-sized companies since 1990s for installations using renewable energy.
The average lowering of the interest rate on these loans is between one and two
percentage points. Furthermore, interest rates are fixed for the entire duration of the
loan, which may be up to 20 years (but usually does not exceed 12 years). A
maximum grace period of five years cab be agreed in order to protect liquidity of the
investor, particularly during the early phase of the development. This instrument has
proven especially effective to ease investments in wind power. The loan approvals,
for all renewable energy, mounted to more than 2.2 billion USD between 1990 and
mid-1997. Within five years (1990-1995), more than 1500 wind energy projects had
been granted ERP loans totalling more than 500 million USD in conjunction with
complimentary Data loans totalling some additional 300 Million USD. [29]
About 80 per cent of all existing wind turbines have been supported by DtA’s
environmental protection loan.
1.3.9 – German Power Companies’ Attitude to Wind Energy
German power companies resent the obligation to give what they consider in an
excessive price for electricity from renewables. The large, super-regional electricity
company Preussen Elektra, in particular, has been complaining about uneven burden
sharing, and alleging that environmental policy is not part of the obligations for
German power companies in their monopoly charters, which were granted by the
Third Reich. However, the reformed German electricity law puts and end to the
closed monopoly charters and clearly expresses in its preamble that environmental
protection is one of the three pillars of German electricity suppliers.
The German Electricity Feed Law does provide a “hardship clause” which allows
local distribution companies faced with large cost increases to shift the excess cost of
their power-purchasing obligation to the regional power company.
However, the local or regional companies have never used this option. An
amendment of the law, coming into force probably in spring 1998, puts this hardship
clause into more concrete terms, at the same time indirectly introducing a cap to the
further expansion of renewable energy in the electricity sector. The obligation for
utilities to pay the tariff set out in the Electricity Feed Law has been limited to only 5%
of their total electricity supply mix. This effective cap on wind energy is designed to
protect regional utilities in windy areas against excessive financial burden. Once the
volume of excess renewables exceeds 5% of such utility’s sales, it can pass the
exceeding amounts to the supra-regional utility, e.g. Preussen Elektra.19 Once the
supra-regional utility has reached the 5% limit, additional renewable energy power
would no longer receive payments. This super-regional power company has no way
of shifting its obligation to other regional competitors.
In sum, utility companies in Germany are obliged by law to pay for renewable energy
up to a maximum of 5% of total German energy consumption.
19
Preussen Elektra controls the utility supply company Schleswag in Schleswig Holstein in Northern
Germany, where 10 per cent of electricity consumption is covered by wind.
19
Since 1994 German power companies under the leadership of Preussen Elektra
have mounted a joint attack on their power-purchasing obligation through both the
German Constitutional Court, and through a complaint to the European Commission
about unfair competition. Both initiatives failed, and a subsequent political initiative in
Boon demonstrated an unusually strong bipartisan support for the present
environmentally friendly policy in the German Bundestag (Parliament).
More than 90 per cent of all wind turbines erected in Germany are owned and
operated by private citizens and investors, farmers, or co-operatives. In contrast to
their Danish counterparts, German electricity companies have never seen any
government obligation requiring them to build wind farms.
1.3.10 – The Energy Policy Role of Utilities
The political polarisation of power companies against renewables advocates is
probably politically unsustainable in the longer term. Right now an armistice prevails,
since the German Parliament has decided not to touch the present legislation for
another two years. For strategic reasons it is likely that the present power company
attitude (displayed in public) will continue for some time, and a complicating factor is
definitely the liberalisation of electricity markets in Europe20.
If a reform of the present system comes about, it seems likely that there will be an
attempt to include some form of national sharing of excess costs of wind power,
although the federal structure and the constitutional complications surrounding the
regional chartered electricity monopolies makes this a difficult task. The idea of a
nation wide sharing system for utilities has been demanded in 1997 by the second
chamber of the German Parliament representing the Länder, the Bundesrat. It has
also been advocated by the German Wind Energy Association.
1.3.11 – Market Size
At the end of 1997 close to 2,100 MW of wind power was online on Germany, making
Germany the largest wind power country in the world. During 1997 a record high 550
MW (849 turbines) were added to the installed base. This is a market growth of
another 18 per cent, once again making Germany the largest market for wind power
in the world for the fifth successive year. Germany has increased its installed wind
power capacity by ten times in just five years.
Compared with an installed base of 56 MW in 1990, before the Electricity Feed Law
came into force, this is a 37-fold increase.
In the early phase of development most of the wind power was place in the windy
states (Länder) of Schleswig Holstein and Niedersachsen in Northern Germany, but
increasingly development has been moving South into in and areas. More than half
of the newly installed capacity during 1997 was erected in the non-coastal regions.
This is partly due to a delay and administrative barriers (from a planning perspective)
along the German coastline, but also due to a keen environmental interest in the
population throughout Germany. At the end of 1997, the Northern region of
Schleswig-Holstein has just passed half of its won official target of 1200 MW.
20
It is noteworthy, however, that Preussen Elektra has recently entered into an agreement with the
largest German wind turbine manufacturer, Enercon, regarding the marketing of its products abroad.
20
1.3.12 – Origins and Mainstay of the Market: Private Citizens
Wind energy in Germany has been developed by private people (non-power
companies) to an even larger extent than Denmark. Both wind co-operatives and
individual farmers play an important role in this respect. More than 90 per cent of all
turbines are owned and operated by private citizens. Power companies have only
invested in a few large experimental turbines, including the 3 MW Aeolus machine in
Wilhelmshafen in the North.
Like in many other countries, the first 10 years from about 1980 was a long and
tough haul by private idealists, who occasionally hardly had assurance that they
could receive payments for the electricity delivered to the grid. Even so, some 250
MW were installed by 1989, before turbine installation took off after the Federal
started its market development programme.
1.3.13 – The Role of Publicly Financed R&D
Germany has a strong tradition for support of large-scale projects in wind energy
development, mostly managed by the private sector, and culminating in the 3 MW
GROWIAN machine in the early 1980s (100m rotor diameter). That particular project
failed when the machine, which had cost 300 million DEM (170 million USD)
encountered a blade failure after only 280 hours of operation.
Large German companies like MBB and MAN were active on the scene during that
period, but like other counterparts elsewhere, they left as public research money ran
out.
Like elsewhere in the world, where the course was taken towards large machines
only, it was difficult to get follow up funding for subsequent projects. In retrospect, the
political accent on large, visible technology demonstration projects did not recognise
the fundamental differences between wind turbine and aerospace technology, both in
terms of the large unknown of turbine aerodynamics and structural dynamics.
Interestingly enough, Enercon, a small engineering firm that started in 1984 without
funding from the large research programme, has succeeded to become the largest
German manufacturer of wind turbines, using its own gearless direct drive concept.
When the interest in renewable energy rekindled in the late 1980s, several market
support schemes wear in place by 1990, as mentioned before, R&D support to
private industry became an important instrument to promote German wind turbine
manufacturing. The unification of Germany added another of supplementary finance
trough regional development incentives. Industry co-operation with several large
number of companies, often as subsidiaries of traditional mechanical engineering
firms, such as Tacke, a gearbox manufacturer, or Husumer Schisffswerft, HSW, a
shipyard.
German incentives, in fact, have been so strong and successful that hey attracted the
Danish manufacturer Nordex to move its turbines development to Germany (NordexHackle Dürr is now majority owned by German interests, and has manufacturing
facilities in both Denmark and Germany).
1.3.14 – Type Approval Requirements
Germanisher Lloyd is one of the official type approval institutes for wind turbines in
Germany. (Its role has to some extent historically been similar to that of Riso in
21
Denmark in the early years, being the anchor point for much of the infant wind turbine
industry). The type approval requirements have also worked well to protect investors.
1.3.15 – Turbine and Component Suppliers
In 1997 Germany accounted for about 18 per cent of world market production of wind
turbines measured in MW. About half of the installed base of wind power in Germany
has been supplied by domestic companies, although distinguishing between
domestic and foreign turbines is not straightforward, since all the major Danish
manufacturers have assembly facilities or license manufacturing in Germany, and
since Nordex-Balcke Dür is now 51% German owned.
Germany is actually has a net surplus on its “wind turbine balance of payments”,
since the companies Flender (gearboxes), Siemens (generation), and AEG (electrical
components) have very large market shares (close to 50 per cent) for their products
in the wind turbine industry world-wide, including Denmark. Other components
manufactures in Germany include ball bearing and roller bearings (FAG), yaw motors
and gears, and yaw wheels.
The bankruptcy of Germany’s second largest company, Tacke Windtechnick, in 1997
(partly due to a series of technical failures) increased the foreign market share on the
German market in 1997. Tacke has since been taken over by the American
developer and turbine manufacturing firm Enron Wind Corp., a subsidiary of the
energy conglomerate Enron21.
The German wind turbine industry today consists of Enercon, Tacke, and a dozen
smaller firms, which are repeatedly going trough a takeover and merger period. The
two large firms account for about 85 per cent of German turbine manufacturing.
1.3.16 - Employment
The German Wind Energy Association estimates that employment in the German
wind industry is around 12,000 persons, or roughly equal to Danish employment in
the area. German wind technology manufacturing is more directed towards the
employment intensive component area than in Denmark.
1.3.17 – German Technology Concepts
Most manufacturers in Germany have stuck to wind turbine designs resembling the
classical “Danish Concept”. The largest German manufacturer, Enercon, however,
has its own multi pole synchronous generator design with direct grid connection
(using power electronics), which has managed to capture about 30 per cent of the
German market, but which has failed to take major market shares abroad.
1.3.18 – Profile of a Success
After a misguided start in the early eighties, the German wind energy programme has
largely been a success for the past 7 years. In the view of the German Wind Energy
Association, the success is largely attributable to:
•
The Electricity Feed Law of 1990;
21
Enron Wind Corp also took control of Zond, a major wind energy player in 1997. With the recent
conglomerate bankruptcy, all wind activities were assumed by GE Power systems.
22
•
•
•
•
Federal support programmes (100/250 MW programme) between the early and
mid-1990s;
Various support programmes by the German Länder until recently;
Preferential loan and financing schemes (investment allowances and preferential
depreciation schemes), and
Privileged status for wind power in the building codes.
23
1.4 - The Wind Market in Spain
1.4.1 - Wind Resources
Spain has excellent wind resources, particularly in Andalucia facing the Southern
Mediterranean, and in Galicia, Aragon and Navarra in the North, facing the Bay of
Biscay. [3] These regions tend to be quite hilly or mountainous, thus adding an
important component of speed up effects to local wind speeds.22
1.4.2 - Wind Generation Structure
Wind generation in Spain is located in (usually very large) wind parks in the windiest
areas of the country, where the density of parks is quite high, particularly around
Tarifa in Andalucia (at the Strait of Gibraltar). The development of wind energy in
Spain started in 1991, but picked up speed around 1994. About 500 MW were
installed at the end of 1997. Approximately 250 MW were added to capacity in 1997,
and another 250 MW are expected for 1998 [25].
1.4.3 - Energy Policy for Wind
The National Government has not set a declared target for wind, but several
provinces in strongly federalised Spain have set very ambitious targets, as
mentioned in the next section. The Spanish system for support to renewables is in
many ways similar to the German system, i.e. an open-ended system with
guaranteed prices from utilities, and guaranteed power purchasing by the utilities in
the national grid. Wind and solar in 1997 received 12 ESP/kWh (0.065 USD/kWh)[26].
Unlike the German system, the excess costs of the premium payment system is
spread on all electricity users nationally. The system is very similar to the German
system, but the whole Spanish national electric system has always had a
compensation and equalisation system under which distribution companies are
required to balance revenues and losses. Spain has a common national grid, which
Germany does not. It is planned that the system will be changed to a system, which
gives each technology a premium over the electricity pool price, rather than a fixed
amount per kWh. (The pool price is currently around 9 ESP/kWh (0.05 USD/kWh)).
The premium should reflect the relative environmental benefits of each technology,
much like the present Danish system. In addition, a competitive bidding system is
envisioned for large wind parks above 50 MW. No details on the future policy are
presently available.
1.4.4. The Role of Regional Governments
Regional governments are in many ways taking the lead in promoting wind energy in
Spain. [30]
Regional governments are responsible for planning, and the municipalities issue
actual planning permits.
In the North, Navarra wants to cover 100% of its electricity consumption from
renewables in 20 years' time. By the year 2000 wind should cover 25% of local
22
Typical wind speeds of 5.5 to 6.5 m/s at 10 m height are therefore not a good guide to actual wind
speeds at wind turbine sites, which may be substantially higher on ridges.
24
electricity consumption (roughly 220 MW), the total being tripled to more than 600
MW by 2010.
Galicia wants 2,800 MW to be installed by 2010, a figure which according to many
observers may be too optimistic, given that the present grid capacity is around 600
MW. A strengthening of the grid is, however, being planned.
As a member of the European Union, Spain is of course obliged not to discriminate
on the basis of nationality, and there is a free circulation of goods in the Union.
Spanish provincial governments, however, attach considerable weight to local
employment, and with their strong hand on planning permissions, have managed to
entice many foreign companies to establish joint ventures with local industry.
According to one leading observer: "Regional support in terms of cutting red tape in
exchange for new jobs in their region, seems to be the solution in most parts of
Spain".
1.4 5 - Wind Resource Mapping
Spain has a national wind map, but its level of detail and quality is apparently
insufficient for actual planning work.
1.4.6 - The Role of Developers
Large, international wind turbine developers are increasingly dominating the picture
in Spain. The major market actors are Seawest (USA), Tomen (Japan), EndesaMADE (Spain), and Iberdrola (Spain). The Spanish market is generally dominated by
professional developer firms, much like the UK.
1.4.7 - Turbine and Component Suppliers
Spain accounts for about 14 per cent of the world production of wind turbines (1997),
and three Spanish firms are now on the list of top ten manufacturers worldwide, i.e.
Gamesa, Endesa-Made and Desarrollos with world market shares around 6, 5, and 3
per cent respectively. The three firms accounted for around 85 per cent of wind
turbine installations in Spain in 1997. [25]
Spain's largest manufacturer with a 36% share of the local market is Gamesa Eòlica
founded in 1994, which uses technology from Vestas Wind Systems, and is a joint
venture with 40% Vestas ownership, while the other two shareholders are a regional
development corporation, and a company group manufacturing car and aircraft
components. Endesa-Made and Desarrolos have market shares of 29 and 21 per
cent. Endesa is a utility, which owns the turbine manufacturer Made. The design
looks remarkably like a classical (1985) Danish design. Desarrolos was originally a
joint venture between the Spanish manufacturer Abengoa and U.S. Windpower
(U.S. Windpower later became Kenetech, which went bankrupt in 1996). These two
companies and the fourth Spanish manufacturer, Ecotèchnia, have their own
technology, which are basically variations on the Danish concept.
Large, international wind turbine developers are increasingly dominating the picture
in Spain. The major market actors are Seawest (USA), Tomen (Japan), EndesaMADE (Spain), and Iberdrola (Spain). Professional developer firms generally
dominate the Spanish market, much like the UK.
Other companies have been or are being established in Spain, and some 80
companies are estimated to take part in supplying components or services to this
industry. Danish NEG Micon, which has already been engaged in Spain through the
joint venture Taim-Nordtank is currently establishing a factory in Galicia in Northern
Spain, while Danish Bonus Energy has entered into a joint venture with a
25
government-owned company, Bazàn which is known for its manufacture of ships for
the Spanish navy, diesel engines, steam turbines, and weapons systems. In 1997,
after only two years of operation, this company had captured 15% of the Spanish
market.
Component manufacturing is growing rapidly in Spain. The world's largest supplier of
rotor blades, LM Glasfiber is now operating three plants in Spain, and one of ABB's
two European wind turbine generator factories is located in Spain.
1.4.8 - Employment
No estimate has yet been made of the employment impacts of wind energy is Spain.
However, it is noteworthy that most outside wind manufacturers have established
manufacturing facilities and in some cases entered into joint partnerships, as this
inevitable maximizes job creation in the host country.
1.4.9 - The Home Market's Role in Industry Development
The Spanish home market presently takes all of the production from Spanish
manufacturers. Given the strong domestic market growth of 90% per year over three
years, and the fact that most firms were established recently this is hardly surprising.
In the longer term, Spain sees itself as a natural stepping-stone to South American
markets for wind power development.
1.4.10 - Assessment of the Spanish System
Spanish wind power development has been a dramatic success in terms of creating
much local employment. In time, Spanish wind turbine companies may be able to
benefit on other markets from the experience acquired during these boom years.
Despite a financing system roughly similar to the German regulations, the Spanish
system creates less of a problem for power companies, since costs are shared
nationally.
1.4.11 – An example of a new model applied in Spain
Early in 2000, the largest wind turbine order ever made, for 1800 machines, was
placed by Spanish developer EHN (Energía Hidroeletrica de Navarra). It was equal
to 15% of the installed wind capacity in Europe at the time. In June 2001, an EHN
project received the largest loan ever granted in the field of renewables. The group
has now installed nearly 900 MW of wind power in Spain, and is planning to double
that amount in Spain in the next two years, as well as transfer its experience to other
countries.
From the beginning EHN has aimed to show that it is both technically and
economically possible to shift towards a new, more sustainable energy model. From
the very start, the company took a firm decision to commit itself to clean forms of
energy generation. They began their operations 10 years ago in Navarre, a region in
Spain unknown in the energy world at the time. Nowadays, Navarre has become a
benchmark for the exploitation of renewable resource, showing how, if they are
developed within a framework of social consensus and Institutional support, they can
add value and create employment. Meanwhile, EHN has transferred its expertise to
another region of Spain, Castilla-La Mancha, where it has been developing 1173 MW
of wind power capacity in this region between 2000 and 2002.
26
To carry out plans in theses two regions EHN has so far invested 940 million euros
(US$ 844 million), mainly since 1994 when it started developing its first wind farm in
Navarre. The company expects to invest a further 574 million euros over the next two
years, and thus to bring its project in the two regions to fruition. This level of
investment has helped considerably to improve the industrial fabric of both
communities, giving rise to a new high-tech industry sector that employs more than
3300 people in the two regions (3600 if the jobs with other wind power developers
are included).
Navarre’s development of renewables, led by EHN, has enabled the region to
produce 50% of its electricity needs from clean energy sources, a figure expected to
concentrate on 100% by 2010. The region’s strategic choice to concentrate on
renewables, in which both public and private interests have come together, has
created a new industrial sector, closely linked to wind power development. This
sector has generated some 2000 new jobs and over 500 million euros investments in
just five years. 80% of this sum has been invested by the EHN group.
EHN has put particular efforts into public information and participation, in the form of
seminars, meeting with a wide range of people in public roles, through educational
programmes and other initiatives. As a result, wind power development has generally
had wide-range public support. At the present 85% of the people in Navarreare in
favour of the implementation of wind farms, and only 1% against.
Behind the plan there is a clear wish to drive forward technological development in
order to improve the competitiveness of renewables. As a result, Navarre will soon
be home to the Spanish Technology Centre for Renewables, and a Chair in
Renewables promoted by EHN has been inaugurated in the Universidad Publica de
Navarre. Strong R&D teams have been set up around this project.
The installed renewables capacity of the EHN group in Navarre is 630 MW (540 of
this is wind power). The group also operates 25 small hydro stations with total
installed capacity of 64 \MW. It is building a 25 MW biomass plant based on straw
combustion and is also developing the largest photovoltaic power sun tracking
technology.
The company’s activities in Navarre have led to the emergence of projects by other
promoters. If the capacity installed by these promoters is added to the existing
figures, the region now has 870 MW from renewables, enabling to cover 50% of its
internal electricity demand.
The Wind Power Implementation Plan approved by the Government of Navarre will
be completed in the near future, bringing capacity installed by the EHN GROUP TO
612 mw and the regional total 912 MW. This will mean that by 2004 Navarre, with a
population of 556,000, will have 1100 MW of renewable in service, equivalent to the
capacity of a nuclear power plant.
Renewable energy infrastructure in Navarre
Technology
Wind *
Small Hydro
Biomass**
Capacity installed by Capacity installed by other Total Installed
the EHN group (MW) developers group (MW)
capacity (MW)
540
149
689
64
91
155
25
25
27
Photovoltaic ***
Total
1
630
240
1
870
Table2 – Energy Matrix of Navarre
* Including the 93.2 MW wind farms at Las Llanas de Codes (1st phase), currently under construction
** The 25 MW correspond to the new straw combustion plant that EHN is building at Sanguesa, which
will enter service in the first half of 2002
*** The 1.2 MWp photovoltaic solar powers at Tudela is due to enter service in the first half of 2002
Evolution of self-sufficiency in electricity in Navarre from renewables
1990
2000
Total electricity demand
2441
3775
(GWh/year)
Electricity production from
332
1456
renewables (GWh/year)
Coverage ratio (%)
13.6
43
Table 3 – Electricity production in Navarre
2001*
3543
2005*
4060
1810
3256
51
80
* Estimated figures on the basis of increases of electricity consumption in Navarre of around 4% per
annum between 2001 and 2005
The importance of the Public Support
All wind power implementation programmes have been carried out on a basis of an
open, transparent approach. The community has been kept informed about the
projects and this has led to greater public awareness of the need to promote this type
pf energy. Hundreds of visits have been made to wind farms, and the other range of
social players and associations, such as environmentalists’ groups, trade unions,
professional and business associations, university lecturers/students and citizens’
groups. This has created a favourable climate around the development of
renewables in the areas concerned.
Opinion surveys are carried out regularly for the company by an independent
company. The most recent (October 2001) found that 85%of the people of Navarre
consider that the development of wind power in the region to have been beneficial,
with only 1% against. For 75% of the population wind power is the best way to
produce electricity, and its main advantage is that it is a clean energy source (93%).
The survey also reveals that around 23,500 (54% of the population of Navarre)
people have visited a wind farm.
Similar results have been obtained in the first opinion survey carried out in Albacete,
Castilla La Mancha (October 2001), approximately two years after the wind power
implementation plan for the province was started. Here, 79% of the people
considered that plan to be beneficial, with 1% against. 69% think that wind power is
the best way to produce electricity because it is a clean source of power (88%) and
creates jobs and wealth (48%). Around 81% of the people of Albacete would be in
favour of the installation of a wind farm in their area.
28
1.6 – Support mechanisms – Main Conclusions
Under the current liberalized market conditions, renewable energy technologies face
significant barriers before they can be widely implemented, including:
• High capital cost
• Lack of network infrastructure
• Lack of confidence in new technologies
• Technical problems associated with the geographical distribution of available
potential, and the stochastic nature of the primary energy (wind)
• Legislative barriers to obtaining construction and operating licences
• Electricity trading mechanisms that inequitably penalize unpredictability.
Support mechanisms are clearly needed to accelerate development of renewable
energy in the world.
The most critical policy issue for achieving the EU white paper targets concerns the
support mechanisms to be established for renewable energy. A wide range of
support mechanisms is in place across Europe, such as:
• Fixed feed-in tariffs - these are not market-based, but are highly effective for
promoting local industry (e.g. Germany)
• Quota system (with or without penalties) - competition-based mechanisms
which ensure that the quotas are obtained with the cheapest technologies
(e.g. Belgium)
• Public tender approach - e.g. the former Non-Fossil Fuel Obligation in the UK
• Green certificates - a market-based approach, where the wind farm generates
both energy and 'green' certificates, which are handled separately and are
traded. This requires, however, a large enough trading area (for example,
across Europe) to be effective and stable. It also presupposes harmonization
of rules at the European level (such as those of Denmark and the
Netherlands).
The ongoing liberalization of the energy sector has introduced significant
uncertainties with regard to subsidies, as whole schemes have been revised in order
to comply with EU common market requirements. In some countries, the procedure
of exchanging old support mechanisms for new ones has been delayed, putting
developers in a difficult situation; uncertain about which set of rules has been
applied.
In general, the liberalization procedure seems to result in subsidy schemes being
harmonized towards the green certificate model, awarding wind power an extra
bonus determined by a certificate market. In the Netherlands, such a scheme is
already in operation. For other countries, the schemes are not yet fully in place,
which introduces significant uncertainty on future prices.
In March 2001, the European Court of Justice made an important decision
concerning the future of price support for the development of renewables, as it
decided that the German Feed-in Law - the Stromeinspeisungsgesetz - was not state
aid. The court also stated that the German laws were in compliance with internal
market rules, as they were intended to help achieve environmental objectives, which
are a priority for the European Community. This decision makes it possible for
member states to implement similar schemes without challenging European state aid
rules, as such rules are not considered to act as barriers for countries that set an
obligation to purchase electricity from renewable sources.
29
Since the time of this decision, however, the future of the green certificate market is
becoming increasingly uncertain, as the feed-in tariffs in Spain and Germany can
now continue. Furthermore, a law on renewables that resembles the German Feed-in
Law has boosted the very promising market in France.
Regarding national incentives, it should be noted that feed-in tariffs have been used
onshore in Denmark, Germany and Spain - Europe's top three onshore markets.
After it was announced that the feed-in tariff in Denmark would be replaced by a
green certificate market, the development of new onshore projects virtually stopped.
Most Danish activity is currently in repowering (replacing small, older turbines with
larger new models).
Based on this example, is not necessarily the case that feed-in tariffs alone can
secure the future development of wind energy (including offshore), but it can be
concluded that countries within the EU need to create long-term market support
mechanisms that are sufficient and secure enough to attract investors and
developers. The EC Court of Justice decision regarding the feed-in tariff system in
Germany indicates that such tariffs are not in conflict with internal market rules,
thereby securing the future of this market support mechanism within the EU.
30
Chapter 2 – Electricity market in Brazil and the Potential Use of Wind
Power Generation
2.1 – Brazilian Energy Balance
In this section will be presented the structure of Brazil’s Energy Matrix and its Energy
Balance, in order to assess ways of integrating the use of wind power generation to
achieve part of the capacity’s expansion needs of the country. Some general data will
be given, showing the difficulties of implementing new technologies in a country with
continental dimensions, and the growth in the electricity consumption per capita and
the actual electricity market structure will be explored, reassuring the need for
creating new generating options.
2.1.1 - General Data of Brazil
Brazil’s Area (km²) - 8,511,965
Demographic Density (hab/km²) – 19.5
Urban Population 2000 (%) – 81.2
Foreign Exchange Rate (average 2000) – R$/US$ 1,8302
UNITY SPECIFIC 1999 - 2000 %
Estimated Population (inhabitants) – 174,820,936
Gross Domestic Product (GDP- 109 US$(00)) - 569,9
Per capita US (00) - 3496 3586 2,6
Internal Energy Offer (106 tep) - 253 258 2,0
Per Capita (tep) - 1,55
per GDP (tep/mil - US$ ) - 0,44
Final Energy Consumption (106 tep) - 231,1
Electricity Offer (TWh) - 390
Oil Production (+LGN) (10³ bep/day) - 1132
Electricity Generation (TWh) - 332
Total Energy Import (10³ bep/day) - 1194
Total Energy Export (10³ bep/day) - 136
Total Consumption
Oil and Natural Gas (10³ bep/dia) - 1693
Gas Oil (10³ bep/dia) - 311
Ethanol (10³ bep/dia) - 245
Fuel Oil (10³ bep/dia) - 223
Aviation Fuel (10³ bep/dia) - 61
Total Electricity (TWh) - 315
Industrial Electricity (TWh) - 138
Residential Electricity (TWh) - 81
Commercial Electricity (TWh) - 44
Natural Gas (106 m³/dia) - 21,2
Total Oil Resources + Natural Gas + LNG (109 bep) - 17,1
Average Prices - US$ (2000)
Oil (CIF/b) - 16,8
Gas (Oil/bep) - 133
31
Diesel/bep - 52,6
Fuel Oil/bep - 25,1
Alcohol/bep - 117
Natural Gas industry/bep - 15,2
Wood/bep - 14,2
Coal /bep - 13,4
Residential Electricity /bep - 194,8
Industrial Electricity/bep - 83,7
Production
Iron -GUSA and Steel (106 t) - 25,0
Iron - LIGAS (106 t) - 0,8
Aluminium (106 t) - 1,2
Cement (106 t) - 40,3
Paper and Pulp (106 t) - 14,1
Residences serviced with electricity (*) % 94,9
Residences serviced with LPG and natural gas (*) % 96,5
Note: bep: equivalent barrel of oil
(*) Includes the rural area of North Region of Brazil
2.1.2 - Energy Balance – Main Issues (base year 2000)
The total primary energy production in 2000 was around 213.149 x 10³ tep, i.e.,
5,13% higher than the previous year. This value takes into account the sum of all
primary renewable energy – 134.240 x 10³ tep (63% of total, 0,25% growth related to
1999), plus all primary non-renewable energy – 78.908 x 10³ tep (37% remaining,
14,64% growth related to 1999).
Among the renewable energy sources, hydropower was the one that contributed with
the highest share, having about 41,9%, followed by wood with 10,1%, sugar cane
with 9,2% and other sources with 1,9%. From those sources, the only one that had a
reduction in production related to 1999 was the sugar cane with 18,50%.
Regarding the non-renewable sources, oil has been the main fuel, having an
increase of related to the previous year. The other fuels had the following increase
related to the previous year: metallurgic coal with 66,67%, steam coal, with and
natural gas, with 11,64%. The overall final energy consumption in 2000 was of
235.264 x 10³ tep, and had an increase of 1,8% related to 1999.
Among the sectors that had major contributions to such an increase, the main one
was industrial sector with 89.724 x 10³ tep (38,1% of overall consumption or 3,9%
increase related to the previous year). The residential sector maintained its
consumption equal to 1999, having participated with 37.728 x 10³ tep or 16,0% of
total. The commercial sector, with 14.605 x 10³ tep (6,2% of total ), had an increase
of 8,8% related to the previous year. Nevertheless, the transport sector had a
reduction of 9,6% compared to 1999, participant with 46.430 x 10³ tep or 19,7% of
total consumption.
In terms of energy source, electricity had the largest share in the energy
consumption, accounting for 40.9%. This happened mainly due to the way electricity
is accounted in the energy balance, followed by oil by-products which had a
participation of (Diesel 12,3%, gas oil 5,9%, fuel oil 4,3% and others 12,9%) and
renewable resources, with wood having 5,8% and sugar bagasse 5,7%. Among the
segments that have consumed more energy in 2000, the main relevant points are: At
32
the industrial sector, natural gas with 4.237 x 10³ tep, was the fuel that had the
largest increase regarding the previous year, with 40,6% increase. Electricity, with
42.288 x 10³ tep, corresponding to 47,1% of total, had an increase of 5,3% related to
1999. Nevertheless, sugar bagasse 7.951 x 10³ tep (8,9%) and fuel oil with 7.476 x
10³ tep (8,3%), had a reduction of 18,5% and 1,9%, respectively.
At residential sector, the natural gas represented an exception with an increase of
300% regarding the previous year. This increase was mainly due to the replacement
at water heating and coccion, increasing from 68 x 10³ tep to 287 x10³ tep. All the
other fuels kept the same consumption rates regarding the previous year. Electricity,
with 24.213 x 10³ tep, increased from 2,7% compared to 1999. Maintaining the
standards, wood (with 6.553 x 10³ tep) and LPG (with 6.206 x 10³ tep) have
increased 2,5% and 0,4%, respectively.
The commercial sector had its consumption mainly based at electricity, with 13.757 x
10³ tep (94,2% from total), increasing 8,8% compared to 1999. Natural gas and LPG
had an increase of 37,5% and 16,2%, respectively. Wood, with 81 x 10³ tep, diesel,
with 58 x 10³ tep and fuel oil, with 308 x 10³ had a reduction of 2,6%, 17,1% e 6,1%,
respectively.
2.2 - Energy Matrix
As detailed before, the Brazilian energy matrix is mainly based on renewable
systems, with the hydropower generation corresponding to 82% of the actual
installed capacity. This structure was created due to an electric system expansion
plan that was developed around 30s, aiming at maximising the generating capacity
while using the available resources that the country offered.
Generation Source
Hydro Power
Thermal
Nuclear
Alternative Sources
(Wind, Biomass, Small Hydro)
SUBTOTAL
Imports from Itaipu
Other Imports
TOTAL
Installed Capacity
2001 (MW)
Estimative
2004 (MW)
61555
6944
1966
2345
82%
9%
3%
3%
69448
17024
1966
5645
67%
17%
2%
5%
72810
5500
1150
79460
92%
7%
1%
100%
94083
6200
3438
103721
91%
6%
3%
100%
Table 4 – Brazilian Energy Matrix
From this hydro basis, it is noticed that the environmental pressure for the
replacement of the generation source and the reduction of greenhouse gases, which
has been motivating investments in wind power generation in some countries as
shown in Chapter 1, is not a characteristic of the Brazilian market.
Nevertheless, due to the hydro dominance in the Brazilian Energy Matrix, the
seasonal stabilization of the energy offer has been a big challenge to the operational
planning of the interconnected electrical system, because the hydrological regimes
have seasonal fluctuations of great amplitude.
The outage demand risks at the dry periods have been increasing over the last
years, since investments at expanding generating capacity have been delayed during
33
the restructuring process of the electricity system. At the same time, during the last
decade, the use of wind energy reached the gigawatts scale, showing its effective
contribution to electricity networks around the world.
To fully understand the context that has led to the development of this hydro based
electrical system, a brief historical review covering the main facts of the Brazilian
Electricity industry at the last years will be presented, showing the potential for the
use of wind energy in conjunction with hydro-energy.
2.3 - Electricity System in Brazil
Historical Background
The Electricity system in Brazil dates back from the beginning of the 20th century,
with the first legal text regulating the use of electricity being approved by the National
Congress in 1903.
In 1934 it was established by the President (Getulio Vargas) The Code of Waters,
which ensured to the Public Power the possibility to control the electricity
concessionaires. Some years later, in 1939, it was created the National Council for
Water and Energy (CNAE) to solve the supply, regulation and tariff issues related to
the electricity industry in the country.
Having a very strong hydro basis, the whole history of the energy industry in Brazil
has always been connected to the water system development. In 1941, it was
regulated the “historical cost” for the electricity tariff calculus, establishing the rate of
return of investors in 10%. In 1945, it was created the first Federal electricity
company, Companhia Hidroeletrica do Sao Francisco – CHESF.
In 1952, the National Economic Development Bank (BNDE) was created, being
responsible for the energy and transport areas. Two years later, in 1954, it was
constructed the first hydroelectric plant, Paulo Afonso I hydro plant, installed at Sao
Francisco River, belonging to CHESF, and the first thermoelectric power plant,
running on diesel started its operation.
In 1957 it was created the Eletrical Central of Furnas (Furnas S.A.), aiming tat
exploring the hydro potential of Grande River (Rio Grande) to solve the energy crisis
of the Southeast Region. This region concentrated the industrial and economical
centre of the country, and by this decade, energy expansion capacity was considered
a bottleneck for the increasing industrial development.
In 1960, as part of the development policy implemented by the President Juscelino
Kubitscek, known as the Target Plan, the Ministry of Mining and Energy – MME –
was created. The following year, it was established Eletrobras, implemented in 1962
to regulate the electricity sector in Brazil. Its main objectives includes the promotion
of studies and projects for the construction and operation of generation plants,
transmission lines and substations, to supply electricity to the country.
Currently, Eletrobras is a company that has private and government investors, acting
as a “holding” of the generation and transmission concessionaires companies, owned
by the federal government, acting in the whole country, through its subsidiaries,
CHESF, CGTEE, ELETRONORTE, ELETRONUCLEAR, ELETROSUL and
FURNAS. Additionally, it has 50% of the capital of Itaipu Binacional, which is the
generation company developed by a joint cooperation agreement with the
government of Paraguay, besides promoting research and development through its
34
Electric Research Centre – CEPEL and coordinate federal government programmes
such as PROCEL, RELUZ and Light in the countryside (Luz no Campo).
The Eletrobras system acts as an agent from the Federal Government, coordinating
and integrating the electricity sector. It is responsible for almost 60% of the country’s
generation capacity and 64% of the transmission lines. It is also responsible for the
energy conservation programme – PROCEL.
Being the main financial credit provider of the electricity industry, it accumulates the a
portfolio that accounts for 60% of the total assets of the sector.
Throughout the years, many Electricity Centrals were created in the regions of the
country.
In 1973, as a consequence of the international agreement signed between Brazil and
Paraguay, regulating the construction and operation of a hydro power plan in River
Parana (which crosses the two countries), it was created Itaipu Binational - ITAIPU.
Also, in this year, it was created Nuclebras, for the development of nuclear power
programme, and the Electric Research Centre – CEPEL, to promote research and
development of electricity systems.
In 1975, it was created the Committee for the Distribution of the Region SouthSoutheast – CODI and the Committee for the Operation of North/Northeast system –
CCON.
In 1982, the Ministry of Mining and Energy – MME created the Group to Coordinate
the Electricity System Planning – GCPS. In 1984, it was finished the first part of the
transmission system North-Northeast, allowing the transfer of energy form the
Amazon basin to the Northeast Region. The Hydroelectric Itaipu started its operation,
being the biggest hydro power plant at the time, with 12,600,000 MW of installed
capacity.
In 1990, it was approved Law n°8031 creating the National Destatization Programme
– PND, which started the privatisation of the electricity assets. It was also created the
Electricity National Transmission System – SINTREL, to promote competition at
generation, distribution and commercialisation of energy.
In 1995, the companies controlled by Eletrobras were included in the Privatisation
Programme – PND, allowing the privatisation of the generation and distribution
companies. It was, then, realized the first electricity distribution company
privatisation, starting a new phase at the electricity sector.
In 1997, the new regulatory body of the electricity sector was established, with the
given name of ANEEL. In 1998, the Wholesale Electricity Market – MAE was
regulated, consolidating the differences between the activities of generation,
transmission, distribution and commercialisation of electricity. The rules for the set up
of the National Operator System –ONS were established, to replace the Coordination
Group for the Interconnected System – GCOI. In this years, the reforms of the
electricity system, with the implementation of a new model for the sector started,
which will be detailed in the next section.
In 2000, President Fernando Henrique launched the Priority Programme of
Thermoelectricity, to implement many gas fired thermal power plants in the country,
in order to meet the increasing electricity demand.
Currently, The Interconnect Electricity System, is composed of three main
subsystems:
35
•
•
•
South/Southase/CentralWest
North/Northeast
North Isolated
The North Region is a complete isolated system, having no connection with the other
regions, whereas the North/Northeast and South/Southeast/CentralWest Regions are
connected through transmission lines, with some constraints.
Many investments are undergoing for the expansion of the transmission lines, and
the connection of the North Region to the rest of the country. The main aim is
avoiding situations, like in the rational period, when there was a superavit of
electricity production in the North, which couldn’t be exported to other regions due to
the lack of transmission lines.
Each sub market has its own characteristics, with different prices and generation
profiles, being all of the controlled by Eletrobras and regulated by ANEEL.
Latest Years
From the 90s onwards, Brazil has experienced a new stage at its economical
development process. Due to the impossibility to promote investments at strategically
segments, such as telecommunications, electrical energy and transport, and unable
to attend the increasing society demands, the Government decided not to act as an
entrepreneurship at the infrastructure sector, but to attract investments through
private agents. It started developing a new role, as regulator of public services. The
establishment of the regulatory agencies was an important step at the restructuring of
the Government role.
Regarding the electricity segment, the need for changes was already perceived at
the 80s. The model adopted at the time has increasing fragilities, requiring a fastchanging process. Nevertheless, this restructuring process involved a lot of political
issues, and the 1998 Constitution maintained the important role of the State on the
infrastructure sector development. Some years later, the State and most of its
companies (stated-owned distribution, transmission and generation companies)
started realizing that they had limited investment resources to expand capacity to
meet desires growth rates.
As a developing country, Brazil has electricity consumption rates higher than the
global energy consumption rates. The income-elasticity of electricity consumption
(relation between the electricity consumption growth and the GDP growth) has been
declining in the last years, as a consequence of structural reforms at the local
economy (although still being much higher than rate at developed countries). But a
dynamic inertial component of the electricity market accounts for its relative growth.
The use of energy efficient technologies has contributed for this decline, but the
increasing penetration of electricity in all economy sectors, reaching all levels of
society and extending the electrical grid, has compensated the overall balance.
In order to assist the government in the energy segment restructuring, the National
Development Bank – BNDES and Eletrobras have, through legal determination, the
role to complement the financial agents with small participation in generation and
transmission projects in private investments. Considering the difficulties to implement
hydropower projects in the short term to attend the increasing electricity demand and
the deregulation of the electricity sector, a new space is created through the creation
of new agents, the Independent Power Producer and the Self Producer. Both would
develop a new role in achieving the expansion needs for electricity generation, which
36
is estimated in 4.5 GW per annum, according the “official” expansion plan from
Eletrobras (figures from the expansion plan before the rationing period, which will be
explained).
The need for expansion of energy offer can be noticed from the increase of electricity
consumption over the last twenty years.
The following graphs show the evolution of electricity consumption and the growth
rates for energy region of Brazil on the period 1983-1999. It is interest to realize that
from the 80s onwards the growth rates from most of the regions (with exception of
the North Region) present similar tendencies, following the country’s average.
Figure 6 - Evolution of electricity consumption by region (Source: MME,2000)
Figure 7 – Evolution of the electricity consumption growth rate in Brazil (Source: MME,2000)
Due to a period of restructuring, increasing demand and lack of investments, the
electricity sector faced an outage period in 2001/2002, known worldwide as the
“Brazilian Energy Crisis”. A Rationing policy, allied to the creation of a Crisis
Management Chamber (which main attributions will be explained later) and energy
conservation measures were established by the government. This shortage period
37
promoted a whole revision on the expansion capacity targets and electricity
consumption levels, as outlined below.
0
-5
-10
-15
-20
-25
From Target Baseline
From June-December 2000
From Forecast for June-December 2001
North
Northeast
0
-5
-10
-15
-20
-25
Southeast/
Central West
0
-5
-10
-15
-20
-25
Figure 8 megawatts)
Brazil Rationing Results -
0
-5
-10
-15
-20
-25
South
June – December 2001 (percent reduction on
average
In the rationing period due to the unavailability of electricity, the MWh was traded in
the WholeSale Market with veru high prices, achieving the value of R$ 600/Mwh,
corresponding to US$ 200/MWh. This has shown how dependent the hydro system
was from natural events, and forced the Regulatory Body to estimate a deficit risk,
reflecting the risk of not meeting demand. This risk was estiamted around R$
450/MWh, US$ 150/mwh, giving room to and opening space to the development of
new generation technologies, like renewables, since the development costs of those
were lower than the deficit risk.
Of course, this was a punctual situation, and the generation costs cannot be
compared to the deficit risk costs, but at least this opened space for a new
discussions, emphasizing the risk of depending on one source of genertaion and the
need to diversify generation capacity.
2.3.1 - Economy and the Electricity Market
At the 1970/1980s period, Brazil experienced a big economy expansion, with
increase at the per capita income, and the per capita electricity consumption. It was
noticed an increase at the participation of the “electrical content of the GDP”.
Throughout this decade, the electricity consumption per product unit has increased
from 0.162 to 0215 kWh/ US$ (GDP in average US$ of 1997) and the per capita
consumption from 430 to 1025 kWh/habitant.
As a consequence, the participation of the electricity at the national energy balance
jumped from 17% to 28%. The average income-elasticity at this decade was 1.37.
38
At the 80s, the economy had an unstable behaviour. The economy growth rate, at an
average was positive, but inferior to the population growth, leading to a per capita
income, in the 90s, lower than the 80s. This didn’t occurred with the electricity
consumption. Due to new projects developed under a National Development Plan
(PND), which started being implemented at the 70s, and a constant tariff reduction,
the electricity consumption remained increasing at high rates. The consumption per
capita and the electrical content of the GDP, have reached 1531 kWh/habitant and
0.330 KWh/us$, respectively. The participation of electrical energy at the national
energy balance ahs also increased, reaching 37%. The income-elasticity during the
period was 3.75.
At the period 1990/1997 there is an important milestone: the Real Plan. This Plan
had as a major consequence, not only thee control over the inflation process, but
also a reduction at the inflation expectation, which started showing progressively
lower indexes. Allied to the economy “opening”, the stabilization plan has created the
conditions necessary for the return of economy growth. This can be perceived from
the triennial index 1995/1997, showing a recovery environment, when compared to
the same indexes at the period 1990/1994. During this period, the average annual
growth rate of electricity consumption was 3.3%, being above GDP, which was 2.3%
p.a. Nevertheless, during 1994/1997, the consumption increased 5.5% annually and
GDP 3.6%.
In 1998, the economic activity started to reflect the adjustments measures adopted
by the government to face the difficulties from the “Asian Tigers” crises and the
default from the Russian government (1997), which had an negative impact at the
electricity market, resulting in a growth rate of 4.1% in this year.
The electrical content of the GDP in 1999, has reached approximately 0.383
kWh/US$, being among the larger in the world, and contributing to good
environmental indicators, due to the hydro predominance, having low carbon dioxide
emission, in tonnes per million, and per GDP thousands US$ (about 0.1 ton/103
US$). The electricity participation in the National Energetic Balance was around 38%
in 1999.
On the other hand, the consumption-elasticity of electrical energy tends to be lower.
After registering significant increases over the 80s decade, this index falls to around
1.74 at the period 1990/1999, reflecting structural changes at the national industry,
due to its modernization and efficient use of electricity.
This brief analysis justifies the non-existence of an inertial component at the dynamic
of the electricity market, which conducts to an increase even in periods of economic
crisis. It also counts for the behaviour of the income-elasticity of the consumption,
which tends to be closer to unit at the dynamic periods of economy, and to have
higher values at the low economic increase periods.
To give additional support to this analysis, the table below shows the values for
economic evolution indexes and energetic consumption in the country during the
period 1970/19999. To be consistent, the electricity consumption represented refers
to the supply of firm energy, summed up with consumption of interruptible energy,
besides the consumption share being supplied by autoproduction.
The total consumption value for 1999 is composed by the following parts: firm
energy: 290.8 TWh; interruptible energy 0.7 TWh; and autoproduction 20.9 TWh.
39
1970
70/80
% p.a.
1980
80/90
% p.a.
1990
90/94
% p.a.
94
95/97
% p.a.
97
98/99
% p.a.
99
POPULATION
million of habitants
93
2,5
119
1,9
143
1,9
154
1,5
160
1,5
165
GDP
us$ billion of 1997
US$/hab
248
2662
8,6
6
567
4761
1,6
-0,3
663
4638
2,3
0,4
726
4716
3,6
2
807
5044
0,6
-0,9
816
4950
Energy Consumption
millions tep
income-elasticity
tep/103 US$ (1997)
tep/hab
69
0,279
0,74
6,4
0,74
-2,1
3,8
128
0,226
1,08
2,8
1,78
1,2
0,9
168
0,255
1,18
3,1
1,35
0,8
1,2
191
0,263
1,24
4,5
1,27
0,9
3
222
0,275
1,39
4,2
7
3,6
2,6
241
0,295
1,46
Electricity Consumption
TWh
income-elasticity
kWh/US$ (97)
KwH/HAB
40
0,162
430
11,8
1,37
2,9
9,1
122
6
219
3,3
3,75
1,43
0,215
4,4
0,33
1
1,025
4,1
1,531
1,4
Table 5 – Brazilian Index
249
0,343
1,671
5,5
1,53
1,8
4,1
292
0,362
1,825
3,4
6,5
2,9
1,8
312
0,383
1,893
Indexes
2.3.2 - Restructuring the Market
In the 1990s, there was a clear need to restructure the electricity market and create
conditions to the uptake of investments, improving the quality of service to general
public. In this context, the Electricity National Agency (ANEEL) was created, being a
strategic link to the transformation process responsible to boost the electricity sector
development. Inspired at existing models of already running agencies throughout the
world, such as the USA, Chile, and many countries from Europe, ANEEL has been
acting the regulator agency role, aiming at balancing the interests of the sector
agents and the consumers, with an overall benefit to the Brazilian society.
2.3.3 - The Pathway to Liberalization
The first legal basis for the restructuring of the Brazilian electricity system was
created in 1993, with the approval of a constitutional amendment that allowed the
participation of foreign investments in the segment. But it was only in 1995 that the
modernization actually took place, with the regulamentation of Article 175 of 1998
Constitution, which attributed to the government the responsibility to supply public
service, directly or through concession permit.
The situation started changing with the establishment of a series of regulatory
measures that contributed to the development of the sector. In 1993, was approved
Law 8631, which has permitted the financial recovery of companies of this sector,
mainly the state-owned distribution companies, that would be privatised later on. In
1995, after the approval of Law 8976, about the concession of public services; and
the Law 9074, about the concession of services of electricity, the minimal legal
conditions for the restructuring of the sector were established. This effort was
consolidated at the following year, with the creation of ANEEL through the Law 9427.
This was the initial step to the transformation process, which would gain new
instruments in 1998, with the establishment of the Wholesale Market (MAE) and the
National Operator of the Electricity System (ONS), through the Law 9648.
40
Those new agents are important and essential elements for the implementation and
function of the new institutional model defined by the State. They are the tombstones
of a new energy market, strong and dynamic, which have as their main
characteristics the deverticalization of the companies, the free competition at
generation and commercialisation and the guarantee of free access to the
transmission and distribution networks.
The following outlines the main legal milestones that contributed to the creation of
those new market conditions.
Law 8631, from 4th March 1993, establishes the level of tariffs and abolishes the
guaranteed remuneration regime for the electricity sector.
Law 8987, from 13th February 1995, implements Article 175 of Federal Constitution,
which establish the concession and permission of public services.
Law 9074, from 7th July 1995, establishes rules for the execution and deadline
extension of concessions and permissions of electricity services.
Law 9427, from 26th December 1996, establishes ANEEL and disciplinant the
concession regime of electricity services.
Law 9648, from 27th May 1998, establish the wholesale market (mae) and the
National Operator of the Electricity System (ONS), among other measures.
2.3.4 - The Agents of the Electricity Market
Energy and Mining Ministry (MME)
At the new institutional model, the Energy and Mining Industry (MME) is responsible
for the definition of public policies for the sector. Being part of the Executive Power,
the Ministry elaborates governmental programmes based on the directives given by
the Energetic Policy National Council, and defines the aims and instruments for the
provision of service to the consumers.
It also has, among its competencies, the determinative planning of the transmission
system and the indicative planning of the expansion of generation, which are
executed by the Expansion of Electricity Systems Planning Committee (CCPE).
National Electricity Agency (ANEEL)
The National Electricity Agency (ANEEL) is a special autarchy, linked to the Energy
and Mining Ministry. Being a State Entity, autonomous, it regulates and controls the
activities of the sector. On behalf of the Union, the Agency acts as a concession
entity as well. As an important part of its mission, ANEEL must ensure the ordered
and equalized development of the electricity sector, assuring the quality of service
supplied to society and aiming at, as far as it may be possible, providing equilibrium
between the interests of the economic agents and the consumers. It is the regulatory
body’s duty to implement the directives and the energetic policy of the executive
power. ANEEL manage two programmes, inserted at Plano Plurianual (PPA) 20002003, from the Federal Government: the Quality Programme of the Electricity
Service, which main aim is to guarantee the quality of the services supplied by the
agents; and the Supply Programme of Electricity, which aim at increasing the supply
offer.
National Operator of the Electricity System (ONS)
41
The operaation of the interconnected electrical system and the administration of the
basic network of transmission are the main attributions of the National Operator of
the Electricity System (ONS). Ons is a entity of private rights, composed by the
generation, transmission and commercialisation, apart from the importers and
exporters of energy and free consumers. The Ministry of Energy and Mining also
takes part at ONS, and it has veto rights over questions that might generate conflicts
with the directives and governmental polices for the sector. ONS coordinates and
controls the generation and transmission activities and makes a closer observation of
the energetic situation of the country.
Wholesale Electricity Market (MAE)
The implementation of the wholesale electricity market (mae) is one of the more
important innovations of the restructuring of the electricity sector. Its implementation
is essential for the effective establishment of competition between the economic
agents. Institutionalised in 1998 and integrated by concession companies in
generation, distribution and commercialisation of electricity, MAE is not yet operating
at full load. In 2000, through Resolution 290, ANEEL established the permanent rules
for the operation of MAE, besides defining the directives for its gradual
implementation.
Independent Power Producer (IPP)
After the restructuring, other companies, beyond the concessionaires, started to
produce and trade electricity. Those are the independent power producers,
companies or consortiums authorized by ANEEL to produce energy and sell it, in all
or only parts of the markets, by its own risk and account, having the guarantee to free
access to the transmission system and having autonomy to sign bilateral contracts.
In the new scenario, the maintenance of the independent power producer is
fundamental for the sustainable development of the electricity sector.
Trading Agents of electricity
The new energy market counts with the participation of trading agents. They are
companies which, even not being owners of generation plants or electrical systems,
are authorized to act in the trading of energy, contributing to make the market more
dynamic, increasing the competition, and, as consequence, promoting an equilibrium
at prices. Two dozens of companies with this profile have already been approved by
ANEEL. The importers and exporters of energy and the independent power
producers can also act as trading agents.
2.3.5 - Recent Initiatives
As part of the liberalization process of the electricity market and to solve the outages
experienced in 2001, due to lack of investment and proper planning of the sector, the
Federal Government has created a special Chamber to analyse and create the new
“modus operandi” of this industry.
The Crisis Management Chamber (GCE) was established in May 2001. Among its
main objectives are: administrate the programmes of adjustment of energy demand;
coordinate the efforts to increase the electricity offer and propose and implement
emergencies measures depending on the hydrological situation.
42
The legal instrument that created this Crisis Management Chamber determines that
the requests and demands of the same should be attended in priority, at a deadline
established by the Chamber.
It is the Chamber responsibility:
1 – regulates and manages the Emergencial Programme to Reduce the Electricity
Consumption and the Strategic Programme of Electricity;
2 – observe and evaluate the macro and micro economical consequences of the
circumstantial reduction of availability of electricity and measures implemented to
face this situation;
3 – propose measures to minimize the negative impacts of the reduced availability of
electricity over the levels of employment, income and economic growth and identify
situations of public calamity;
4 – establish limits for the use and supply of electricity and compulsory measures for
the reduction of consumption and to suspend or interrupt the supply of electricity;
5 – propose a change in tariffs and taxes over goods and equipments that produce or
consume electricity and decide about the implementation of rationing and the
individual or collective suspension of electricity supply;
6 – define the Organ or entity responsible for the implementation and execution of all
this measures;
7 – work jointly with the Union and other federal unities aiming at implementing
programmes to face the lack or reduction of availability of electricity;
8 – impose restrictions to the use of the hydro resources, which are not used to
human consumption and are essential to the operation of a hydro power plant;
9 – propose the adjustment of the investments limits at the federal and state levels of
the electricity sector;
10 –establish other measures to reduce consumption and increase the transmission
and electricity offer and negotiate with specific consumers sectors for a greater
economy at the electricity consumption;
11 – establish specific procedures for the implementation and operation of the
Wholesale Market (MAE) in emergency situations; and
12 – establish directives for the social communication actions among the organs and
entities of the electricity sector, aiming at the proper promotion of the Government
and the Chamber actions.
Besides the Crisis Chamber, another ten organs were created to analyse and
implement actions related to the reduction of electricity availability, being:
1 – Commission to Analyse the Hydrothermal Electricity System
The Commission aims at evaluating the electricity production policy, as well as
identifying the structural causes for the non-equilibrium of demand and offer of
energy.
2 – Technical Committee to Reach Essential Areas
This Committee aims at promoting actions to minimize the negative impacts of an
eventual electricity supply interruption to the areas considered essentials by the
Committee. This Committee works jointly with the Federal Public Administration,
other federal entities and essential service suppliers.
3 – Technical and Tax Analysis Support Committee
This Committee promotes the suggestion of modifications in tariffs and taxes over
goods and equipments that produce or consume electricity.
4 – Legal Support Committee
This Committee acts as a legal consultant, giving support to the Crisis Chamber.
5 – Load Reduction Programme Group
43
This Group prepares and determine the directives for the implementation of the
compulsory load reduction programme, by the Crisis Chamber.
6 – Committee to Monitor and Control the Reduction of Electricity
Consumption
7 – Technical Committee of the Wholesale Electricity Market
The Wholesale Committee main objective is to analyse and revise the operation rules
of the Wholesale Electricity Market.
8 - Technical Committee of Environment
This Committee aim at analysing and revising the procedures for the environmental
licensing process of projects that will increase the energy offer.
9 - Technical Committee To Increase Offer in the Short Term
This Committee analyses proposals and measures to increase generation and
energy offer from any source in the short term, being composed by the following
members:
10 – Committee to Revival the Electricity Sector Model
This Committee is responsible to make proposals in order to correct the actual
problem and suggest improvements for the new model, taking into consideration:
I – the need to preserve the basic principles of the Model, which is based on the
existence of competition, prevailing the private investments, energy offer compatible
with the development needs of the country and maintenance of high standards of
service quality;
II – the working results from the Commission to Analyse the Hydrothermal Electricity
System.
As a consequence of the new model to be implemented and the Commissions and
Comitees created, a new policy was established to expand generation offer. The
contribution of renewables to achieve this objective was detailed, which will be
presented later on this chapter, after an explanation of the actual status of the wind
energy industry in Brazil.
2.4. - The Use of Renewables Sources for Electricity Generation in Brazil
Brazil is a country known all over the world by its continental dimensions and its
biodiversity. Actually, huge natural resources reserves (sun, wind, biomass, tides,
etc) are available, which brings to the question of why they are not used in a larger
extent.
As presented before, the country’s energy matrix is already 82% based on
generation from renewable energy (hydropower), although some experts may argue
that big hydroplanes are classified as “renewable”, for the environmental impact they
cause on their installation and implementation.
For decades, the use of other renewable sources for energy generation have been
disregarded in Brazil, either due to cost issues, to easy availability of hydropower
energy, to lack of a proper policy, of incentive schemes and competitiveness. As
detailed before, with the experiences of countries where wind power has been
implemented, it is made clear proper development mechanisms and policies are
fundamental for the success of this industry.
Some initiatives have been very successful and recognized worldwide, like the “ProAlcohol” Programme, where it has been developed a combustion motor, which ran
entirely on alcohol derived from sugar cane, and allowed the country to be less
dependent on oil during the Oil Crisis in the 70/80s.
Actually, the main renewable sources used are biomass, wind and sun, with many
different applications and projects. Regarding the use for electricity generation, those
projects were developed mainly as “pilot projects”, sponsored by the government and
44
built to supply electricity to isolated communities where it would be more expensive
to extend the network then to invest in those projects. Some small-scale commercial
projects are also in place, which will be detailed later.
With the new electricity market scenario explained before and the need to expand
generation to meet increasing demand, an opportunity for electricity generated from
renewables is identified. Among the renewable technologies available in Brazil, wind
has proven to be the more cost-effective, representing the most promising choice to
be used for generating electricity in large scale in the short and medium term.
From the table below, we can see the costs for the different renewable technologies
and the prices expected in the future, outlining the competitive advantage of wind
energy related to other renewables.
Table 1 – Current Status and Future Prospects of Renewable Energy
Technologies (RETs)
Sources
Bio energy combustion
Bio energy power
Bio energy liquid fuels
Hydropower
Solar heating
Concentrating solar power
Solar PV
Geothermal
Wind
Heat
Electricity
Liquid Fuels for transport
Current Unit Cost (in US$)
Renewables
3-5/GJ
0.06-0.09/kWh
15+/GJ
0.03-0.05/kWh
10-30/GJ
0.12-0.15/kWh
0.25-0.65/kWh
0.03-0.12/kWh
0.05-0.11/kWh
Estimated Cost (2020)
3-5GJ
0.05-0.06/kWh
10-12/GJ
0.03-0.04/kWh
10-20/GJ
0.04-0.05/kWh
0.10-0.15/kWh
0.025-0.08/kWh
0.02-0.03/kWh
Conventional Technology
5-61/GJ
0.03-0.05/kWh
9-10/GJ
* - U.S. estimates from RET Characterisations report
* - U.S. DOE/EPRI’s report on Electricity Technology Roadmap
Estimates from Japanese sources
* - EC Work Programme and Update
2.5 - Wind Energy in Brazil
Introduction
Wind energy has been used for a long time in Brazil, in isolated or small-scale
projects. It has been used, mainly, for water pump systems using windmills. The
latest years technological advance permitted a higher penetration of wind turbines for
electricity generation, as shown in the first chapter. In Brazil, the use of small-scale
wind turbines for residential electricity supply has been increasing, mainly to attend
isolated communities non-connected to the grid. As part of the new programme to
expand generation capacity, it will be explained throughout this dissertation how wind
energy can be used for grid connected electricity generation in Brazil, explaining the
country’s potentials and the challenges faced to implement this technology under
local conditions.
45
Brazil has several pilot projects in operation and some small scale commercial plants
connected to the grid. During the 90s many national entities have signed cooperation
agreements with foreign entities for the development of renewable sources in the
country. The first solar and wind energy projects were implemented in the Northeast
and North Regions of the country, places where the non-availability of electricity is
harder. Due to the existence of many low-income communities, isolated, without
supply of conventional energy sources, many projects were implemented with the
installation of photovoltaic and wind systems for the distributed generation of
electricity.
Today in Brazil there are many groups involved with wind energy, its technology and
applications, besides the quantification and qualification of areas where this resource
has proven to be abundant. The first studies focused on the development of a
national technology dates from 1976, at the Aerospace Technical Centre (CTA).
Initially, prototypes of aerogenerators of low power were developed (1 to 2 Kw),
which gave place to the first evaluation of the wind potential on the Northeast Coast.
The project had a great development when CTA established a partnership with the
German Aerospace Centre – DFVLR, through which they started project DEBRA.
This project would comprise the use of an aerogenerator of 100 Kw, with a rotor of
25m diameters. It was CTA responsibility the blades assembly, which in 1983 where
ready and was shipped to Germany.
Many institutions all over the country, suppliers, universities, NGOs, federal organs
among others have intensified their presence in wind energy on the second half of
90s, when the main projects from renewable energy sources were implemented in
the county. The new market scenario, with privatisations of generation and
distribution electricity companies opened new opportunities for the development of
renewable energy sources. It was essential an accurate assessment of the real
potential for the use of renewable resources, as a way of creating new generation
options to expand capacity and comply with the new environmental standards. The
assessment of the wind potential has proven to very important for the future
development of an electricity generation source that could be available within a short
period, faster than the big hydro power plants the system was used to.
Many initiatives to assess the wind potential of different areas of the country were
started. The first successful result was issued in 1998, covering the Northeast Region
of Brazil. The Wind Assessment of Northeast of Brazil, WANEB project, consolidated
speed and directional wind data measured in wind stations.
After this project was officially launched, the Brazilian Centre for Wind Energy
(CBEE) has focused its efforts in the development of the Brazilian Wind Atlas, a
consolidation of different measurement centres and data gathered throughout the
years, which was completed in July 2002. Part of the data will be presented
subsequently, as well as an explanation of the metrology adopted.
2.5.1 - Assessment of Brazilian Wind Potential
The Brazilian Wind Atlas covers the whole national territory. Its main objective is to
provide information that enables decision makers to identify areas suitable for the
use wind to generate electricity.
One of the main constraints for the use of wind energy has been the unavailability of
consistent and trustable data. A significant part of the wind registers available can be
misleading by aerodynamic influence of obstacles, terrain and roughness. The
46
availability of representative data is important in the Brazilian case, where this
renewable resource has not been explored yet to a large extent.
This Atlas was developed based on MesoMap, a numeric modelling software system
for the superficial wind. This system simulates the atmospheric dynamic of wind
regimes and meteorological variables related to it, through the use of representative
samples of data validated for the period 1983/1999. The system includes
geographical variables such as terrain, roughness induced by vegetation classes and
use of soil, the thermic interactions between the earth surface and atmosphere,
including effects from existent water vapour. This simulations are then adjusted to
existent references, such as meteorological data resulted from reanalysis, radio
sonars, wind and temperature measured over ocean and surface wind
measurements already available for specific regions of Brazil. Among this, only
measurements with proper suitable to make reference to the model were selected.
The following table shows the stations used:
Institution
CEPEL
CELESC
COPEL
COELBA
SUDENE
Navy – DHN
Region Covered
North Region
Santa Catarina State
Parana State
Bahia
Ceara
Coast of Brazil
Total
Number of Stations
7
6
17
13
2
2
47
This results of these simulations are presented in different maps, representing the
average behaviour of wind (speed, main directions and static parameters of Weibull)
and wind loads at a height of 50 meter, at an horizontal resolution of 1km x 1km, for
the whole country.
Besides this general assessment of the best areas for wind energy developments
and the main wind characteristics, it was also realized the integration of potential
areas with geo process tools, using conservative premises.
A generic set of results for the different regions of the country can be seen from the
table below. It is important to bear in mind, that the objective of the wind atlas is to
identify potential areas, acting as an indicative for future developments, but those
numbers do not consider any physical and geographical limitations, just taking into
account the wind speed in the areas. The areas with wind speed equal or above 7
m/s were considered more suitable for the use of wind energy, but for further
deployment of this technology a detailed study has to be conducted, considering all
the local conditions of the areas. When looking at those, in some cases areas with
wind speed lower than 7 m/s (as in many regions of Europe) may prove to be more
feasible than areas with higher wind speed.
47
MAP 1 – Wind Potential of Brazil
48
Integration per W ind S peed R anges
R egion
C um m ulative Integration
W ind Speed
( m /s)
Area
( km 2)
Installable W ind
Power (G W )
Capacity F actor
Annual E nergy
( T W h/year)
W ind Speed
(m /s)
Cum m
A rea
Installable W ind
Power (G W )
Annual E nergy
( T W h/year)
North
6 - 6.5
6.5 - 7
7 - 7.5
7.5 - 8
8 - 8.5
> 8.5
11460
6326
3300
1666
903
551
22,92
12,65
6,60
3,33
1,81
1,10
0.13
0.17
0.20
0.25
0.30
0.35
25,58
18,46
11,33
7,15
4,65
3,31
> 6
> 6.5
> 7
> 7.5
> 8
> 8.5
24206
12746
6420
3120
1454
551
48,41
25,49
12,84
6,24
2,91
1,10
70,48
44,9
26,44
15,11
7,96
3,31
Northeast
6 - 6.5
6.5 - 7
7 - 7.5
7.5 - 8
8 - 8.5
> 8.5
146589
60999
24383
9185
3088
870
293,18
121,98
48,77
18,37
6,18
1,74
0.13
0.17
0.20
0.25
0.30
0.35
327,19
178,02
83,73
39,43
15,91
5,23
> 6
> 6.5
> 7
> 7.5
> 8
> 8.5
245114
98525
37526
13143
3958
870
490,22
197,04
75,06
26,29
7,92
1,74
649,51
322,32
144,3
60,57
21,14
5,23
M idwest
6 - 6.5
6.5 - 7
7 - 7.5
7.5 - 8
8 - 8.5
> 8.5
41110
8101
1395
140
6
0
82,22
16,20
2,79
0,28
0,01
0,00
0.13
0.17
0.20
0.25
0.30
0.35
91,76
23,65
4,79
0,6
0,03
0,00
> 6
> 6.5
> 7
> 7.5
> 8
> 8.5
50752
9642
1541
146
6
0
101,50
19,28
3,08
0,29
0,01
0,00
120,83
29,07
5,42
0,63
0,03
0
Southeast
6 - 6.5
6.5 - 7
7 - 7.5
7.5 - 8
8 - 8.5
> 8.5
114688
46302
11545
2433
594
297
229,38
92,60
23,09
4,87
1,19
0,59
0.13
0.17
0.20
0.25
0.30
0.35
255,99
135,15
39,64
10,44
3,06
1,78
> 6
> 6.5
> 7
> 7.5
> 8
> 8.5
175859
61171
14869
3324
891
297
351,72
122,34
29,74
6,65
1,78
0,59
446,06
190,07
54,92
15,28
4,84
1,78
S outh
6 - 6.5
6.5 - 7
7 - 7.5
7.5 - 8
8 - 8.5
> 8.5
121798
38292
9436
1573
313
57
243,60
76,58
18,87
3,15
0,63
0,11
0.13
0.17
0.20
0.25
0.30
0.35
271,86
111,77
32,4
6,75
1,61
0,34
> 6
> 6.5
> 7
> 7.5
> 8
> 8.5
171469
49671
11379
1943
370
57
342,94
99,34
22,76
3,89
0,74
0,11
424,73
152,87
41,1
8,7
1,95
0,34
> 6
667400
1334,79
1711,61
> 6.5
> 7
> 7.5
> 8
> 8.5
231755
71735
21676
6679
1775
463,49
143,48
43,36
13,36
3,54
739,23
272,18
100,29
35,92
10,66
T otal B razil
Estim ated Potential
49
50
Although the preliminary results shown above can be considered overestimated by
some experts, they outline vast potential of wind energy use in the Brazilian territory.
For a more accurate assessment of those potential areas, it is necessary to conduct
a full analysis of the region, considering many different aspects, which will be
detailed in the case studies.
Some of the maps obtained from the Brazilian Wind Atlas will be presented in the
Annexes.
2.5.2 - Wind Energy in Brazil – State of the Art
The better potentials for wind energy use in Brazil are located in the North and
Northeast Region. Compared to other renewable sources available for power
generation in those regions (mainly solar and biomass), wind energy has many
advantages that establish its position as an important option for new investments in
power generation projects. Many institutions have already worked for the accurate
assessment of both regions, mainly in the coastal shore, where strong and constant
wind are observed almost the whole year. Studies conducted by CHESF (electrical
utility that serves most of the Northeast states) and COELCE (electricity utility of
Ceara state) shows that the Northeast coast between the states of Rio Grande do
Norte and Ceara have wind resources estimated in 12,000 MW.
The Northeast Region is pioneer in the installation of wind energy power projects. As
can be noticed from the table below, most of the projects already existents in Brazil
are located in this region. The programmes of experimental implementation in Brazil
sum up to 2.6 MW. The projects implemented by private companies’ sum up to 17.5
MW (15 MW in state of Ceara and 2.5 MW in state of Parana).
Installation
Fernando de
Noronha – PE
Fernando de
Noronha – PE
Morro do
Camellinho – MG
Porto de Mucuripe
– CE
Hybrid System of
Joanes – PA
Wind Farm of
Prainha – CE
Wind Farm of
Taíba – CE
Wind Farm of
Palmas – PR
Central Eolica -
Implementation
Investors
Operational Projects
CELPE,
30% Denmark
UFPE/Folkente
r
CELPE, UFPE,
ANEEL
ANEEL
CEMIG
70% Germany
COELCE
70% Germany
CEPEL/
100% USA
CELPA
Wobben
Private
Windpower/
COELCE
Wobben
Private
Windpower/
COELCE
Wobben
Private
Windpower/
COPEL
Projects under negotiation
Cinsel/COELCE
Private
51
Capacity
Operational
Start
75 KW
1992
300 KW
1992
1 MW
1994
1.2 MW
1996
40 KW
1997
10 MW
1999
5 MW
1999
2.5 MW
1999
5.4 MW
1999
CE
2ND Phase –
Palmas
Wobben
Private
9.5 MW
Windpower/
COPEL
Paracuru – CE
Ceara
100% Japanese
Government/
COELCE
Camocim - CE
Ceara
100% Japanese
Government/
COELCE
Feasibility Studies / Pre-Concession
Barreirinha
C.E.X Clean
30 MW
Energy do
Brasil
Fortaleza
C.E.X Clean
60 MW
Energy do
Brasil
Preliminary Studies / Planning
Jericoacara – CE
COELCE
100 MW
Cabo Frio – RJ
UFF
10 MW
Norte Fluminense
UFF
40 MW
– RJ
Pernambuco,
UFPE/
30 MW
R.G.Norte
Manufactures
Consortium
rd
3
Phase
–
75 MW
Palmas
Minas Gerais
150 MW
Salinopolis – PA
50 MW
2000
2002
1998
1998
Table 6 – Status of Wind Projects in Brazil (2001)
In the North Region, the Electric Research Centre (CEPEL), the national Electricity
company (Eletrobras) and electricity utility of state of Para (CELPA) have been
collecting data in different places with high wind occurrence, providing accurate and
updated information, which favours the implementation of a wind farm. The
construction of wind farms in the North and Northeast Region are facilitated by the
following reasons:
•
•
•
•
Decreasing generation costs, with the development of large scale projects and
the mature of this new technology;
The new legislation creating the Independent Power Producer (IPP);
The importance of wind energy to reduce fossil fuels dependency, mainly in the
North Region where fuel supply is essential;
New legislation allowing open access in distribution and transmission network;
Even in a small number, the wind projects implemented in the country shows an
important initiative from the concessionaires, responsible for the experimental
projects, and for the self-producers power companies.
52
2.5.3 - Experimental Projects and Cooperation Agreements
The discussions about the Environment, during the Rio de Janeiro Conference, in
1992, contributed to the creation of partnerships to develop renewable-based
projects. Governments from some industrialized countries created different
cooperation programmes regarding renewables, such as: the Eldorado Programme
from the German Government, the Programme from the Department of Energy
(DOE) of the United States, through the National Renewable Energy Laboratory –
NREL and the Sandia National Laboratory, and actions from France, mainly at
Morocco and Denmark.
International agreements for the implementation of experimental projects have also
included Brazil in many solar and wind projects. Some demonstration projects were
implemented involving electricity companies, government, universities and research
centres. The following table presents the projects in place since 1995, due to these
international agreements.
Project
Folkencenter/ CELPE/ UF
Eldorado / CEMIG
NREL – Phase 2
State of Para
State of Minas Gerais
TOTAL
Capacity (kW)
75
1,000
Characteristic
1 aero generator
4 aero generators
40
Hybrid wind and solar
27.5
Hybrid wind and solar
1,142.5
Table 7 - Experiments from International Cooperation Agreements
2.5.4 - The Legal Framework for the Development of Wind Energy in
Brazil
In this section will be presented the laws, decrees and resolutions that have directly
contributed to the increase of wind energy use in Brazil. It is important to outline that
there are specific laws to other renewable technologies that won’t be presented here.
It will be covered the Law that Regulates The Independent Producer and the SelfProducer, the ANEEL resolution about the normative value (VN), and Law n° 10438.
The study of the laws and regulation available is of extreme importance because
through those, many countries have reached technology maturity and a significant
contribution of renewable technologies for energy generation, as shown in Chapter 1.
After the rationing crisis Brazil has faced in the last years, and considering that there
is plenty of natural resources available in this country, it is very important that States
and Governments participate actively, contributing for the development of wind
energy projects. The need for a clear and specific legislation and the guarantee of
the acquisition of energy generated from renewable is essential to attract investors.
Only after the establishment of a local market in the country with enough critical
mass it will be possible to promote a reduction in costs and improve the
competitiveness when compared to the conventional energy sources.
53
2.5.4.1 – Independent and Self-Producer of Energy
The Legal Decree n° 2003, from September 1996, regulates the electricity production
from Independent Producers and Self-Producers. This Decree regulates the
electricity concession for legal entity or consortium of companies, designated totally
or partially to the commerce or exclusively for self-consumption.
In the Article 2°, there are the final considerations about the Independent Producer
and Self-Producer, as follows:
I.
II.
Independent Power Producer is the “pessoa juridica” or consortium of
companies that are granted the concession or authorization to produce electricity
aimed to be totally or partially traded, by its own account and risks;
Self Power Producer is the “pessoa fisica ou juridica” or consortium of
companies which are granted the concession or authorization to produce
electricity exclusively to its own use;
In Chapter 1, Section 1 of the Decree opens the possibility for the interested, through
request, to precede the tender process by itself, which are usually determined by the
Public Power. The concession, preceded by tender in the terms determined of the
decree, is legally necessary for hydropower developments higher than: 1,000 KW for
the Independent Producer and 10,000 KW for the Self-Producer.
The definition of optimal use of the hydro potential can be realized through technical
studies conducted by the interested, as long as it has been previously authorized.
This way, the implementation of thermal power plants with capacity superior to 5,000
KW can be authorized, destined to the Independent Producer and the Self Producer,
as well as the use of hydropower potential superior to 1,000 KW and equal or inferior
to 10,000 KW by self producer.
One important measure is detailed on the article 5°, which releases the need for
concession or authorization for the use hydro power potential equal or inferior to
1,000 KW and the implementation of a thermal power plant with capacity equal or
inferior to 5,000 KW, demanding only the communication for the responsible Organ,
to registry. The following table shows the rules for concession of electricity
generation in Brazil.
End Use of the Power
Installed Capacity of the Hydro Power Plant
Up to 1 MW
Up to 10 MW
Above 10 MW
Public Service
Free
Through Tender
Self Production
Free
Authorization
Tender
Independent Producer
Free
Through Tender
End Use of Power
Installed Capacity of a Thermal Power Plant
Up to 5 MW
Above 5 MW
Self Production
Free
Authorization
Independent Producer
Free
Authorization
Table 8 - Rules for the Electricity Generation Concession
About the access to the distribution and treatment system, Article 13 states an
important measure, guaranteeing the commercialisation and use of the electricity
produced. The Independent Producer and the Self-Producer will have the free
access to the transmission and distribution systems of concessionaires and
54
permissionaires guaranteed, through the reimbursement of the transport cost. The
Decree also: regulates the integration of the energetic operation of the Independent
Power Producer and the Self-Producer to the electricity system (section IV) and
establishes the financials charges to be paid by those producers (section V),
determines standards of control and penalties (section VI), besides presenting a
former authorization for the alienation of goods and installations used for the
electricity production by those producers, as well as establishing standards referred
to the final destiny of those goods at the end of the concession or permission period
(section VII).
This decree covers, in a broad extent, the supply of electricity by private investors.
Some limits and observations regarding hydropower and thermal systems are
established, as noticed from Table 8 . Although it does not establish any limits or
authorization for the use of renewable technology, this Decree is extremely important
to regulate the Independent and Self Producers that use renewable sources for the
generation and selling of energy.
The Wind Farms of Taíba and Prainha, in the state of Ceara, and the wind farm of
Palmas, in the state of Paraná, are the first cases to sell electricity produced by
Independent Producers to the local distribution electricity companies, COELCE and
COPEL, respectively. The new initiatives to contribute to wind energy generation
aims at creating ways to incentive the establishment of Independent Power
Producers for the free commercialisation at the electricity market.
2.5.4.2 – Incentive Programmes and Laws
The Federal and Local Governments established many different incentive
programmes and schemes for the use of renewable technology for electricity
generation over the last years. Most of them included subsidies or tax exemptions,
but a strong and definitive programme that supported the deployment of renewables
were still lacking.
The rationing period faced in the last couple of years brought to attention the
question of a proper expansion capacity planning, and the need to diversify the
country’s energy matrix. The large availability of renewable resources in Brazil, the
decreasing generation costs of this technology and the interest to develop projects in
this area from foreign investors, has reopened the debate over the need of a more
concrete policy covering the issue.
As part of the restructuring process of the electric sector, it was issued in April 2002,
Law n° 10438, which establishes the new agreement between the agents of the
sector after the rationing period and deliberates a new policy for the use of
renewables for electricity generation. Many experts are considering this Law as a
definitive step for the implementation of renewable energy, although many
uncertainties still remain. The Law will be detailed in the following item.
Law N° 10438
As a consequence of the Crisis Management Chamber work, a set of new laws and
regulation were created to implement the new operational model of the sector and to
plan the expansion of the generation capacity, aiming at preventing the reoccurrence
of an outage period.
Among those initiatives, Law n° 10438 creates the Programme to Incentive the use of
Alternative Energy Sources for Electricity Generation (PROINFA) and the Energy
55
Development Account (CDE, through its Article, which will be referred to sequentially,
showing the importance of what it determines.
“Art.3°. Establishes the Programme to Incentive the Use of Alternative Energy
Sources for Electricity Generation – PROINFA, aiming at increasing the amount of
electricity generated through Independent Autonomous Producers, based on wind,
small hydro and biomass resources, at the National Interconnected Electricity
System, and making it feasible through the following procedures:
I. In the first phase of the programme:
a) The contracts will be granted by “Centrais Eletricas Brasileiras” (Central Brazilian
Electricity System) – Eletrobrás in up to 24 months from the publication of this
Law, for the implementation of 3,300 MW capacity, in installations with
operational start until 30th December 2006, guaranteeing the purchase of the
energy produced during 15 years, starting from the operational start date stated
in the contract, following the floor value established in alinea b;
b) the contracts related to alinea a may be equally distributed, in terms of installed
capacity, for each one of the sources participating in the programme, and the
energy might be purchased by the economic value related to the specific
technology for each source, value to be defined by the Executive Power, but
having as floor value 80% (eighty per cent) of the average national tariff;
c) The value paid for the electricity acquired following alinea b and the
administrative costs incurred by Eletrobras as the contract process will shared for
all classes of end consumers supplied by the National Interconnected Electricity
System;
d) The acquisition of the installations which this subsection refers to will be done
through Public Call, for each specific source, giving priority initially to those who
have already obtained the Installation Environmental License – LI and then, to
those who obtained the Previous Environmental License – LP;
e) In the case of existing installations with LI and LP in a larger amount than the
acquisition availability from Eletrobras, it will be contracted those whose
environmental licenses have a shorter validity period remaining;
f)
It will be allowed the direct participation of manufacturers of generation
equipment, its controlled, colligated or controller in the constitution of the
Independent Autonomous Producer, as long as the nationalization index of the
equipments is, at least, 50%( fifty per cent) in value;
II. At the second phase of the programme:
a) After reaching the 3,300 MW target, the development of the Programme will be
conducted in order to supply 10% (ten per cent) of the annual electricity
consumption in the country from wind, small hydro and biomass, target to be
achieved in up to 20 years, including the first phase in this period;
b) The contracts will signed between Eletrobras, with a duration period of 15 (fifteen)
years and price equivalent to the economic value correspondent to the
competitive generation, defined as the weighted average cost of generation of
new hydro power projects, with capacity superior to 30,000 KW and gas fired
thermal power plants, calculated by the Executive Power;
56
c) The acquisition will be done through an annual planning purchase programme of
electricity for each producer, in order to have the refereed sources supplying a
minimum of 15% (fifteen per cent) of the annual increase of electricity to be
supplied to the national consumer market, offsetting the differences between the
expected and actual for each exercise, in the flowing one;
d) The alternative energy producer will have access to a complimentary credit to be
monthly supplied with resources from the Energy Development Account – CDE,
which will determined by the difference between the economic value for each
specific source, value to be determined by the Executive Power, but having as
floor value 80% (eighty per cent) of the average national tariff supplied to the end
consumer, and the value paid by Eletrobras;
e) Until 30th of January of each fiscal exercise, the producers will issue a Certificate
of Renewable Energy – CER, in which will be included, at least, the juridical
qualification of the producer, the source of the primary energy used and the
amount of electricity actually traded in the previous fiscal exercise, to be
presented to ANEEL (regulatory body) for the contrail and checking of the annual
targets;
f)
The Executive Power will regulate the procedures and Eletrobras will control so
that the complimentary credits which are detailed in alinea d don’t overpass 30
(thirty) days of the payment request done by the producer agent;
g) at the contract order, which will preceded by Public Call for the knowledge of the
interested parties, Eletrobras will use the classification criteria detailed at
subsection I, alinea d,e and f, respecting, yet, the minimum period of 24 (twentyfour) months between the signature of the contract and the installation
operational start;
h) The contracts might be equally distributed, in terms of installed capacity, for each
one of the generation sources of the programme, having the Executive Power, for
each 5 (five) years from the implementation of this second phase, transfer to
other sources the remain capacity of any of the others, which haven’t been
contracted for not having interested buyers;
i)
The value paid for the acquired electricity and the administrative costs incurred
by Eletrobras at the contract process will be shared through all classes of end
consumers supplied by the National Interconnected Electricity System,
proportionally to the verified consumption.
#1° The Independent Autonomous Producer is the one whose society is not
controlled by or colligate to the generation, transmission or distributions electricity
concessionaire, neither from its shareholders or society controlled or connected with
the common shareholder;
#2 – The Executive Power will be allowed to grant permission to Eletrobras to
establish contracts with Independent Producers that doesn’t fulfil the criteria of #1, as
long as the total to be contracted is not higher than 25% (twenty-five per cent) of the
planned annual purchase and that from those contracts the Independent Producer
offer is not chosen. It might be observed that in the case of wind energy, in the first
phase of the programme, the total of contracts established can reach up to 50% (fifty
per cent).
57
#2° – The Executive Power will be allowed to grant permission to Eletrobras to
establish contracts with Independent Producers that doesn’t fulfil the criteria of #1, as
long as the total to be contracted is not higher than 25% (twenty-five per cent) of the
planned annual purchase and that from those contracts the Independent Producer
offer is not chosen. It might be observed that in the case of wind energy, in the first
phase of the programme, the total of contracts established can reach up to 50% (fifty
per cent).”
Article 13 defines the creation of the Energy Development Account (CDE), which
covers most of the alternative resources. In the following reference to this Article, it
will be presented the conditions related to wind energy, excluding the section related
to other sources.
“ Art 13. Establishes the Energy Development Account (CDE), aiming for the energy
development of the States and to ensure the competitiveness of energy produced
from wind, small hydro, biomass, natural gas and national mineral coal, in the areas
served by the interconnected systems and to promote the universalization of
electricity services in the whole national territory. The resources of this account
might, following the constraints and limits detailed below, be destined to the following
uses:
II – for the payment of energy agents that produces electricity from wind energy, gas
fired thermal power plants and small hydroelectric, whose operation starts after the
publication of this Law. This payment will be equivalent to the difference between the
economic value correspondent to the specific technology for each source and the
economic value of the competitive energy, when the selling and purchasing are
realized with end consumer;
III – for the payment of the credit detailed in alinea d of “ïnciso” Ii of article 3°;
#1° - The resources of the Energy Development Account (CDE) will come from the
annual payments obtained for the use of public good, the fines applied by ANEEL
(regulatory body) to concessionaires, permissionaires and authorized companies,
and from 2003 onwards, from the annual quotas paid by every agents that trade
electricity with the end consumer.
#3° - The quotas mentioned in #1° will be readjusted annually, starting from year
2002, proportionally to the market growth of each agent, up to the limit that does not
cause tariff increase for the consumer.
#6° - CDE will last for 25 (twenty-five) years, being regulated by the Executive Power
and managed by Eletrobras.”
This Law was issued on 26th April 2002, and has not been regulated yet. Discussions
with the involved agents, governments and development agencies are still going on,
and the prediction is to have it regulated by November, before the change in the
Federal Government (elections will be in October, and the new President starts its
mandate on 1ST January, 2003).
Resolution N°248
This resolution establishes the mythology to calculate the price limits that can be
transferred to the supply electricity tariffs depending on the purchase prices.
58
This limit price, known as Normative Value (VN), became important during the
restructuring of the electricity sector, due to the expire of the old bilateral contracts a
general “fear” that new high prices could be transferred from the concessionaires to
its customers. The maintenance of the transfer price control has always been an
important issue for all the agents involved in the market, mainly to guarantee that
clear rules and non-abusive were being used.
Law n° 9648, from My 1998, regulates, through article 10, a new relation for the
buying and selling of energy. After this Law, the relationship between
concessionaires and authorized agents of generation and distribution
premissionaires becomes of free negotiation, as long as the transition conditions
established in alineas aa,b and c from paragraph I are respected during 1998 and
2002. From 2003 onwards, the volumes of energy traded will be reduced gradually in
the proportion of 25% p.a. This Law also defines that ANEEL will formulate the
criteria to establish the transfer price limit based on the purchase price of electricity.
Law 9074, from July 1995, opens the possibility that, from July 2003 onwards, any
electricity consumer which is classified as a free consumer will have the option to
choose its electricity supplier.
With the responsibility to define the criteria for the transfer prices, different versions
of Resolutions were debated with the agents, resulting in the final version, which will
be referenced below, showing the main relevant parts:
“ Art. 2° - The cost with the acquisition of electricity, to be considered in the
readjustments determined in the Concession Contract, will be obtained using the
following formula:
Where:
CE – cost of the electricity acquisitions necessary to meet the reference market, at
the conditions at the date of readjustment in process and the previous readjustment ,
expressed in R$ (Reais, Brazilian currency);
MCI – volume purchased of electricity, through the initial contracts, at the reference
period, expressed in MWh;
PCI – tariff of the electricity purchased referred to the initial contracts, at the
conditions observed at the date of readjustment date in process and at the previous
date of readjustment, expressed in R$
TCI – value of the charges incurred to use the transmission and distribution systems,
referred to the electricity purchased through the initial contracts, at the conditions
observed at the date of readjustment in process and the date of the previous
readjustment, expressed in R$;
MCEi – volume of the electricity purchased, at the refereed period, related to the
bilateral contract “I” negotiated freely, expressed in R$;
PCTi – transfer price related too the purchase of electricity related to the bilateral
contract ‘I” negotiated freely, at the conditions observed at the date of readjustment
in process and the date of the previous readjustment, expressed in R$;
MCRi – volume of the purchase of electricity from the concessionaires, at the
reference period, related to bilateral contract “I”, expressed in R$;
59
PCRi – tariff of the electricity purchased related to bilateral contract “ï” signed with a
public service concessionaire, at the conditions observed at the date of readjustment
in process and the date of the previous readjustment, expressed in R$;
MCP – volume of the short term electricity purchases, needed to meet the reference
market, at the reference period, expressed in R$;
VNC – normative value defined by for the valuation of the short term purchases, at
the conditions observed at the date of readjustment in process and the date of the
previous readjustment, expressed in R$;
TCE – value of the charges to use the systems of transmission and distribution,
complimentary to the charges related to the initial contracts, at the conditions
observed at the date of readjustment in process and the date of the previous
readjustment, expressed in R$;
Art.3° - The transfer price of the electricity purchased at the reference period will be
the Normative Value as upper limit, and that should obey the following procedures:
Electricity Purchase Price at the Bilateral Electricity Transfer Price – PCEi
contract “i” Pbi
Pbi > VNi
PCEi = VNi
Pbi < VNi
PCEi = Pbi + (VNi – Pbi) x Pbi/4 x VNi
Where:
PBi = purchase price of electricity acquired, at the reference period, through bilateral
contract “I” freely negotiated, which will be expressed in R$/MWh;
VNi = Normative Value, defined by ANEEL, valid at the signature of bilateral contract
“ï”, expressed in R$/MWh;
PCEi = transfer of the electricity purchase price, expressed in R$/MWh;
Art. 5° For each electricity purchase contract with duration equal or superior to
twenty-four months, it will be associated a Normative Value, taking it account the
register date at ANEEL.
#1° For comparison with the Normative Value, the purchase price of the contract will
be considered at the common reference point of the submarket where the electricity
byuer is located, following what is established by art.15 of Decree 2655, from July
1998.
#2° In the moment of the contract register and when the revisions may occur, the
concessionaire should present the weighting factors F1I (weighting factor of the
IGPM index) and F2I (weighting factor of the foreign exchange) respecting the limits
established in this Resolution
Art 6° For the annual readjustment of the electricity tariffs, it will consider the total
purchased at the reference market, following what is established at the concession
contract, valued for the prices at the “Readjustment Date in Process” - DRP and at
the “Previous Reference Date”- DRA.
60
#1° For the calculus of the limit of the transfer price of the contracts, the Normative
Value established for each electricity purchase contract will be updated for the month
previous to the date DRP or DRA, depending on the case, through the formula:
VNi = Vno x (F1ox IGPM1i/ IGPMo + F2I x IVCi/ IVCo)
Where:
VNi = Normative Value updated for the last readjustment month of the electricity
purchase contract previous to DRA or DRP;
VN0 = Normative Value at January 2001;
F1i = weighting factor of IGP-M index;
F2i = weighting factor of the foreign exchange rate;
IGPM1i = accumulated value of the general price index, established by Fundação
Getúlio Vargas - FGV, until the month previous to the update of VN;
IGPM0 = 1,000;
IVC0 = average of the foreign exchange rate, issued by the Central Bank of Brazil, at
the month previous to the update of VN;
IVC0i = R$ 1,9633/US$;
§ 2o The sum of the weighting factors F1i and F2i might be equal to 1,0.
§ 3o The weighting factors F1i and F2i will be revised after the tenth year of the
bilateral contract duration, and after this period, at every five years
§ 4o If the variation of the IGP-M and/or the IVC index is considered expressive
enough, between DRA and DRP dates, to cause significant impacts at the electricity
purchase price, the concessionaire will be allowed to request to ANEEL the revision
of the tariffs, as disposed in the Concession Contract.
Art. 7 The Unique Normative Value (VN), representing the competitive source, is
established as:
Vno (R$/MWh)
72.35
F1o minimum
0.25
The normative Value will be revised, annually or as decided by ANEEL, in the case it
happens relevant structural changes at the electricity production chain, following the
aspects:
I.
projects under development;
II.
planned expansion of the generation park;
III.
update of project costs;
IV.
bilateral contracts signed between the agents; and
V.
polices and directives of the Federal Government
61
Art. 8 The short term Normative Value – VNC will be the Normative Value valid at the
readjustment in process 9drp) or the previous readjustment (DRA), using the formula
presented at art.6 of this Resolution, considering F1I = 1.0
A Brief Analysis of the Law and Recent Initiatives
Law n°10438 sets very ambitious targets for the deployment of renewable, but still
has some uncertainties that need to be clarified to the achievement of those.
Other programmes were created before this Law to incentive the use of renewable,
but they were unsuccessful, failing to attract local or foreign investments in this area.
The expectation is for the programme to be well accepted, because there is a strong
willingness of private investors to develop projects related to this (many companies
are already undertaking feasibilities studies in different regions of Brazil), and there is
a clear need to expand the generation capacity, and renewable technology can help
to increase this in a short term. Also, the conditions set, not only by this Law, but also
from Local governments seems favourable, and the increasing environmental
awareness and initiatives to create self-sustainable societies to reduce inequality will
help society to push for the use of those technologies.
Some renewable energy projects were already approved before this Law was issued,
resulting in a total capacity round 4 GW authorized Wind Energy Projects by ANEEL.
This amount outlines the real willingness of the investors, but it only means that a
permission has been given by the regulatory body. This does not guarantee that
those projects will be executed, since most of the project developers are waiting for
the Law to be regulated.
In a market research conducted with the main project developers (SIIF Énergies,
Marubeni, Seawest and Enerbrasil) some points were raised:
•
•
•
•
Uncertainty about the PPA conditions
Need for a final definition over the Normative Value (VN), guaranteeing a
competitive price that reflects real market conditions;
Indefinition about how the resources of the Energy Development Account will
distributed;
the importance of a proper competitive value to be defined;
2.5.4 - The Financial and Tax Framework for the Development of Wind
Energy in Brazil
As the equipment used for wind energy generation is still not produced in Brazil, for
the development of a local project the import taxes and any other taxes incurred in
the process, freight and insurance charges have to be included for a full analysis.
After some contacts with import agents, it was obtained an average value for the
shipping from Europe (where most of the manufactures are located) to Brazil of
around DM$ 200.00/TON or DM 200.00/m3, being used the highest value. About the
insurance the average value obtained was around 1% over the average cost of the
turbine at its origin country. When it reaches Brazil, some other taxes are applicable
over the cost of the turbine on its own origin country (FOB cost), which are added to
the transport and insurance (CIF). Currently, those taxes are:
•
•
Import Tax – II
Tax over Industrialized Goods – IPI
62
•
Tax over Circulation of Goods and Services – ICMS
As per the Brazilian Goods Classification – NBM, issued by the Aduana, the value of
II (IPI) is: 3% over the CIF cost for wind generators and the 5% over the CIF cost for
the wind turbine. As tax II (IPI) is applicable over the equipment, so it is III (ICMS).
The value of ICMS varies for every state of Brazil, being 17% up to 18%.
Financing Conditions
The financing of a wind project in Brazil can be done with equity or with external
capital resources. Currently, local financing is also available form the National
Development Bank – BNDES, which has special financing lines for the electricity
sector.
For the case where external financing is used, some simulations were done varying
the percentage amount of external capital and the interest rates applied. It were
analysed participations from 10% and 90% of the total initial investment, and interest
rates of 10%, 12.5%, 15%, 17.5% and 20%. The financing conditions adopted were
the same for each possibility of participation and interest rate, being:
•
•
•
•
Use of constant amortization system;
Grace period of 2 years;
Total investment period of 12 years (grace period + amortizations);
Annual Payments
Another financing source used at the economic study presented for the case studies
were the credit lines from BNDES. The Bank provides credit lines known as FINEM –
Projects Financing. The FINEM finances projects with investments superior to R$ 7
million, including the equipment and machines acquisition done directly through
BNDES or through financial institutions catalogued.
The interest rates used by FINEM are:
Interest Rae = Financial Cost = Basic Spread = (Risk Spread or Agent Spread)
Where:
• Financial Cost
• TJLP – Interest Rate of Long Term
• Foreign exchange rate (dollars to R$) added up to Libor or
• Variation of the monetary unity from BNDES (UMBNDES) added up the
currency basket charges
• Basic Spread
• Standard level: 2.5% p.a.
• Special level: 1.0% p.a.
•
Agent Spread: to be negotiated between the financial institution and the customer
• Risk Spread: Up to 2.5% p.a. in the financial operations directly with BNDES;
and at the other cases it will be negotiated between the financial institution
and the customer
Using TJLP as the financial cost of 9.75% for the period of October to December
2000, it is predicted a daily capitalization of the remaining debt as the following
formula:
FC = (1+TJLP / 1 + 6%) N/360
63
Where:
• FC is the capitalization factor of the remaining debt;
• N is the number of days passed between the financial event and the
capitalization date
The interest rate may be calculated over the remaining debt, after using the
capitalization factor, the BNDES spread added a the non-capitalized part of TJLP of
6% , following the formula:
J = SD x FC x { (1 + (s+6))N/360 – 1 }
Where:
• J is the interest rate;
• SD is the reaming debt;
• S is the BNDES spread ate the operation (basic + risk) in % ;
• N is the number of days between the financial event and the capitalization data
The level of participation of BNDES in financing classified in FINEM is limited up to
80% in machines and equipments, and can reach up to 90% in the case of small
companies, and projects classified under the Regional Programmes financed by the
Bank. For the other investment items, the participation of BNDES investments can
achieve up to 60%. For the special cases, such as projects belonging to the Regional
Programme, the participation can reach up to 80%, and for small companies up to
90%.
The total financing period is determined as a function of the payment capacity of the
developer, company or economic group involved in the project. In contracts signed
with BNDES, it was observed that the maximum investment period was of 10 years.
It is important to notice that there are specific credit lines from BNDES for electricity
generation, mainly for the priority governmental investments.
All the process of requesting financing in BNDES is analysed and the values for the
basic and risk spread, total financing period, participation levels and guarantee
criteria may be altered from case to case. Using the possible variations for the credit
variables used by FINEM, it was considered two types of financing used by FINEN:
Basic Level and Special Level
FINEM
TJLP
Basic Spread
Risk Spread
Participation Level –
Machines
Participation Level – Other
Items
Basic Level
9.75%
2.5%
2.5%
80%
60%
Special Level
9.75%
1.0%
0.0%
90%
90%
Even not including wind energy projects, the Financial Support Programme for
Priority Investments in the Electricity Sector, presents criteria aiming at developing
expansion capacity projects. Following the same criteria of interest rates used by
FINEM, the Support Programme for the Electricity Sector is different at the levels of
financing participation in 1005 of local expenses, limited to 80% of total investments.
This programme is limited to the cases of implementation hydroelectric projects,
64
small hydro, and transmission lines. Using the possible variations of basic spread,
two types of financing were considered in the Support Financing Programme for the
Electricity Sector: Basic Level and Special Level.
FINEM
TJLP
Basic Spread
Risk Spread
Financing of local
expenses
Limit of total investments
Basic Level
9.75%
2.5%
2.5%
100%
Special Level
9.75%
1.0%
0.0%
100%
80%
80%
The objective of analysing the rules for investments for priority electricity projects is
to evaluate the possible effects of using wind energy as priority projects for electricity
generation.
Other Aspects to Consider
Maintenance, Operation and Other Expenses
About the O&M costs of a wind farm, the main ones are: expenses with replacement
parts, preventive maintenance, personnel costs, rental expenses with the land and
also a margin for eventual unexpected expenses. The maintenance costs predicted
in the catalogue Windenergy 2000, varies from 0.8% up to 1.3% over the turbine
cost. The annual maintenance expenses may vary according to the local wind
conditions and to the corrosive concentration levels of components at the local
atmosphere.
Besides the maintenance costs of the turbines, there are also the operational
personnel expenses and the expenses with use of the land. All those factors
contribute for the annual expenses that have to be considered for the whole wind
turbine useful life, which is around 20 years.
The total operation and maintenance costs of the wind farms are not a linear function
of the wind farm size. For big projects, the annual costs with O&M have a smaller
participation related to the turbine price. Generally, the big wind farm occupy a
smaller area, and present a reduced operation personnel regarding the total of
installed turbines.
In the case studies, it was considered a rate of 4% over the turbine price that would
be used for the annual O&M costs. This fraction may be considered a conservative
value, since the maintenance costs predicted by the manufacturers varies from 0.8
up to 1.3% over the catalogue value. Considering the costs practiced in German with
the whole infrastructure installed, and that the technology transfer to local conditions
requires investments in personnel training, equipment import, the value of 4% is
considered reasonable, since it includes the personnel costs, training, land rental and
other expenses.
2.6 - Conclusions
The current scenario in Brazil is favourable for the development of wind projects
because:
• great advances were achieved in the Legal and Financial to use wind energy for
electricity generation;
65
•
•
the need to expand generation capacity in the short term benefits technologies
that are able to produce electricity fast;
the market reforms, “opening” the generation segment contributed to attract
investors for the development of big wind projects (wind farms) for electricity
generation, making economic sense in areas with high wind speeds, as
expressed in the list of projects authorized by ANEEL;
But the regulatory and “economic country” risk is still considered high by many
developers and market players.
66
Chapter 3 – Case Studies
In this chapter will be presented two different case studies, evaluating the economical
and technical feasibility for the implementation of wind energy projects in those
different regions. All the aspects that have to be taken into consideration for the
development of a project locally and the establishment of a local wind industry will be
covered.
For those analyses, it was used WASP for the identification of sites for the
development of wind projects, as will be described below.
A special consideration for the complementary regimes of wind and hydro systems in
Brazil will be explained, outlining the potential to use those technologies and the
possibility to rationally manage the natural resources, proving a well planned
expansion capacity.
3.1 - Procedures for the Evaluation of Wind Sites and the Use of Computational
Tools
Usually, when a region has strong winds, it expected that it will be suitable for the
implementation of wind energy power projects for electricity generation. But this
factor only, is not enough to outline the feasibility of a wind development for the
region. It is necessary to know, with as much details as possible, the wind behaviour
and its seasonality. This way, due to the complexity involved in the wind assessment
of a potential area, the identification of the accurate potential requires strict criteria. It
is recommended to establish a basic procedure to identify the elements that
concludes if the place presents (or not) the requirements needed for the
implementation of a wind system.
This procedure can be divided in two stages. The first stage is to conduct a prequalification analyses of the region through a questionnaire to identify the main
factors that influence the wind regime, such as soil conditions, vegetation, the terrain
complexity and the presence of obstacles. The pre-qualification also includes the
knowledge of the local electric system, its availability and the distance to the nearest
distribution network.
It is necessary to have some information about the wind behaviour at the region. It
might be verified the existence of a measurement station at the region, or, if this is
not available, data might be collected form neighbour regions. Having this wind data
and the surface map of the region, the wind behaviour must be analyses in order to
identify if the region is suitable or not for the implementation of a project.
After finishing the pre-qualification, it is possible to have subsidies to conclude over
the potential of the region being studied. If the results of the first stage are
considered satisfactory, a deeper evaluation of the place with specific measurements
at the region might be conducted, in order to obtain an estimated local capacity
production.
The second stage is the more strategic one. In this phase is determined the feasibility
of the project. It requires a lot of investment in the human resource quality, working
tools and monitoring equipment. In this stage, a more elaborated assessment is done
and the project is proposed. This consists at mapping the place, acquiring all data
needed. With those, the wind farm map is proposed, the wind measurement stations
67
are positioned to ensure the wind regime and the positions of the aerogenerators are
rehearsed.
Afterwards, with the data obtained from the wind measurement stations, a correlation
with data obtained from the neighbourhood is done, and the turbine type most
suitable to the place is chosen and the energy production is estimated. This results,
associated with the area and equipment costs, will be used to calculate the plant
capacity and the cost of the energy (in $/MWh).
The use of computational tools have been increasing in the last years, and provide a
simulation of the behaviour of the speed distribution of a region.
Computational Tools are also used for the simulation of the wind turbines behaviour
distributed in a certain region. This simulation is based on the wind behaviour of the
region, and generally are used in a joint analyses. The optimal position of the
turbines in a region is influenced by the wind speed, its direction, the surface and
roughness characteristics of the region. One of the most popular programmes for this
purpose is WasP (MORTENSEN, 1993).
The Programme WAsP (Wind Atlas Analysis and Application Program) was
developed by the Danish Lab Riso (Riso National Laboratory) during 1987 and 1993,
and it used by researchers interested in defining the wind climatologic, i.e., the speed
behaviour and the wind direction, corrected for the local effects. Besides that, this
Programme has capabilities to estimate the energy production of a turbine, helping at
the location of wind systems and the analyses of wind farms.
The programme also enable to evaluate the influence of local topographic conditions
at the wind regimes, such as the variation with the height, roughness, surface and
existence of obstacle. Those factors are analysed independently in the Programme,
which needs the flowing basic information’s:
Data that define the wind regime, which can be a wind time series or the
distributions Weibull parameters;
Data that describe the roughness of the terrain;
Data that describe the location of obstacles;
Data about the region orography;
Data about the wind system intended to be used, mainly the power curve of the
wind turbine too be used;
The working principle of WasP can be seen in the figure below. The programme
requires the knowledge of the wind regime and the local orography. It is also needed
an historical record of wind data, which allow the construction a seasonal distribution
for different directions. As a simpler alternative, the Weibull parameters can be used
in each one of the directions.
68
Wind Regime Free of Surface Influence
(free data)
Roughness
Roughness
Data: Terrain classification
Data: Terrain classification
Obstacles
Obstacles
Data: Dimension and Position of
Obstacles
Data: Dimension and Position of
Obstacles
Orography
Orography
Data: Level Curves of the
Region
Data: Level Curves of the
Region
Wind Regime in a Given
System
Wind Data from
Measurement Stations
After knowing the wind regime, the influence factors are withdarwn (roughness,
obstacles and orography). This way, is obtained a wind distribution free of the
external effects of the place, i.e. a wind regime corresponding to a perfect land (no
roughness), plain and free of obstacles.
This data, which can be called “clean data”, are the references available in most of
the wind atlas, such as the European Wind Atlas, developed by Riso Lab.
Apart from WAsP, other programmes are available in the market. Most of them works
at optimisation of calculus, attributing new models to the effects of roughness, land,
and obstacles. Some of them enable a more detailed level of information.
Potential Complimentarily of Hydro and Wind Systems in Brazil
Due to a hydrogenation dominance of the electric system in Brazil, as detailed
before, the seasonal stability of energy offer has become a big challenge in the
historical planning of the interconnected electricity systems. This happens because
the hydro systems have a stochastic profile with seasonal fluctuation of great
amplitude.
The risks of not attending demand in the dry season have worsened in the last years,
resulting in the rationing period experienced, due to a delay in expanding generation
capacity in the restructuring period of the electricity sector. Nevertheless, in the last
decade, wind power generation has demonstrated the capability of reaching Gig
watts scale, necessary for an effective contribution to electric systems.
Based on existent data, it will be shown that it is feasible to achieve seasonal stability
of energy offer through the complimentarily existent between the wind and hydro
systems, if the vast natural resources in the country are used.
The cases for the South, Southeast and Northeast Region will be presented , where
significant gains are observed due to electricity produced using natural sources that
are seasonally complimentary.
Using hydro and wind energy jointly produce a stabilization in the energy offer.
69
International Experiences of Wind/Hydro Interaction
In 1997/98, it was realized a study with simulation in hourly resolution to two different
scenarios of insertion of wind energy in the Danish electricity system, interconnected
to the European electricity system. Those studies were coordinated by Roskilde
University, Denmark, with contributions of energy and transmission concessionaires
from Denmark, Norway and Sweden.
In the first scenario, an insertion of wind energy equal to 37% of total consumption
(54% of demand) in Denmark would meet complimentarily in the hydro system of
Swiss and Norway. This would assure the energy offer in the “dry” months of those
countries, without any prejudice to the safely level of regional supply.
In the second scenario, it was analysed an insertion of wind energy of approximately
100% of the Danish system consumption level, interconnected to the Nordic system,
including Germany, Finland and Holland. According to the simulations, this scenario
would be would be technically feasible, without prejudice to the regional supply safety
level, as long as complimentary investments were realized in the transmission
system of Denmark /Sweden.
Including Wind Energy in the Brazilian Electricity System
The regions of Brazil that present more benefits with the use of wind complementary
to hydro are the South and Northeast Regions.
In both cases, the evidences presented of the seasonal complimentarily between
wind and hydro, and the tendency of seasonal stabilization of the energy offer if the
hydro-wind system is put in place in a proper scale will be shown. The studies were
realized at: COPEL (distribution electricity company of Parana State – South of
Brazil) and CHESF (generation electricity company for the Northeast Region), where
there was available enough information to indicate a complementary potential.
In those Regions, the hydro power potential is next to its limit, and the immediate
alternatives considered to meet the increasing demand, have been the addition of
thermal power generation or imports from remote regions, not taking into account the
environmental and macroeconomic impact.
Regions South and Southeast
During the feasibility study of a wind farm of 200 MW in Palmas, in the state of
Parana, COPEL conducted studies and simulations of the inclusion of the wind farm
in the interconnected system. It was analysed the energetic availability of Palmas
Wind Farm, with installed capacities of 50 and 200 MW. On of the aim of the study
was to evaluate the complimentarily between the generation of the wind and hydro in
the electrical subsystems South/Southeast. For this purpose, it was used a historical
series of monthly wind generation for the period 1972 to 1993, besides the series of
monthly hydro loads for the subsystem South/Southeast, with the final configuration
of the generation expansion 10 year plan of cycle 1996. The wind data series was
obtained from the correlation of data effectively measured at Palmas, since 1995,
with data from Agro business Institute of Parana – IAPAR, IN Clevelandia,
municipality situated 50 KM form the wind farm local. The scenarios were elaborated
with the simulation model to equivalent subsystems – MISSE. The figure below
shows the results of those simulations.
70
HydroPower (MWmotnh)
15000
25
12000
20
9000
15
6000
10
3000
5
0
0
jan
fev mar abr mai jun
Hydro
jul
ago set
out nov dez
Wind
Figure 1 – Seasonal Regimes: Wind in Plamas (PR) and Hydro at South
It can be observed that the seasonal behaviour of wind generation is similar to the
hydro generation at the subsystem South. The correlation coefficient was 0.226.
7
6
5
4
3
2
1
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
0
1983
Monthly Averages / Period
Averages
A relevant data can observed when comparing the monthly average wind speeds and
the natural flow of Igaçu River, as observed in Figure 2. Although the wind speed is
very variable in the scale of minutes or hours, the variation in the monthly averages is
lower than the hydro. In statistical terms, the series of average speeds has, in
average, 3.8 m/s AND 0.43 M/S of standard deviation, and the average monthly
flows have an average of 863 m3/s and 725 m3/s of standard deviation.
years
Wind Speed
Monthly Average Flows
Figure 2 - Monthly averages: Wind and Water Flows
Wind Generation x Hydro Generation at Southeast Subsytem
The southeast subsystem is the one with highest contribution to the Brazilian
electricity system and the relation of wind generation in Plamas 9pr) to this
subsystem can been seen from figure 3.
71
Hydropower
(MWmonth)
80000
25
60000
20
15
40000
10
20000
5
c
0
0
jan fev mar abr mai jun jul ago set out nov dez
months
South/Southeast
Wind
Figure 3 – Seasonal Regimes: Wind in Palmas (PR) and Hydro at Southeast
In this case, it was observed that the behaviour of the two energy sources are
complimentary at the seasonal scale: the correlation coeficient was –0.48.
The simulation with installed capacity of 200 MW has shown results quantitatively
similars. Other aspect covered in the study was the quantification of the frim energy
generated from the wind farm, interconnected to the South and Southeast
subsystems. The values obtained at the simulations were very close to the energy
value measures at the porwer plant, which had a capacity factor estimated in 30%.
In this case, it was observed that the behaviour of the two energy sources are
complimentary at the seasonal scale: the correlation coefficient was –0.48.
The simulation with installed capacity of 200 MW has shown results quantitatively
similar. Other aspect covered in the study was the quantification of the from energy
generated from the wind farm, interconnected to the South and Southeast
subsystems. The values obtained at the simulations were very close to the energy
value measures at the power plant, which had a capacity factor estimated in 30%.
From the results of this study, it can be concluded that the implementation of wind
farms in wind regimes similar to the Palmas Region brings benefits to the
interconnected electricity system. This happens because it will add more energy to
the system in the period of the that a reduction in the hydro regime occurs at the
Southeast, where the highest loads are concentrated.
To assess the wind potential for state of Parana, through the study coordinated by
COPEL, 25 measurement stations were installed in the state. It was verifies that
there is a high correlation between the wind regimes in the whole stat, which induces
that that wind farms at the South and Southeast Region would have similar seasonal
behaviour. Another relevant information concerns the size of the wind potential
estimated for the state, which was induced by integrations over the mapping results,
calculated in the resolution of 2km x 2km, as presented below:
Using wind starting from
(m/s)
Potential technically
6.0
6.5
11.0
2.7
72
installable (GW)
Energy technically useful
20.5
(TWh/year)
Table – Wind Potential of state of Parana, Brazil
5.8
As a reference for comparison, the current electricity consumption in the state of
Parana is around 20 TWh/year.
Northeast Region
Simulations conducted by CHESF (REF11) presented a monthly electricity
production from wind turbines installed in 10% of Ceara state coast. In this scenario,
the following consideration were assumed:
wind data from the period 1993/95 were used, from wind measurement stations
of five different sites along the cost of Ceara;
the capacity curves for wind turbines of 500/600 kW were used as a base for the
conception of a hypothetic wind farms, with an availability factor of 95% and other
loss factors of 90%;
for an arrangement of wind turbines with a distance of 5x7 diameter between
each other and a installed capacity of around 3 GW.
Joining the production data of the wind farms with natural hydro flow of Sao
Francisco River (the main River of the Northeast Region, crossing all its states),
using the historical series of 1931-1992 (ref 12) with the productivity (MW m3/s) of
the power plants of CHESF along Sao Francisco River , this study was elaborated.
Initially, it were used monthly wind generation data and the productivity accumulated
from 2.731 MW m3/s, regarding the annual production of the power plants of
Sobradinho, Itaparica, Paulo Afonso I, II, III and IV, Apolonio Sales and Xingo, with a
capacity of 9974 MW of installed capacity. This way, it was converted the total
electricity produced monthly for the wind farms in equivalent flow, which was
theatrically located in the storage of Sobradinho, corresponding to the same
production of the hydro power plants situated before it.
1400
1200
Gwh
1000
Mucuripe
800
600
Codeco
400
Bijupita
200
Acarau
0
jan
fev
mar
abr
mai
jun
jul
ago
set
out
nov
Figure 4 – Production of Wind Frams in 10% of Ceara Coast, Brazil
73
dez
6000
Flow (m3/s)
5000
4000
3000
2000
1000
0
jan
fev mar abr
mai
jun
jul
ago set
out
nov dez
months
Figure 5 – Income Flow of Sobradinho Storage System, 1931/1992
Montlhy Averages
Figure 6 shows the normalization of wind energy and hydro energy, i.e., the
relationship between the monthly average values and the annually averages of the
two systems, where it can be observed complimentary systems with positive
contribution of the wind source to the electric system. This system is mainly fed by
hydro generators, mainly in the dry season of Sao Francisco River and the maximum
peak of the wind system, occurring in September.
2
1,75
1,5
1,25
1
0,75
0,5
0,25
0
jan fev mar abr mai jun
jul ago set out nov dez
months
Hydro
Wind
Figure 6 – Seasonal Regimes of Wind and Hydro Energies
Having the monthly average flows of São Francisco River, hypoteticalflows were
added relative to the annual contribution of wind generation equivalent to 1.090
MWh/h. This was equivalent to an average flow of 400.8 m3/s, representing 14.3% of
the average river flow at Sobradinho, which is 2800.5 m3/s.
Additional scenarios of including more 30% or 60% in the average river flow,
resulting in a higher wind generation, are presented in figure below.
74
8000
Average Flow
6000
4000
2000
0
Jan fev Mar Abr Mai Jun Jul Ago Set Out Nov Dez
months
Natural
Adding 30%
Adding 14,3%
Adding 60%
Figure 7 Increase at Average Ntural Flow (m3/s) due to Wind Generation
It can be observed that the river flow profile doesn’t change as a function of the wind
generation participation, specially by a higher volume increase at the river dry period.
From all the contribution that wind energy can provide to the volume increase in
Sobradinho, replacing partially hydro power by wind generation, the most interesting
is the one happening during the dry season of Sao Francisco River, i.e, from May to
October. This way, in the table below, it was illustrated thee water volume equivalent
to the energy production generated from wind developments. The first column shows
the average annual electricity capacity from wind sources, needed for an equivalent
percentual increase in the average flow of the River, at Sobradinho. The third column
brings the corresponding hypothetical volume to be accumulated during the dry
season. And finally, the fourth column presents the electricity average capacity at the
wet periods, produced by wind farms.
MWh/h yearly
Wind Contribution
(%)
1090.0
14.3
2286.7
30.0
4573.4
60.0
Table 3- Capacity at Dry and Wet Periods
Billion m3 – dry
season
7.4
15.5
31.0
MWh/h dry period
921.4
1933.0
3866.0
After November, it can be considered the beginning of the wet period, which is critical
in term of energy, because it happens at the same period when Sobradinho has the
lowest storage volumes. As an example, it can be outlined the volumes of 100.92%
and 11.33% of the total volume for the years 1987 and 1999, respectively. At this
period, a similar approach can be conducted, using the benefits form the wind energy
production, still high in this month.
As it can be observed, the control over the flow of Sao Francisco River can receive
good contribution from the wind potential use. This contribution can happen, not only
from wind from Ceara, but also from other states from North and Northeast, where
the highest potential is observed in the second semester, due to incoming aliseos
winds.
75
Additionally, it wasn’t accounted the losses for the transmission systems which
serves the North system of CHESF. This value was predicted for September 2000,
as being 8.7% or the equivalent to 118 MW, because of the long distances between
the transmission lines. This value, even if discounted from the losses, would
contribute to a positive perceptual for the wind resources, increasing proportionally
the values presente at Table 3.
One of the characteristics of Sobradinho storage is that it hardly overflows, even in
the wet period, as observed in all its operations (ref12).
The Northeast is known by its constant winds and of high intensity in the cost. It is
also observed the existence of dunes in areas next to the sea, with very low
roughness index and possibility to experience orography accelerations f the wind.
The State of Ceara, for example, has more than 400 Km2 of dunes in its coast,
having wind farms operating over dunes at the beaches of Taiba and Prainha.
One of the arguments against wind energy is the fact that it does not produce firm
energy (hydroelectric stores potential energy in storage systems, while wind farms
count on the kinetic energy from atmosphere). But, as it has been demonstrated, the
operational integration of hydroelectric with wind power plants tends to optimise the
use of the hydro storages and add seasonal stability to the interconnected electric
system.
Nevertheless, the storage of water takes to different interests, once the Northeast is
vulnerable to extensive dry periods. The waters of Sao Francisco River are used for
diverse purposes, mainly to land irrigation by the government. One of the
alternatives, with the use of wind energy, would be change the river course, through
channels and bomb systems, to the regions historically dry.
The case studies presented in the sequence will explore this potential for integration,
since they are situated in the South and Northeast Region of Brazil. The first case
study presents a general assessment of the potential of a whole State, identifying the
better areas for development, whereas the second case is more focused in a specific
site.
3.2 - Case 1 - Wind Energy in the South of Brazil – The case of Rio
Grande do Sul -RS
Introduction – State Wind Atlas
In August 2001, it was issued The Wind Atlas of Rio Grande do Sul. This was the
fruit of the initiative of the Secretariat of Energy, Mines and Communication SEMC
and has been elaborated from wind data obtained as a result of institutional
partnerships.
This work forms part of the incentive of wind energy in the State of Rio Grande do
Sul (RS) began in 1999 when the first steps were taken, of note being the 1st
Seminar on Wind Energy in Rio Grande do Sul, sponsored and organized by SEMC,
and the signing of the first letter of intention for the recording of wind measurements
in RS, between SEMC and the CEEE, and the following companies: Gamesa (of the
group Iberdrola), Energia Regenerativa Brasil Ltda- ERB, Enerfín ( of the group
Elecnor) and Raiko Engenharia e Consultoria Ltda. A further two protocols were
signed between the SEMC and Wöbben and the following entities: the Departamento
Municipal de Energia de Ijuí-DEMEI (the Municipal Department of Energy of Ijuí) and
the Cooperativa Regional de Eletrificação Teutônia CERTEL (the Regional
76
Electrification
Cooperative
of
Teutônia).
By the second half of 2001, the SEMC already had sufficient information and
measurement time to take the first steps in the elaboration of the first Wind Atlas of
Rio Grande do Sul. Anemometric data from 21 towers has been used in the Atlas,
covering a period equal to or greater than 12 months, valid for climatologically
comparison and the filtering of local effects such as topography and ruggedness.
At present there are 26 towers in the State and, until the end of the year 2002 the
number of sites with high quality wind measurements should reach 36, as shown in
the Table below.
Protocol
Signatures
SEMC / CEEE / WOBBEN
9/12/1999
SEMC / WOBBEN / CERTEL
17/9/2000
SEMC / CEEE / Gamesa
3/4/2000
Measurement Towers
Nº
Municipalities
Start of
Measurements
1
2
3
4
5
Imbé
Cidreira
Arroio do Sal
Santa Vitória do Palmar
Cassino
7/7/2000
8/2/2000
5/4/2001
1/29/2001
7/20/2001
Progresso
1/3/2001
São Francisco de Paula
Imbé
Palmares do Sul
Tapes
São Lourenço do Sul
São José do Norte
Rio Grande
Santa Vitória do Palmar
Jaguarão
Piratini
Livramento
Faxinalzinho
1/16/2001
1/17/2001
1/19/2001
1/22/2001
1/23/2001
1/25/2001
1/26/2001
1/28/2001
2/6/2001
2/7/2001
2/12/2001
2/13/2001
Arambaré
Santa Vitória do Palmar
São Francisco de Paula
Mostardas
10/27/2001
11/11/2001
12/8/2001
1/11/2002
Balneário Pinhal
Mostardas
Osório
Mostardas
Jaquirana
Vacaria
Canguçu
Rio Grande
São José do Norte
Sta Vitória do Palmar
Giruá
Santiago
3/04/2002
3/7/2002
7/31/2002
To be installed
To be installed
To be installed
To be installed
To be installed
To be installed
To be installed
To be installed
To be installed
Osório
4/19/2002
Ijuí
To be installed
To be defined
To be defined
1
1
2
3
4
5
6
7
8
9
10
11
12
1
2
SEMC / CEEE / ERB 15/5/2001 3
4
SEMC / CEEE
SEMC / CEEE / ENERFIN
26/11/2001
SEMC / WOBBEN / DEMEI
26/2/2002
SEMC / CEEE / RAIKO
1
2
3
4
5
6
7
8
9
10
11
12
1
1
77
All measurements are being obtained with the use of shell type calibrated and
certified anemometers, installed in 26 towers, with heights of between 40m and 50m,
located in specially selected sites. Technical staff from the Secretariat and CEEE
participated in the selection of the measurement sites, installation of the towers and
equipment and performed the collection and treatment of the wind data collected.
These activities conform to the rigorous technical procedures and recommendations
of the German Institute of Wind Energy DEWI and the International Energy Agency
IEA. As well as the elaboration of this Atlas, this work has made it possible to wind
turbine projects, some of which are registered with the ANEEL (National Electrical
Energy Agency) and currently being considered for environmental permission. Their
implantation, dependent upon Federal regulation, will represent the concrete
introduction of wind energy into power network of Rio Grande do Sul.
Along the length of the 630km of the coastline of the State of Rio Grande do Sul;
there are 986km2 of sand and dunes, fanned by intense and constant winds. Also
inland, many winds come together with the Minuano to compose one of the most
promising sources of wind power in Brazil. Add to this scenario an electrical power
network that has recently received substantial investment in the areas of generation
and transmission in order to meet the increased demand for electrical energy
resulting from the industrialization and economic development of the State.
In this context, wind energy represents an alternative capable of contributing to the
strengthening of the state electrical network, and even to the Brazilian national grid,
given the high degree of seasonal complementarity between the natural wind and
hydraulic flow rates in Brazil. In the socio-economic field, the potential fringe benefits,
known to be associated with large scale wind-generated electrical energy: selfsustainability, with the use of natural resources existing within the State, the
attraction of a manufacturing investment, such as in electrical generating plants and
wind turbine component factories, the generation of employment, technological
advancements, decentralized economic development, as well as the conservation of
the
environment.
The Atlas contains detailed mapping of the main parameters related to the wind and
its energy potential, at a resolution of 1km x 1km for the entire State of Rio Grande
do Sul, using mesoscale modelling tools and three-dimensional boundary-layer
simulation, state-of-the-art methodologies in the sector. To the institutional action of
the Secretariat of Energy, Mines and Communications of the State of Rio Grande do
Sul was added the invaluable support of the most important companies of the wind
energy sector operating in Brazil, that made available anemometric data of the
highest quality, measured in high towers, constructed in especially favourable
locations and equipped with calibrated and certified instrumentation.
RS – Geography and Demography
With a territorial area of 282, 062 km2 (3.30% of the Brazilian territory) and
occupying the southern extreme of Brazil, the state of Rio Grande do Sul has
boundaries with the State of Santa Catarina to the N-NE, the Argentine Republic to
the W-NW, the Republic of Uruguay to the S-SW and is bathed by the Atlantic Ocean
on its eastern edge. It is located between the longitudes 57°36'14"W - 49°42'00W
and
the
latitudes
33°45'37"S
27°05'20"S.
According to the Demographic Census 2000-IGBE (Brazilian Institute of Geography
and Statistics) the population of the state is 10,187,798 inhabitants. There was an
increase of 11.4% in the decade from 1991 to 2000 (1.02% per year in recent years).
78
In this period the urban population increased from 76.6% to 81.6%, while the rural
population also diminished in absolute terms: of the 2.14 million rural inhabitants
recorded in the census of 1991, 1.87 million remained in 2000. This represents not
only the migration of rural population to the urban centers, a recurrent phenomenon
throughout Brazil in recent decades, but also the migration of rural entrepreneurs and
workers to the new important agricultural frontiers of the Midwest and North of Brazil,
where
there
is
a
notable
presence
of
Gaucho
pioneers.
Around 28% of the population of Rio Grande do Sul is located in municipalities that
form the Metropolitan Region of Porto Alegre - the main center of energy
consumption in the State. Also notable are the large industrial centers of Caxias and
Pelotas,
cities
with
populations
of
over
300,000
inhabitants.
Map 1, in Annex II illustrates the distribution of the population in the State, while the
Population Map, Map 2, in Annex II quantifies the number of inhabitants in each one
of the 467 municipalities of the State, according to the Demographic Census of 2000
IGBE.
Transport
The internal road network of the territory of State is 24,580 km in total length; of
which the paved state and federal roads total 10,543 km and the unpaved 5,437km.
For maritime transport the State has two important ports: Rio Grande and Porto
Alegre, which are also linked to the hinterland and the extreme west of the State by
an extensive rail network. The road network and the main ports in operation are
included in the Population Map.
Electrical Energy Consumption
Figure above shows the participation by sector and evolution of electrical energy
consumption in the period 1984-1999 [20]. In the period shown, the average
expansion of consumption was 5.5% per year. At present, the beginning of the 21st
century, the consumption of electrical energy in the State exceeds 20 TWh/annum,
with an annual per capita consumption in excess of 2,000 kWh.
Electrical System
As shown in Map3, in Annex II, the electrical transmission infrastructure in the state
of Rio Grande do Sul is inserted in the Brazilian national system, while at the same
time it is connected to the Argentinean electrical system (through the Garabi and
Uruguaiana converter stations) and to the Uruguayan electrical system ( Rivera
converter station, at the frontier with Sant'Ana do Livramento). The grid frequency
used in Argentina and Uruguay is 50Hz while that of Brazil is 60Hz, hence the
necessity for conversion stations in transnational energy integration.
79
Electrical Energy Consumption
Figure above shows the participation by sector and evolution of electrical energy
consumption in the period 1984-1999 [20]. In the period shown, the average
expansion of consumption was 5.5% per year. At present, the beginning of the 21st
century, the consumption of electrical energy in the State exceeds 20 TWh/annum,
with an annual per capita consumption in excess of 2,000 kWh.
Electrical System
As shown in Map3, in Annex II, the electrical transmission infrastructure in the state
of Rio Grande do Sul is inserted in the Brazilian national system, while at the same
time it is connected to the Argentinean electrical system (through the Garabi and
Uruguaiana converter stations) and to the Uruguayan electrical system ( Rivera
converter station, at the frontier with Sant'Ana do Livramento). The grid frequency
used in Argentina and Uruguay is 50Hz while that of Brazil is 60Hz, hence the
necessity for conversion stations in transnational energy integration.
Hydroelectric
Itá
Machadinho
Itaúba
Passo Fundo
Jacuí
Passo Real
Dona Francisca
31 Peq. Centrais Hidrelétricas
Canastra
Total 2576MW
Thermoelectric
Uruguaiana
Presidente Médici
Canoas I
Charqueadas
Oswaldo Aranha(Alegrete)
Nutepa
São Jerônimo
Piratini
MW
725
570
500
226
180
158
125
46.7
44.8
MW
600
446
160
72
66
24
20
10
80
Fuel
Gás Natural
Carvão
Gás Natural
Carvão
Óleo Combustível
Óleo Combustível
Carvão
Resíduos de Madeira
Uruguaiana II
Total 1406 MW
8
Casca de Arroz
S
S
Situated at the extreme of the Brazilian national system, the Rio Grande electrical
system has historically been dependent on additional supply transmissions, as well
as the expansion of thermal generation. Table above shows the installed generating
capacity
in
Rio
Grande
do
Sul,
as
in
2002
[22].
Maximum demand in the state electrical system occurs in the evening, in the summer
months, caused by the widespread necessity for ambient refrigeration. This peak has
reached values close to 4,000MW (2001-2002). Since 1999, the investments in
transmission and sub stations, coordinated by the Secretariat of Energy, Mines and
Communication of the State have guaranteed the margin of safety necessary to
attend
the
consumption
peaks
within
the
State.
The State possesses 6,400 km of basic network transmission lines in 525 kV and
230kV, 5,200km of sub-transmission lines in 138kV, 69kV and 44kV, and around
100,000 km of distribution lines in 23.1kVand 13.8kV[25]. The electrical system of
Rio Grande do Sul is composed of three specifically generating companies, 1
transmission company, 1 in energy interconnection, 8 concessionaires and 15
cooperatives, as shown in Table 2.2. The distribution of electrical energy in Rio
Grande do Sul is carried out mainly by the companies CEEE - Companhia Estadual
de Energia Elétrica S.A, AES-SUL - Distribuidora Gaúcha de Energia S.A., and RGE
Rio
Grande
Energia
S.A.
Power Generation
AES Uruguaiana LTDA.
Companhia de Geração Térmica de energia Elétrica
Tractebel Energia S.A. (Ex GERASUL)
Power Transmission
ELETROSUL
Empresa Transmissora de Energia Elétrica do Sul do Brasil.
International Interconnection
CIEN
Companhia de Interconecção Energética
Power Distribution
AES Sul
Distribuidora Gaúcha de Energia Elétrica S.A.
CEEE
Companhia Estadual de Energia Elétrica
RGE
Rio Grande Energia S.A.
DEMEI
Departamento Municipal de Energia de Ijuí
ELETROCAR
Centrais Elétricas de Carazinho S.A
HIDROPAN
Hidrelétrica Panambi
UHENPAL
Usina Hidroelétrica Nova Palma Ltda
Muxfeldt Marin & Cia Ltda
Cooperatives
CELETRO
Cooperativa de Eletrificação Centro Jacuí Ltda
CERFOX
Cooperativa de Energia e Desenvolvimento Rural Coprel Ltda
CERILUZ
Cooperativa Regional de Energia e Desenvolvimento Ijuí Ltda
CERMISSÕES
Cooperativa Regional de Eletrificação Rural das Missões Ltda
CERTAJA
Cooperativa Regional de Energia e Desenvolvimento Rural
CERTEL
Cooperativa Regional de Eletrificação Teotônia Ltda
CGTEE
81
CERTHIL
CERVALE
COOPERLUZ
COOPERNORTE
COOPERSUL
Cooperativa de Energia e Desenvolvimento Rural Entre Rios
Cooperativa de Eletrificação Rural do Vale do Jaguarí Ltda
Cooperativa de Eletrificação Rural Fronteira Noroeste Ltda
Cooperativa Regional de Energia e Desenvolvimento do Litoral
Cooperativa Regional de Eletrificação Rural Fronteira Sul Ltda
Climatology
The seasonal rain pattern in Rio Grande do Sul is presented in Map 4, Annex II. The
climatological series exhibit one of the main characteristics of the temperate
subtropical climate of southern Brazil, with rainfall distributed throughout the year.
The inter-regional fluctuations within the State are of small magnitude, with a
noticeable tendency for annual precipitation levels to increase from the south to the
north,
varying
between
1,200mm
and
2,500mm.
On the other hand, as it is situated at the southern extreme of Brazil, Rio Grande do
Sul has the widest annual temperature range, reaching temperatures as low as 0°C
in the winter and experiencing hot (30°C >), humid days in the summer. The coldest
region is, naturally, situated among the highest mountain plains, while the hottest
region is the extreme west of the State. The following maps respectively, show the
average seasonal temperatures and the average annual temperature in Rio Grande
do Sul, elaborated from climatological data extracted from Map 4, corrected for
altitude
from
the
digital
elevation
model.
This degree of fluctuation in temperature in the course of the year may imply
variations of over 10% in air density, with a consequent impact on wind power
generation. The air density [kg/m3] varies with the altitude and the temperature as
shown in Appendix III, where dry air was considered. Additional fluctuations in
density, though less accentuated, occur due to variations in air humidity indicator.
The following maps show, respectively, seasonal and annual average air densities in
the State of Rio Grande do Sul.
Wind Patterns
Despite apparent unpredictability, the wind shows a continual movement of the
atmosphere, resulting from the circulation of masses of air provoked by the radiant
energy of the Sun and the rotation of the Earth. Among the principal action
mechanisms, the unequal heating of the Earth´s surface, that occurs at both a global
(latitudes and day-night cycle) and local (sea-land, mountain-valley) scale, stands
out. Thus, it is natural that wind speeds and directions exhibit daily and seasonal
tendencies
within
a
stochastic
character.
Figure 1, Annex II synthesizes the daily and seasonal patterns in the different regions
of Rio Grande do Sul, based upon 10 minute average recordings obtained from
anemometric towers. The graphs show the normalized average hourly speeds - i.e.
divided by the value of the average annual speed - and the variation over the 24
hours of the day and the 12 months of the year. In seasonal terms, the intense winds
of the second half of the year stand out, as they occur in all regions, with slight
discrepancies in the occurrence of the peaks between the extreme east and extreme
west of the State. This seasonality is also shown in the Wind Maps. In the
atmospheric flow over Rio Grande do Sul, the effects dictated by the dynamic
between the Atlantic sub-tropical anticyclone, the intermittent displacement of
masses of polar air and the barometric depression to the north-east of Argentina
dominate.
82
The Atlantic sub-tropical anticyclone is a high pressure center, the average annual
position is close to 30°S, 25°W. The resultant atmospheric circulation, in an anticlockwise direction, leads to the predominance of east-northeasterly winds over the
entire
area
of
Brazil
situated
below
latitude
10°S.
The barometric depression to the northeast of Argentina is an almost permanent area
of low pressure, generally stationary, located to the east of the Andes, the average
annual position of which is approximately 29°S and 66°W. This depression is caused
by the general atmospheric circulation blockage imposed by the mountainous wall of
the Andes and accentuated by the intense heating of the lowland plains of the region.
The atmospheric pressure gradient between the depression of the northeast
Argentina and the Atlantic sub-tropical anticyclone provokes a persistent flow from
the east- northeast throughout the region of Southern Brazil. This flow results in
average annual wind speeds of 5.5m/s to 6.5m/s over large areas of the region.
However, in this general picture of atmospheric circulation there are significant
variations at the mesoscale and micro-scale, due to differences in the properties of
the surface, such as geometry and altitude of the terrain, vegetation and distribution
of the land and water surfaces. These variations may give rise to local wind
conditions that are significantly different from the general picture of the large scale
atmospheric circulation in the region, as can be seen from the Wind Maps. Thus, wind
speed in excess of 7m/s may be found at more favorable elevations of the continent,
always associated with a low level of roughness of the plain. Another large area with
speeds exceeding 7m/s is that along the extensive coast that extends from Imbé to
the extreme south of the State, where the predominant winds from the east-northeast
are accentuated by the daily action of the sea breezes, during the months of spring,
summer
and
the
beginning
of
autumn.
Up to now, the predominant wind patterns have been emphasized, but it is very
important to highlight the dynamic character of the circulation over Rio Grande do
Sul, especially the intermittent passing of cold fronts. These are more intense in
winter and spring, bringing the well known Minuano, a strong, cold cutting wind that
blows from the SW over the plains, and lasts for about three days with the passing of
each
mass
of
polar
air.
An example of this dynamic is presented in Figure2, Annex II : above are shown the
speed vectors during the displacement of a mass of polar air, represented by the
color blue. The cold air has greater density and the barometric pressure in the area
occupied by these parcels of chilled atmosphere is high, that have a horizontal
dimension of around 1,000 km and are generated in the South Pole, within the
process of atmospheric circulation. Being denser, the mass of cold air advances,
raising the masses of warmer air in its path, which causes the rains on the leading
edge.
The arrival of the front is preceded by winds from the north-northwest, that bring
more intense winds, though of short duration. The passing of the front is followed by
the Minuano, a blast of cold air from the southwest, with speeds that can exceed 10
m/s for several days. Gradually, with time, the general condition of the winds from the
north-north-east tends to re-establish itself, until the passing of a new front. In the
period presented in above figure - a sample July-August from the Coxilha de
Santana- it is possible to observe the passing of at least 5 cold fronts, marked by
variations of 360° in the wind direction. On one occasion the average wind at 10
minutes (at a height of 40m) reached 27m/s (97.2 km/h) with the arrival of a front.
Three times in the sampled period, the Minuano persisted for days, as shown in
yellow. Certainly the Minuano is a wind of great significance to the gaucho riding on
the open plains, for the strong blasts of arctic air that persist throughout the days.
83
Although it is not predominant, the Minuano represents an important contribution to
wind potential of Rio Grande do Sul.
Some of the Wind Maps obtained, such as: Directions x Frequency, Direction x Wind
Speed, Wind Speed Seasonal and Annual at different Heightsand the Weibull Shape
factor, are presented in Annex II.
Analyses and Diagnoses
Most Favorable Areas
•
•
•
•
•
•
The Mission Plateau - areas that alternate steppes, seasonal forest and
agricultural activity, with annual average winds close to 7.0m/s at the higher
elevations. Two sub-stations are situated in the region in Santo Angelo and Santa
Rosa, with transmisson lines of 230kV and 500kV. The main potential
consumption centers are the cities oj Ijuí (78.5 The main potential consumption
centers are the cities oj Ijuí (78.5 thousand), Santo Angelo (76.7 thousand),
Santa Rosa (65.0 thousand) and Palmeira das Missões (38.2 thousand).
Serra Gaúcha - areas that alternate mixed ombrophile forest (araucaria forest)
and open grassy-wooded areas, with annual average winds in the range of 7.0 to
7.5m/s at the highest elevations, standing out those elevated areas situated to
the notheast of the city of Canela and highest elevations, standing out those
elevated areas situated to the notheast of the city of Canela and pincipally the
upper mountain plains, in the vicinity of Bom Jesus and São José dos Ausentes.
Of note in the eletrical system are the sub-stations of Vacaria and Caxias do Sul
with transmission lines of 138kV and 230kV. The main cities are Caxias do Sul
(360.4 thousand), Bento Gonçalves (91.5 thousand), Vacaria (57.3 thousand),
São Francisco de Paula (19.7 thousand) and Bom Jesus (12.0 thousand).
The Lagoa dos Patos Shoreline - a flat area with predominately low scrub
vegetation and agricultural activities, there is an extensive region of sand and
dunes along the shore, with annual average winds of 7.0 to 8.0m/s. A promising
region for the installation of largewind power plants. The access from the BR101
consists of a long stretch of unpaved road, hampering transit. There is a
transmission line of 138kV linking yhe cities of Mostardas, Palmares do Sul and
Osório. The main consumption centers of the region are the cities of São José do
Norte (23.8 thousand), Palmares do Sul (10.9 thousand) and further north, the
cities of Osório (36.1 thousand), Tramandaí (31.0 thousand) and Imbé (12.2
thousand). The latter cities are coastal resorts and experience a considerable
increase in population and energy consumption in the summer period
(December-January-February).
Coxilha de Santana - an extensive area of low lying hills on the Gaucho plains
(vegetation grassy-wooded), with annual average winds of 7.0 to 7.5m/s at higher
elevations. There is a transmission line of 230kV, linking the sub-stations of the
city of Sant'Ana do Livramento, the main center of consumption of the region
(90.8 thousand inhabitants(, to the cities of Bagé, Alegrete and to the Uruguay
(Rivera converter station).
Rio Grande Shield - areas of steppes, alternated with grassy-wooded vegetation
(fields) and tree cover, with average annual winds in the range of 7.0 to 8.0m/s at
the higher elevations. The region is crossed by transmission lines of 230kV,
linking the sub-station of Bagé and the thermal eletric power of Presidente Médici
to the state eletrical system. The mais cities are Bagé (118.8 thousand), Canguçu
(51.4 thousand), Piratini (19.4 thousand)and Pinheiro Machado (14.5 thousand).
South Coast - extensive area of coastal plain, covered by low scrub, dunes and
low roughness of predominating rice plantations and pastures. It has large
84
extensions with annual average wind plantations and pastures. It has large
extensions with annual average wind power plants. There is a wide extension of
dunes alond the shore of the Lagoa Mangueira (Margueira Lagoon), where the
annual averages exceed 8.0m/s. The area is acessible by existing roads between
the Lagoa Mangueira and Lagoa Mirim (Mirim Lagoon). A transmission line of
138kV links the municipalities of Santa Vitória do Palmar to Rio Grande. Among
the potencial consumption centers are the cities of Pelotas (323 thousand
inhabitants), Rio Grande (186.5 thousand inhabitants) and Santa Vitória do
Palmar (33.3 thousand), according to data from IBGE-Census 2000.
Those regions are shown in the Maps, Annex II.
Estimated Wind Resource
From the calculations of the annual average wind speeds in the entire State of Rio
Grande do Sul, it is possible to estimate the wind-electric power that can be
effectively utilized given the present level of wind power plant technology, by
integrating the wind speed maps, applying geoprocessing tools and calculations of
the performance and electrical energy production of typical wind power plants. In this
process
the
following
conditions
were
presumed:
- To each of the 3 heights of calculated wind speeds, 50m, 75m and 100m, average
performance curves of commercial wind plants in the following classes were
considered, 500kW, 1500kW and 300kW, with rotor diameters of 40m, 80m and
100m and heights of 50m, 75m and 100m, respectively. The class 3000kW was
included, as there is a recognized tendency for increased capacity of wind turbines in
wind power industry. In this case the performance was extrapolated from the typical
power curves of 1500kW and 2500kW turbines, taking into consideration the power is
proportional to the area swept by the rotor. The power classes and dimensions
considered were not based upon any one specific turbine available on the market,
and the results do not indicate significant variations for turbines of dimensions
proximal to those considered. For example, the power does not alter significantly
when turbines of 600kW to 750kW are considered in place of 500kW, or 1200kW1800kW
in
place
of
1500kW.
-
-
Standard criteria of aerogenerator spacing and density in commercial wind power
plants, together with the simulation of the aerodynamic interference caused by
clusters of aerogenerators, according to an aerodynamic wake mathematical
model [19], considering an average representative wind-rose of the most
promising areas in Rio Grande do Sul, an average occupation rate of
7.5MW/km2, is estimated, with an energy efficiency rate of 97% on flat, obstaclefree terrain. However, in practice there is the possibility of technical restrictions
that may reduce this rate of terrain occupation: unfavorable topography, inhabited
areas, difficult access, areas prone to flooding or other restrictions that may limit
the use of the terrain. Thus, an average occupation rate of 20% of that possible in
flat, obstacle free terrain was considered a sufficiently conservative premise,
resulting in an average occupation rate of 1.5 MW/km2.
The areas with annual average speeds from 6m/s, in bands of 0.5m/s have been
integrated into the respective maps with a resolution of 1km x 1km, covering the
entire territory of Rio Grande do Sul.
The integration and the potential generation calculation were performed
separately in cases of wind plants implanted on:
• LAND (onshore), in which the areas covered by the main lagoons, reservoirs,
lakes, rivers and sea are discarded;
85
•
-
-
WATER (offshore), covering only the main lagoons of the State: the Lagoa
dos Patos, the Lagoa Mirim and the Lagoa Mangueira. As they are situated
on the extensive coastal plain, these lagoons are naturally shallow and
extensive in area, being potentially suitable for the future installation of
offshore wind power plants. The Lagoa dos Patos, which is 265km long and
has a surface area of 10,000 km2 has a relatively flat bed and an average
depth of 6m to 7m and points of less depth along its west bank. The Lagoa
Mirim, with an extension of 180km and total surface area of 3,750 km2 (part
of which is in Uruguayan territory), has depths of the order of 1m to 2m in the
north, reaching 4m in the central area and 5-6m in the south. The shore and
banks which are low and sandy and marshes and reed banks are common.
The Lagoa Mangueira, which is 123km in length and has a surface area of
approximately 800km, is the smallest and shallowest of the three lagoons
considered in the calculation of the utilizable offshore wind power in Rio
Grande do Sul.
In each wind speed integration band, the capacity factors corresponding to the
minimum threshold of the speed band were considered. Such capacity factors
were corrected for the local density effects, from the Air Density Map presented
on page 11 which was elaborated at a resolution of 1km x 1km, from
climatological data and the relief model;
The local Weibull Form Factors (k) were considered, as shown in the
corresponding wind map in Annex II.
An availability factor of 98%, and a plant efficiency (aerodynamic interference
between rotors) of 97% were considered in the performance calculation.
The following table shows the result of the integration of the maps, by speed
bands.
LAND(Onshore)
WATER(Offshore)
Wind
[m/s]
Area
[Km2]
50m
6.0-6.5
6.5-7.0
7.0-7.5
7.5-8.0
8.0-8.5
8.5
74157
29045
8191
1993
363
11
Installable
Annual
Capacity
Area
Power
Yeld
Factor
[Km2]
[GW]
[TWh/year]
121
111.24
0.20
192.51
760
43.57
0.25
92.03
6144
12.29
0.29
30.99
5363
2.99
0.34
8.82
827
0.54
0.39
1.82
12
0.02
0.43
0.06
75m
6.0-6.5
6.5-7.0
7.0-7.5
7.5-8.0
8.0-8.5
8.5
86035
73197
28211
6744
1246
83
129.05
109.80
42.32
10.12
1.87
0.12
0.19
0.023
0.27
0.32
0.37
0.41
206.18
215.12
98.83
27.70
5.88
0.44
100m
6.0-6.5
6.5-7.0
7.0-7.5
7.5-8.0
8.0-8.5
8.5
74157
29045
8191
1993
363
11
111.24
43.57
12.29
2.99
0.54
0.02
0.20
0.25
0.29
0.34
0.39
0.43
192.51
92.03
30.99
8.82
1.82
0.06
86
Installable
Power
[GW]
0.18
1.14
9.22
8.04
1.24
0.02
Annual
Capacitye
Yeld
Factor
[TWh/year]
0.21
0.32
2.48
0.25
0.30
23.72
0.35
23.90
0.39
4.16
0.43
0.07
72
204
3074
6653
3209
70
0.11
1.31
4.61
9.98
4.81
0.11
0.19
0.23
0.28
0.33
0.37
0.41
0.18
0.62
11.09
27.87
15.27
0.37
43
105
1075
7206
4636
242
0.06
1.16
1.61
10.81
6.95
0.36
0.16
0.20
0.24
0.29
0.33
0.37
0.09
0.27
3.36
26.54
19.66
1.16
The Estimated Wind Resource of the state of Rio Grande do Sul is presented in the
table above.
LAND(Onshore)
Installable
Power
[GW]
Annual
Yeld
[TWh/year]
Wind
[m/s]
Area
[Km2]
50m
>6.0
>6.5
7.0
>7.5
>8.0
8.5
113760
39603
10558
2367
374
11
170.64
59.40
15.84
3.55
0.56
0.02
326.23
133.72
41.69
10.70
1.88
0.06
75m
>6.0
>6.5
>7.0
>7.5
>8.0
8.5
195516
109481
36284
8073
1329
83
293.27
164.22
54.43
12.11
1.99
0.12
554.16
347.98
132.98
34.02
6.32
0.44
100m
>6.0
>6.5
>7.0
>7.5
>8.0
8.5
230820
173044
76797
21695
3298
230
346.23
259.56
115.19
32.54
4.94
0.34
607.55
490.68
247.11
79.93
13.93
1.08
Area
[Km2]
13227
13106
12346
6202
839
12
WATER(Offshore)
Annual
Installable
Yeld
Power
[TWh/year]
19.84
54.64
19.66
54.32
18.52
51.84
9.30
28.12
1.26
4.22
0.02
0.07
13282
13210
13006
9932
3279
70
19.92
19.82
19.51
14.90
4.92
0.11
55.40
55.22
54.61
43.52
15.64
0.37
13307
13264
13159
12084
4878
242
19.96
19.90
19.74
18.13
7.32
0.36
51.08
50.99
50.72
47.36
20.82
1.16
The attraction thresholds for the investment in wind power generation depend upon
the economic and institutional context of each country, varying in terms of the annual
average speeds, between 5.5m/s and 7.0m/s. Technically, annual averages from
6.0m/s constitute favorable conditions for the operation of wind power plants. In the
following analysis a threshold of 7.0 m/s will be presumed as reference.
The results of the cumulative integration suggest great magnitude for the estimated
usable wind energy on land (onshore) in Rio Grande do Sul, in the order of 15.8GW,
54.4GW and 115.2GW, for areas with winds equal to or greater than 7.0m/s, at
heights
of
50m,
75m
and
100m,
respectively.
The magnitude of the wind power over water (offshore) is also noteworthy,
considering only the three main lagoons, the result of the integration of the annual
average wind speeds calculated for the lagoons, dos Patos, Mirim, and Mangeira, is
estimated at 18.52GW, 19.51GW and 19.74GW, for winds equal to or greater than
7.0m/s, at heights of 50m, 75m and 100m, respectively. Having low roughness, in
these areas the boundary-layer recovers part of the kinetic energy lost upon passing
over the terrain of the Atlantic coast, recording the highest average speeds in Rio
Grande territory. It can be observed that, due to low roughness the over the water,
the wind power at the three heights differ little, since the variation of the vertical wind
speed profile in the atmosphere is a function of the roughness of the terrain, as well
as
the
vertical
thermal
stability.
The estimated wind power for the State of Rio Grande do Sul is relatively high. As a
comparative reference to the values resulting from the integration, the Brazilian
nation system possessed a total installed capacity of 77.0GW, up to the end of
87
2001[22], and the total Brazilian hydraulic resources (inventoried plus estimated) is
143.4GW[20]. The State occupies an area of only 3.32% of the Brazilian territory and
possesses a wind power generating potential, at 50m height over land and for
speeds from 7.0m/s, equivalent to 15% of the estimated wind power for Brazil [27],
compared under equal criteria. The total consumption of electricity in the State was
19.31TWh in the year 1999[20], that is, 46.3% of the estimated annual wind
generation
(41.7TWh/year).
Strategic Aspects
Wind energy is the energy source that has shown the highest rates of growth in the
world in recent years, generating, apart from energy for production and development,
important fringe benefits, such as the creation of employment in the cycle of
manufacture, installation and operation/maintenance, economic development and the
improvement in the quality of life, the decentralization of generation and the benefits
to the global environment as a substitute for thermal power generation. In 2001,
6.77GW were added to the installed world wind capacity, resulting in an annual
growth
rate
of
38%
and
reaching
a
total
24.50GW
[21].
The modularity, inexhaustibility, speed of installation, decentralization of generation,
ever lower installation costs, non-aggression to the environment and the co-use of
the land occupied by the wind plant with other activities such as cattle farming and
agriculture, make wind energy the energy source of the future.
The wind is an abundant natural resource in the State of Rio Grande do Sul. The
potential generation capacity could be used gradually, at the technical limits of the
insertion of the wind capacity in the regional electrical system, elevating economic
growth
and
the
energy
self-sustainability
of
the
State.
The utilization of wind resources in the most favorable areas identified such as the
center-south coast of the State, would potentially permit the strengthening of the
electric
grid
extremities.
The winds over the State of Rio Grande do Sul are sufficient to help meet the energy
demand for the well being and economic development for many generations to come.
Wind Energy in the Southeast of Brazil – An experimental case at Minas
Gerais – MG
In 1992, CEMIG, the elctricty utility of Minas Gerais started a feasibility study for the
implementation of a wind power plant at Morro do Caelinho, at the municipality of
Gouveia. In 1994, CEMIG installed the Experimental Wind Power Plant of Morro do
Camelinho. This was the first wind power plant connected to the interconnected
electricity grid.
This project was developed with subsidies from Eldorado Programme of the German
Governemnt, and the manufacturer Tacke Windtechnick was selected as the wind
turbine provider.
The carachteristics of this project were:
Turbine Implementation costs: US$ 1.54 million (51% financed by BMTF –
Research and Technology German Ministry);
88
Average Annual energy production: at the experimental phase, it was produced
800 MWh/year. The cost of energy was US$ 116.38/MWh, considering useful life
of 20 years, O&M of 3% and rate of return of 14% p.a.;
Connected to the subtransmission of CEMIG through line Parauna-Gouveia of
34.5 Kv;
It was implemented in a complex terrain and high resisitivity;
Integrated to the hydroelectric of Paraúna;
High atmospheric discharge index at the local;
The graphs showing the wind distribution at the local are presented in Annex II.
3.4 - Wind Energy in the Northeast of Brazil – The case of RN – Macau
The region with higher potential for the use of wind power generation in Brazil is the
Norteast. States like Ceara and Rio Grande do Norte presents steady constant wind,
with high speeds, aand can also use the complimentarity with hydrogeneration for a
better use of the electricity system.
In the following graphs will be presented the case of the Macau Region, in Rio
Grande do Norte, where the feasibility study for the implementation of a wind farm of
40 MW capacity was conducted, using the WindPro tool and considering the local
conditions.
The study considered the implementation of 27 wind trubines of 1.500 Kw, which eas
the model considerd mores suitable for the wind consitions at the region.
The first graph is illustrated below, the other are presented in Annex II.
89
90
Economical Feasibility
3.5 – Economical Feasibilty
Once proved from the case studies presented that different regions of Brazil present
the technical conditions to the development of wind projects, in this section it will be
analysed the economical feasibility of a wind project, given the current legal and
financing conditions explained in Chapter 2.
For the economic feasibility study the following assumptions were used:
Cost of the wind turbines: Catalogue Windenergie 2000
Initial Costs (additional costs compared to the turbined price):
· 15% - Low Costs
· 30% - Average Costs
· 40% - High Costs
Operational Life: 20 years
Freight Costs: DM$ 200,00/t.
Insurance Costs: 1% over turbine preice
Taxes:
· II - 3% (over CIF price)
· IPI - 5 % (over CIF price)
· ICMS - 18% (over CIF price)
Maintenance: 4% over the turbine price
Investments:
Equity Capital
Investments Programmes from BNDES
Market Interest Rates: (10%, 12.5%, 15%, 17.5 e 20%)
Payment Period (2 years grace period + 10 years amortization)
Constant Amortization System Used
Wind Potential:
Wind Potential Class 2: Capacity Factor: 20%
Wind Potential Class 2: Capacity Factor: 30%
Wind Potential Class 2: Capacity Factor: 40%
Sensitivity Analyses:
Energy Cost
Turbine Cost
Foreign Exchange Rate
Tax reduction
The following table shows the cost of the turbines analysed, as provided from
Catalogue Windenergie 2000:
91
The treshold internal rate of return for wind projects was considered as 15%, in US$.
Energy Production
To facilitate the analysis for the use of wind potential and the economic feasibility
calculus, different capacity factors levels were adopted for each turbine. This
procedure allowed the groupment of wind measuremnt stations, from where the
average speed annual data and the Weibull parameters were described and
analysed.
All those stations were grouped following the Capacity Factor – FC of each turbine
model. in the use of wind potentia for the economic feasibility analysis, only the
potentials classified as Classes 3 or 4 were considered, using a capacity factor of
30% for Classs 3 and of 40% for Class 4.
In some the tests, places where the wind potential is less than 30% show low
attractiveness, and in some cases, are even unfeasible, since the energy production
costs are a function of the capacity factor. For this reason, even including just a few
wind measurement stations, only stations Class 3 with higher than 30% and stations
Class 4 were considerd in the economic feasibility analysis, showing the the best
results of energy production for each Class.
It is important to bear in mind that the energy production may vary from year to year.
The safety margin to predict the wind regime is directly influenced by the data quality
and the observation period. In the model used, it is addopted the same energy
production during the whole useful life of the turbine, without any adjustment in the
behaviour variation of wind regime.
Results
Using the assumptions detailed before, to obtain an IRR of 15%, the electricity price
from wind generation under the Brazilian conditions is of US$ 65/MWh.
For the Profit and Losses results and the Cash-Flow projections, it was used a
depreciation criteria approved by the Brazilian Laws. It was used a linear
depreciation, with a 10 year period.
The Proft and Losses spreadsheet is important for tax charges, once from the results
of these projections is obtained the taxable profit. The tax income rate used was 30%
(following Brazilian Legislation), and the results obatined are presented in the
following table:
92
The cashflow spredsheet shows the inflows and outflows of the investor’s capital, as
presented below:
Both spreadsheets are icluded in Annex II for a better visualization.
Aiming at identifying the parameters of main relevance to results validity, a series of
sensitivity analysis were conducted, altering the values of: financing options; O&M;
turbine costs, taxes, electricity price, and Normative Value. The results fom those
analysis are presented in different the graphs in Annex II.
The best results were obtained for Turbines Classes 3 and 4, achieving attractive
rates of return (equal or higher to 15%).
93
Chapter 4 – Conclusion
Wind energy is the renewable source of generation that presents greater advantages
at the generation of big blocks of energy. In many countries, the use of wind energy
for generation of complimentary energy has been vastly used and a significant
increase is expected for the nest years.
Among the many attractives of the wind energy use, it can be outlined the supply
diversity at genertaion park, the fast development of this industry and the technology
innovation existent in manydifferent project conditions. The possibility of presenting
short period betweenpreliminary project and installation is also an advantage. Evn
considering that the “fuel”used if free, plentiful and unlimited, wind energy still is a
technology that is not taken into account for electricity supply decisions due to
barriers still existent.
Under the perspective of the new environmental concerns and climatic questions, a
new consensus is emerging that the analysis of a project might consider not only the
economic aspects, although this still is the screening criteria . The economic methods
available don’t represent a proper option for the investment analysis, and it is society
duty to create ways for significant changes in economy, establishing a new balance,
considering the social, economical and environmental aspects.
The interest for the wind energy potential of Brazil is not limited to a local whish to
improve and expand the renewable contribution to electricity genertaion. Many
foreign companies have showed interest in the new and promissing wind energy
market in Barzil. The strong interest from German companies, can be identified
through the installation of Woobben WindPower, company from the group Enercon
GbH, which initially contructed the wind tubine blades, and nowadays, already have
infrastructure to produce model E-66.
Even being in an initial stage of big investments in wind energy, there are many
reasons that transform this technology in one of the most promissing energy sources
for the Brazilian Energy Matrix. As shown form the Brazilian Wind Atlas, and the case
studies presented, the depolyment of this technology in the country is feasible. For a
more developed stage to be achieved, it is necessary the establishment of a local
wind industry, where turbines and equipments would be produced locally, making
possible a decrease at costs, with large scale projects and a mature market.
The Regulatory Agency – ANEEL has benen working at the creation of incentives for
the use of wind energy in the country, as seen from Programme established through
Law 10438. A big advance in the regulation norms propoed by ANEEL is estblished
in Resolution, defining the refernce prices for the supply tariffs.
Many policy initiatives have been taken to sustain the increase of wind energy usei
all over the world. The removal of barriers and the subsidies that penalize renewable
resources is an important strattegy for the increase of wind energy in the next
decades. The barrires related to the electricity sector are, many times, in the
legislation of the sector, at planning activities and access to network, which has been
develpoed for big capacity generation plants. This is an institutional obstacle, that
shouldn’t be considered for promissing area for wind generation, being the electricity
sector responsibility to promote transparent and fair prices for the electricity services.
Many policy and economic measures were adopted for the development of wind
energy. Due to its technical and economic carachteristics acquired in the commercial
94
development over the last 15 years, wind energy needs more and more political will
to promote its increase in the future. The technology is ready and avilable and is
capable of overcoming challenges of new projects. Besides the political will, it is
necessary the consciouness of society topromote the contribution of energy supply.
Legislation is one of the most important tools for the development of renewable
resource in Brazil. Tha existent Laws show an initiative for the absorption of thei
energy source in the energy matrix, in remote isolated systems and in interconnected
systems. Law 10438 was an essential step for the depolyment of this technology, but
as the Law is very recent and some aspects are still undefined, the results will be
seen in the years to come.
The development of wind energy in Brazil might be acompained not only from
political and legal actions, but also with reaserach and development initiatives. Many
institutions in Brazil already promote resaerch in different segments of wind energy
use, with results already applied in the utilization of wind genertaion systems. Brazil,
presenting its own carachteristics, needs validation studies and adjustments from
renowned European models. To make it viable a more effective share of wind energy
at the national energy matrix, it can be the destacados main research and
development lines:
Computationl models suitable for the climate and topography of Brazil;
Statistical distribution of wind data and standardization at data avialability;
Research over the quality of wind farms and impact at the network;
Development of turbines suitable for the tropical conditions of Brazil;
Research over the use of wind energy in hydrid systms (Solar-Wind or SolarWind-Diesel);
Better aerodynamic models, new intelligent structures and materials,
Improved understanding of mechanical loads, more efficient generators and
converters, reliable
Small machines for remote locations and large sea-based machines
And to minimise environmental impacts there is a need for:
Combined land use, visual integration, reduced noise from machines and
increased knowledge of effects on flora and fauna;
And to enable large-scale use there is a need for:
Improved forecasting of power output, better power quality and hybrid systems,
Including hybrids with natural gas
All those improvements, inherent to new technologies, and expected in the next
years, will contribute to a more effective use of wind energy as viable option for a
more sustainable energy supply.
95
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96
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