Brazil is rich in natural resources. 44% of its energy comes from renewables.
Is the leader in biofuels production and has a very important contribution of hydroelectric plants.
It is between developing countries with most installed wind power, especially in the coastal area of Maranhao, Piaui, Ceara and Rio Grande do Norte.
The PROINFA program established the incorporation of 3300 MW of renewable energy. Large investments in wind and biomass were performed. However, solar has not been considered in energy integration; especially in large-scale plants connected to the grid.
The green energy Brazilian matrix was envied by many nations and the government was convinced that the country had the status of economic superpower.
Three-quarters of Brazil’s electricity came from hydroelectric plants and automobiles are moved mainly by sugar cane ethanol.
The country had just discovered huge oil reserves off its coast.
Today the picture is not as promising.
Oil production is falling and electricity rationing is discussed, which further depress the economy.
The problems began when Brazil tried to increase control over their resources and it spooked investors.
They deepened because the country has a strong dependence on hydroelectric (2/3 generation) and faces one of its worst droughts.
The reality is that Brazil’s power sector is plagued by inefficiencies.
The new oil law passed in 2010 sought to ensure state control over large deposits discovered under the sea off the states of Rio de Janeiro and Sao Paulo, demanding that Petrobras increase its controlling interest in the exploration and production.
Companies with long-term projects in Brazil reduced their plans or simply left the country.
But most damaging were gasoline prices policies.
The government prevented to Petrobras raise the prices of gasoline and diesel to contain inflation and the company incurred their first losses in 13 years.
The artificially cheap gasoline turned uncompetitive the local biofuels industry. The producers responded by cutting production, which shot ethanol prices.
Each liter of gasoline takes 1/4 of ethanol, so that increased the cost of gasoline.
To prevent an inflation increase, the government reduced the percentage of ethanol in the mixture at 20% at the end of 2011.
With refineries at full capacity, Petrobras was forced to import gasoline at market prices and sell at a loss.
The other big blow was the government’s plan to force a 20% fall in electricity prices in 2014, sliding that electricity companies would have to settle for lower profit margins.
The investor response was to sell companies shares. Eletrobras shares, the largest generator in Latin America, lost this year more than 2 decades of profits.
Although solar energy was not considered in the PROINFA and there is no state strategy to encourage it, Brazil has implemented several programs especially for electrification in rural communities.
The most important has been the PRODEEM, which was a leap for local solar industry know-how with a significant involvement in research and universities.
The other was the “Light for All” program, promoted by the state government in 2003 with the ambitious goal of bringing electricity to 10 million people.