Why hydroelectric power plants are making a comeback
It was a long drought. Now, after more than a decade without new projects, large hydroelectric plants are once again attracting investments in the country. Hydroelectric plants have come to be seen as essential to guarantee energy security and prevent blackouts, gaining space in the capacity auctions of the electric sector – which should contract significant volumes.
After more than a decade without new projects, major hydropower plants are regaining investor interest in Brazil. Once seen as crucial for energy security and to avoid blackouts, hydropower has gained prominence in electricity sector capacity auctions, which are expected to bid for significant volumes in the coming years. Currently, hydropower accounts for over 47% of the country's installed generation capacity, a substantial increase from its 1990s peak of over 90%.
As operating hydropower plants have been running more frequently, especially during peak evening and early night demand periods when solar generation is low, they are proving to be valuable assets in the market. This shift has driven up the value of hydropower assets, but it also highlights the need for increased investment in maintenance and modernization – a boon for equipment manufacturers in the sector.
Cláudio Trejger, CEO of GE Vernova's Hydro Power division, noted the cyclical nature of the industry, having experienced both boom and bust phases. "We really went through some tough times right after major structural projects like Jirau, Santo Antônio, and Belo Monte ended," he said. "Now we're seeing a new upward curve."
Historically, hydropower dominated Brazil's energy mix, supplying more than 90% of installed generation capacity until the 1990s. However, project licensing difficulties, which faced even resistance from then-Minister of the Environment Marina Silva, contributed to a decline in hydropower's share of the energy matrix, dropping to the current 47%.
The recent capacity auction featured expansions of existing plants from AXIA Energia, Copel, and the Chinese firm SPIC, totaling 2.5 gigawatts of power generation capacity – the largest volume in decades.
These expansions take advantage of idle sites left behind by past hydropower projects to achieve low-impact environmental expansions. Studies suggest there is potential for an additional 7.5 GW of capacity through additional machines in existing plants, along with 11 GW of repowering and modernization of existing facilities. The government and companies are also working to promote "reversible" hydropower plants, which use two reservoirs to operate as a battery system, similar to those in China and Europe. Copel plans to present 4 GW of projects this year, among others studying feasibility.
Written by urgent.news from Brazil Journal's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
