Transmission a potential bottleneck for renewables in northeast Brazil

Bnamericas Published: Friday, September 13, 2019

Power transmission infrastructure could be one of the main bottlenecks for the development of renewable generation projects in Brazil’s northeast in coming years.
Brazil has a schedule for transmission line tenders up until 2021 but could face greater challenges during the next decade as it expects a big boost in renewable generation after 2025. That is when domestic consumers will be allowed to migrate from the captive market, where they are supplied by distributors, to the free market, where they can choose electricity provider. Currently, only big consumers are allowed to migrate.
“The market will undergo big changes in consumption patterns. There is a worldwide trend for higher representation of renewables and consequently this will bring a need for transmission expansion,” Marcelo Gonçalves, partner at consultancy firm KPMG, told BNamericas.
According to Gonçalves, another subject investors need to be wary of when developing renewable generation in the northeast is the environmental licensing process, which often demands environmental and social compensation.
There is also an expectation that new technologies will have a big impact on the development of such projects, helping to solve some of the bottlenecks. One of the main innovations expected in the short-term is energy storage batteries, which should gain ground after the country adopts an hourly PLS [index of short-term electricity prices]. Other technological solutions such as more accurate wind generation forecasts should also help with the financing of projects, as Fitch said in a recent report.    
The northeast region is crucial for the development of the wind and solar power markets in the country due to its high solar irradiation and good wind speeds and steadiness. The region hosts over 80% of the country’s total wind generation capacity, and has the three top producing states: Rio Grande do Norte, Bahia and Ceará.
Although the states with the highest solar power capacity are in the southeast, the northeast is also important. An example is Fortaleza city in Ceará state with 11.7MW installed capacity, putting it among the top four municipalities for solar generation in the country.

“In a few years a representative share of Brazil’s power generation could come from the northeast,” Gonçalves said.

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