IEEE Power & Energy Magazine - November/December 2014 - 31
both generation projects and the associated electric transmission. Local gas-fired thermal generation has lower capital costs for both the generators and the electricity network
costs, but it has higher production costs along with the capital cost of the needed gas pipelines. In addition, it is relevant
to assess how the adequacy of natural gas, electricity, and
renewable resources may evolve.
Pricing schemes for natural gas will be discussed, including how the variability of LNG prices affects electricity
prices. The article will also address the regulatory and system operation changes made to ease the integration of gasfired plants and the remaining hurdles to be overcome.
Electricity and Gas Integration in Brazil
sector in terms of physical assets (as illustrated by the contrast between the two transportation networks, as shown in
Figure 3), regulatory framework (unlike many countries,
Brazil has separate regulatory agencies for electricity and
gas), and market structure. The Brazilian electricity market was fully liberalized in 1996, and while oil and gas
production was liberalized soon afterward in 1997, regulations regarding gas transportation and pipeline access were
only introduced in 2009. Despite the growing private participation in both sectors, the participation of the Brazilian
national oil and gas company Petrobras in almost all segments of the natural gas value chain is much more dominant
than that of state-owned companies in the electricity sector.
In addition, the lack of a robust pipeline network enabling
choices among suppliers has made competitive gas pricing
difficult to implement. To date, natural gas trading has been
carried out chiefly via long-term bilateral contracts.
The complexity of the Brazilian electricity sector has
deep historical roots: an intricate system of hydro plants,
made up of several river basins and multiple large reservoirs capable of multiyear storage, accounts for 70% of the
country's installed capacity. In order to take full advantage
of synergies between hydro basins and other complementary sources, the country is fully interconnected at the bulk
Brazil is the largest country in Latin America and an interesting case study of successive attempts to smoothly integrate electricity and gas. The country's experience has been
rather mixed, illustrative of the complicated "marriage"
between the two sectors.
Despite Brazil's substantial natural gas reserves and the
great expectations surrounding the large oil and gas resources
located in the Pre-Salt layer (as announced in 2007), the
Brazilian natural gas sector is relatively underdeveloped.
As demand for space heating is almost nonexistent due to
the country's tropical climate,
gas demand in the residential
and commercial sectors tends
to be very limited; the potential
demand of the industrial sector
(as feedstock for the chemical
2.3 Gm3
19.1 Gm3
and petrochemical industry or as
a substitute for oil or electricity)
has generally been insufficient
to justify large investments in
gas production and transportation. The electric power sector,
10.1 Gm3
on the other hand, represents a
major potential market for natural gas, and indeed the demand
5.4 Gm3
for gas-fired electricity production has been an important
driver behind many of the devel2.8 Gm3
4.5 Gm3
opments that have enabled the
3
4.1 Gm
Brazilian natural gas sector to
achieve a certain level of maturity today. Today's fairly modest
domestic gas production in the
LNG Terminal
country, mostly associated with
LNG Net Trade
oil extraction, has been supplemented by pipeline imports
Pipeline Net Trade
from Bolivia since 1999 and by
3
5.2 Gm
(2012 Data, in Billion
LNG imports since 2007.
Cubic Meters per Annum)
The Brazilian electricity sector is noticeably more developed
and more complex than its gas
figure 2. Gas imports and exports in South America in 2012 (source: BP).
november/december 2014
ieee power & energy magazine
31
Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - November/December 2014
IEEE Power & Energy Magazine - November/December 2014 - Cover1
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IEEE Power & Energy Magazine - November/December 2014 - Cover3
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