POWER February 2012 - 65

POWER IN BRAZIL
The arrival of these private players in the
Brazilian distribution sector has allowed for
an average yearly investment of R$8 billion,
expected to rise to R$11 billion by 2015 in
order to maintain growth levels and to secure
energy supply during the coming World Cup
and Olympic Games.
A prime example of how privatization of
the distribution sector allowed for the arrival
of new players is AES. As AES President
Britaldo Soares affirmed: " AES arrived
to Brazil in 1997 and took advantage of the
process of privatization of the energy distribution
sector. Through its successful strategy
of acquisitions, AES provides energy to 25
million Brazilians and is the biggest private
energy distributor in Latin America. "
Despite partial privatization, the distribution
sector is still a regulated market. Ricardo
Perez Botelho, president of Energisa, claimed
that private distributors' growth ambitions
are constricted: " There are very few opportunities
to grow in the distribution sector at the
moment, and the government tends to be very
restrictive. Discussions with the government
on changing the rules applied for energy tariffs
have been very difficult; it continues to
impose very unrealistic conditions on returns
on investment, and it is reluctant to orchestrate
further privatizations. "
In Brazil, distribution is a system of geographic
monopoly, and as such there is no real
competition between distribution companies;
each one is confined to a limited area. Indeed,
only customers with demand over 3 MW can
choose their supplier; the rest are bound to the
distributor operating in their area. Energy tariffs
are divided into a portion for energy itself
and a fraction equivalent to the transmission of
that energy. According to Fonseca Leite, president
of ABRADEE, the Brazilian Association
of Energy Distributors, this implies that companies
" do not make money on energy but on
the delivery of the energy. "
On the question of energy tariffs, Leite
also pointed out a recurrent problem related
to distribution tariffs: " 45% percent of the
bill paid by final consumers corresponds to
taxes; consequently, energy prices are very
high, and this constitutes a considerable dayto-day
concern for many Brazilians. "
An issue especially promising for the distribution
industry is the prospective development
in Brazil of the so-called " smart grid. " In the
words of Welson Regis Jacometti, president of
CAS Tecnologia: " The market is now describing
the regulatory marks that create the ideal
scenario for utilities to evolve towards smart
metering. Indeed, today the immediateness of
smart grid is a reality. "
Intelligent energy meters, by providing
distribution companies with accurate and immediate
information on different variables of
February 2012 | POWER
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65
electricity consumption, could considerably
mitigate and even potentially suppress nontechnical
energy losses (such as theft) in the
transmission of distributed energy. Moreover,
the smart grid will constitute a revolution in
the relationship between distribution companies
and their customers, providing for the
adoption of different tariff schemes tailored
to consumers' needs while maximizing the
grid's overall efficiency.
Notwithstanding these advantages,
ABRADEE's Leite warns about some of the
difficulties that must be overcome before
effectively introducing a smart grid: " Right
now we are discussing the implementation
of smart grids in Brazil and working
on trying to establish public policies for
smart grids; but this is a very complex task,
as we have to take into account the diversity
amongst power distribution companies
across the country in order to grant tailored
solutions for each region. "
Marcelo Prado, marketing director of General
Electric (GE) Energy for Latin America, of
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POWER February 2012

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