Electricity Goverance Initiative Launched in Brazil

EGI offers a new hope for electricity in Brazil.

This story originally posted at the Electricity Governance Initiative.

Brazil’s energy sector has arrived at a critical moment. The government expects that demand for electricity will surge, yet climate and hydrological changes threaten an energy supply heavily dependent on large hydroelectric dams. From 2010 on, the cost of electricity is likely to increase faster than the rate of inflation.

While Brazil works to add generators powered by natural gas and diesel, energy efficiency measures and alternative energy sources offer substantial potential to significantly reduce the need for expensive new sources of electricity.

With the intent of easing the transitions needed to Brazil’s electricity sector, WRI’s Electricity Governance Initiative has launched a new effort. Led by Brazil’s leading consumer advocacy group, the Institute for Consumer Defense (IDEC), EGI/Brazil’s efforts will focus on better understanding and responding to the environmental sustainability concerns and motivations of consumers.

IDEC will lead a coalition including Centro Clima at the Institute for Post Graduate Studies and Research in Engineering of the Federal University of Rio de Janeiro (COPPE), the International Energy Initiative Latin America at UNICAMP, the World Wildlife Fund Brazil, and the Brazilian Network of Civil Society Organizations for Renewable Energy (RENOVE).

The coalition will examine the following issues:

Programme of Incentives for Alternative Electricity Sources (PROINFA) and other incentives

One of the most progressive incentive programs to promote renewable energy in the world, PROINFA aims to add 3,300 MW of wind, small hydro and biomass energy within 3 years. Unfortunately, implementation has faced numerous problems since it was passed into law in 2002. Weaknesses in governance that have precluded the necessary documentation, contract oversight, and stakeholder buy-in have all been problematic. EGI/Brazil plans to more closely analyze the development and implementation of PROINFA in the context of Brazil’s legislative and planning processes. Insights from this work should enhance the effectiveness and impact of such programs in the future.

Consumer representation in policy and regulatory processes

Electricity pricing is one of the most complex and contentious issues in the sector, and in Brazil there are many issues to address including: the hidden costs of subsidizing traditional sources of energy including large dams; the relative cost of alternative forms of energy in this context; and the need for social tariffs to meet the needs of the poor. Power sector companies in Brazil must pay a “wire charge” that streams a small portion of their revenues into a public fund to support energy conservation, and research and development of new technologies; but there is little accountability for how these funds are spent. Transparency, accountability and public participation around these issues will be increasingly important as imminent price hikes attract consumer concern, as they present important mechanisms to mitigate the impact on consumer welfare. In this context, it is important to assess the extent to which civil society and consumer protection organizations have the capacity to engage in and contribute to these discussions.

Luz Para Todos

While Luz Para Todos has achieved some impressive results, the program has faced serious obstacles in achieving its goal of universal access by 2015. The program has thus far been unable to reach people in remote and isolated communities, many of them in Amazonia. Here again, it has been difficult to overcome local political forces in the absence of wide spread stakeholder support for the program. Issues relating to incumbent suppliers, potential new agents, and community involvement remain unresolved. Legal barriers to off-grid renewable energy point to the need to develop new policy and regulatory processes that are more responsive to the needs of this population.

The keys to improving governance of the power sector in Brazil lie at the intersection of politics and administration. Through this initiative we seek to engage with legislators, government officials, planners and regulators as part of the assessment process, as well as with industry associations, small providers of alternative energy, and private sector leaders on social and environmental issues.

Contacts:

Marcos Pó IDEC marcospo@idec.org.br

Smita Nakhooda WRI snakhooda@wri.org

Davida Wood WRI dwood@wri.org