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Brazilian Energy Matrix

The evolution of energy resources in Brazil

Energy Matrix over the years

In 2017, Brazil rose the Domestic Energy Supply (DES) 1.8%, reaching 293,5 Mtoe(Million Tonnes of Oil Equivalent), being led by the growth of natural gas (6.7%) and wind power (26.5%). Historically, Brazil migrated from a wood and coal-powered economy, in the 70’s, to a current economy powered by a more balanced mix of energy sources in 2017, but with Oil and Gas (O&G) responding to circa of 50% of the energy supply. This change mirrored a population shift from rural areas to the cities and the country is now predominantly urban. Additionally, the natural gas went from low significance in the energy matrix in the 70’s to become the third most important source of energy in the country.

Source: Energy Research Office (EPE) - Brazilian Energy Balance. Deloitte Analysis.

 

Source: Energy Research Office (EPE) - Brazilian Energy Balance. Deloitte Analysis.

 

When it comes to petroleum and oil products, some points are worth highlighting. For instance, petroleum was the second main source of energy supply in 1970 (37.7%) and current is the most important one, although it’s relative share has remained nearly the same in the last years, being 36.2% in 2017. However, the domestic petroleum supply structure was drastically changed. In 1970, net imports represented circa of 70% of Brazilian gross domestic supply, outlining a pronounced dependency. In contrast, Brazil has become a crude oil net exporter since 2006 (with exception of 2007), which means that the country is self-sufficient in petroleum quantity (in relation to petroleum quality, Brazil is still dependent on small imports of lighter oil). In this manner, it is important to highlight that while imports represented 69.9% of gross domestic supply of crude oil in 1970, in 2017 it was only 8.3%.

 

Brazilian energy balance - Petroleum 10³ m³
  1970  2017 
Production 9.534 152.533
Import 20.848 8.407
Stocks variation -473 252
Total supply 29.909 161.192
Exports -76 -60.473
Gross domestic supply 29.833 100.719

Source: EPE. Deloitte Analysis.

 

The efforts to grow the domestic oil production was not the only measure adopted to decrease external dependency of crude oil in Brazil during the seventies, when two global oil crisis occurred in 1973 and 1979. In the second half of the seventies Brazil launched a program to boost the development of the new source of fuel called ProÁlcool, aiming at reducing energy dependency and vulnerability of crude oil, by stimulating utilization of cars moved by ethanol. After the 2000’s Brazil adopted other measures also aiming at secure the safety of supply (for example, reducing the dependency of crude oil), as much as to address socio-environmental concerns: in addition to increasing the role of ethanol fuel, with the launch of flexible fuel cars, biodiesel, bioelectricity; biogas and bio-methane were inserted into the national energy matrix (EPE, 2017). 

With the substantial rise of hydraulic supply after the 70’s, becoming the fourth main source of energy supply in the country in 2017 with 12%, Brazil has managed to compose a favored mix of renewable and non-renewable energy endowment along the years. Remarkably, the renewable share in the Brazilian energy matrix (sugar cane products, hydraulic, firewood and charcoal, and other renewables) is among the highest in the world, it registered at 43.2% in 2017, while this indicator in 2015 in the World and OECD (Organization for Economic Co-operation and Development) statistics was only 13.7% and 10.1%, respectively (EPE, 2018).

Brazilian Electricity Matrix


In 2017, the supply of electricity in Brazil totaled 624.3 TWh, having a rise of 0.7%, following a similar rise in the consumption (0.9%). Despite the reduction of hydraulic energy supplied (-3.4%), renewables sources still accounted for 80.3% of the electricity matrix in Brazil in 2017, and this can be explained by the rise of wind power generation, as point out the Brazilian Energy Balance of 2018 (EPE, 2018). Wind generation grew 26.5% in 2017, reaching 42.4 TWh. The installed capacity of wind power reached 12,283 MW, rising 21.3% in relation to 2016.

As of 2017, the Brazilian electricity matrix – which percentage level of renewable share four times higher than the world or OECD, was mainly supplied by the following sources: Hydropower (65.2%), biomass (8.2%) and wind power (6.8%), according to the Brazilian Energy Balance 2018 edition (EPE, 2018).

 

Source: EPE- Brazilian Energy Balance 2018. Deloitte Analysis.

 

Brazil is blessed with one of the greatest hydropower potentials in the world. As previously shown, generation from this source was responsible for almost 2/3 of the domestic supply of electricity, including imports. Today, only around 1/3 of Brazilian hydropower potential is fully exploited. The greatest undeveloped hydropower generation potential is in northern Brazil, but new projects can face some setbacks due to socio-environmental concerns. 

Despite the great share that hydropower represents in the country’s electricity generation, it is important to note that this participation suffered a significant reduction over the last years. This was largely due to adverse hydrologic conditions, counterbalanced by thermoelectric generation, with highlights to the contribution from natural gas power plants, which counts on the relevant role played by LNG imported.

Brazilian electricity matrix evolution
  2010  2011  2012  2013  2014  2015  2016  2017 

Hydraulic²

81,0%  81.9% 76.9% 70.6% 65.2% 64.0% 68.1% 65.2%

Natural Gas

6.2% 4.4% 7.9% 11.3% 13.0% 12.9% 9.1% 10.5%

Biomass³

5.9% 6.6% 6.8% 6.6% 7.4% 8.0% 8.2% 8.2%

Oil products

2.7% 2.5% 3.3% 5.3% 6.8% 4.8% 2.5% 3.0%

Coal and coal products¹

1.4% 1.4% 1.6% 2.6% 3.2% 4.5% 4.1% 3.6%

Nuclear

2.4% 2.7% 2.7% 2.5% 2.5% 2.4% 2.6% 2.5%

Wind power

0.4% 0.5% 0.9% 1.1% 2.0% 3.5% 5.4% 6.8%

Photovoltaic solar

- 0.0% 0.0% 0.0% 0.1%
Total (TWh) 545.10 567.70 592.80 611.20 624.30 615.90 619.70 624.30

¹Includes electricity imports

²Includes firewood, sugarcane bagasse, black-liquor and other primary sources

³Includes coke oven gas

Source: EPE - Brazilian Energy Balance. Deloitte Analysis.

 

Even though wind power only accounted for 6.8% of the electricity generation in Brazil in 2017, the evolution of its contribution is worth mentioning. Just considering the wind power supply since 2013, it had an accumulated growth of 544%. Wind power is thought to be more suitable for coastal areas, principally in the northeast of Brazil, although there is also windfarms in the southern region of country.

 

Source: EPE- Brazilian Energy Balance. Deloitte Analysis.

Within trends, the Ten-Year Energy Expansion Plan (PDE) 2016 – 2026, published by the Brazilian Energy Research Office (EPE, 2018), expects that the Domestic Energy Supply reach 350 Mtoe in 2026, with an average annual growth of 2%. It also estimates an increase of the share of the renewables in the energy matrix, reaching 48% in 2026. On the other hand, it highlights the reduction of the share of crude and oil products in the domestic energy supply from 37% in 2016 to 32% in 2026.

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