1. World Bank Water Week – 2004 Jerson Kelman

2. Hydroelectric power accounts for more than 90% of the total electric energy produced in Brazil

3. BRAZILIAN ELECTRIC SYSTEM

4. Vast territorial extension and hydrological variability  Country Wide Integrated Electric System Centralized Energy Dispatch BRAZILIAN ELECTRIC SYSTEM

5. INTEGRATED ELECTRIC SYSTEM  Installed Capacity (2000) = 72,299 MW  96 Hydropower plants > 30 MW  57 Regulating reservoirs  Country is interconnected by 70,000 km of high-voltage lines

6. THE POWER SECTOR REFORM The reform process started in 1996 Rationale: –Public sector has no $ to invest –To promote economical efficiency Guidelines: –Private investment and competition in energy generation and retailing –Transmission and distribution to remain regulated, with provisions for open access

7. Reforms based on the same principles had worked in countries based on thermal production. Would it work in a country like Brazil, based on hydro? THE POWER SECTOR REFORM

8. SOUTH-SE System Energy Wholesale Market Prices (US$ / MWh)

9. THE ENERGY CRISIS OF 2001 There was a market failure  Lula’s Government restored centralized expansion planning for new plants and transmission lines Owner of a new hydroelectric plant will get, before construction, a long term contract with a pool of distribution companies (equivalent to an annual “rent”) All power plants operate according to rules set by central dispatch

10. Cost of new energy (US$/MWh) Hydro30 Thermal40 Alternative50

12. Amazon Region

14. CHE Belo Monte Rio Xingu Localization Total Capacity (MW) Energy (MW méd) Xingu River(PA) 11.182 4.796 Reservoir Area (km²) 440 Belo Monte

15. CHE Belo Monte and the National Interconnected System - SIN

16. ENVIRONMENTAL MANAGEMENT Concern: The social and environmental impacts caused by large hydroelectric projects implemented in the 70s and 80s. What’s new? Methodology to screen out, at the river basin scale, sites for construction of hydroelectric power plants which would not be social or environmentally feasible

17. ENVIRONMENTAL MANAGEMENT The environmental licensing for hydroelectric plants requires preparation of an Environmental Impact Assessment (EIA) with Public Hearings, through three phases: –first license (LP) –installation license (LI) –operation license (LO)

18. Final Remarks Brazil needs to ensure a sustainable growth of energy supply Hydroelectricity cannot be spared The strategy is to select, from the numerous sites technically and economically feasible for hydroelectric power plants, a subset that would cause minimum environmental and social impacts However, we are not seeking for a subset that would cause no impact