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Brazil Power Report Q2 2012 Published : March 2012

No. of Pages : 62

Price: US$530

BMI View: With plenty of monetary and fiscal ammunition to weather a global growth slowdown and continually strong demand for Brazil's commodities, the medium-term economic outlook in the country is one of above-trend growth. This considered, we reiterate our view that Brazil will remain a very attractive power market relative to its peers. Most notably, we believe that Brazil's wind industry looks set to continue where it left off in 2011, with many regional and global players looking to capitalise on a booming market. Furthermore, with Brazil's plans to build four new nuclear power plants likely to be resumed by the government in 2012 after a delay of around 18 months, the nuclear sector is also likely to attract growing interest. Despite some revisions of our historical data series and forecasts to account for stronger than expected hydropower output in 2011, our overall view of Brazil's power market remains unchanged. Although BMI's country risk analysts revised down our 2012 real GDP growth forecast to 3.9%, from 4.8% previously, in line with our deteriorating global growth projections, BMI remains above consensus. Expansive monetary and fiscal policy is likely to support growth in Brazil, with several factors suggesting that private consumption will contribute positively to headline GDP growth in 2012 (after trending down in 2011). In light of this, and despite some persistent policy concerns (particularly in regards to fiscal consolidation), we maintain our view that the country's power sector will continue to see strong demand, with growth in consumption expected to average 4.8% a year between 2012 and 2021 (only marginally lower than the 5% expected by the Brazilian authorities). This robust growth in demand, coupled with the country's need to substantially increase electricity generating capacity and diversify its power mix to reduce its dependence on hydropower, have already attracted strong interest from international players. Given the weak global economic outlook, we expect this to continue, especially in the wind sub-sector. On top of these long-term elements, key developments for Brazil’s power sector include: • Eletrobras’ President, José da Costa Carvalho Neto, has presented the company's investments for 2012, announcing that a total amount of almost BRL13.2bn will be invested. Most of this is concentrated on generation (BRL6.8bn) and transmission (BRL3.8bn). The distribution segment will receive a contribution of BRL1.8bn. We highlight, however, that delays in licenses may limit commitments. • Complains have emerged from the wind industry as necessary transmission lines are behind schedule, efforts are being duplicated and licensing issues are slowing progress. This picture confirms BMI’s view that, in spite of the buoyant outlook for Brazil’s wind segment, a number of risks remain pertinent. • In February 2012, Brazil and Argentina announced plans to create a joint venture to manage electricity-generation projects on the border between the two countries, with a view to build a 2,200MW facility, the Garabi-Panambi hydroelectric complex. Apart from increasing energy security, the venture aims to strengthen ties in the region. • Despite the absence of formal announcements, speculations have emerged about the possibility of 100MW of solar projects to be auctioned off in 2012. Brazil has only one utility-scale photovoltaic project, located in Taua, and the auction model could be used by the government in an attempt to replicate the success of wind.


Brazil Power Industry Table of Content SWOT Analysis . 7 Brazil Power SWOT 7 Global Industry Overview 8 Regional Industry Overview .. 12 Industry Forecast Scenario ... 17 Brazil Snapshot (Macro) ... 17 Country Snapshot: Power Sector .. 17 Country Snapshot: Economic and Demographic Data . 17 Brazil Forecast Scenario .. 17 Electricity Generation and Power Generating Capacity ... 17 Table: Brazil Total Electricity Generation Data And Forecasts ... 17 Table: Brazil Total Electricity Generation Data And Forecasts ... 22 Table: Power Auction 002/2011 (A-3) .. 30 Table: Power Auction 003/2011 (Reserve) ... 30 Electricity Consumption 33 Table: Brazil Total Electricity Consumption Data And Forecasts 33 Table: Brazil Total Electricity Consumption Data And Forecasts 33 Transmission/Distribution, Imports/Exports . 34 Table: Brazil Electric Power Transmission And Distribution Losses Data And Forecasts ... 34 Table: Brazil Electric Power Transmission And Distribution Losses Data And Forecasts ... 35 Table: Brazil Trade Data And Forecasts .. 35 Table: Brazil Trade Data And Forecasts .. 35 Key Policies/Market Structure .. 38 Regulation and Competition . 38 Sustainable Energy Policies .. 39 Pricing .. 40 Key Projects Database .. 41 Table: Power Plants & Transmission Grids . 41 Power Risk/Reward Ratings .. 45 Latin America Regional Power Risk/Reward Ratings ... 45 Table: Regional Country Risk/Reward Ratings . 47 Rewards 48 Risks.. 48 Operador Nacional do Sistema Elétrico (ONS) 49 Eletrobrás . 49 Tractebel Energia . 50 Company Profiles ... 51 Centrais Elétricas Brasileiras (Eletrobrás) .. 51 Glossary of Terms .. 54 Table: Glossary of Terms .. 54 Methodology And Sources 55 Industry Forecasts 55 Power Industry - Data Methodology . 56 Generation and Consumption Data .. 56 Electricity Generation Capacity Data ... 57 Power Risk/Reward Ratings Methodology 58 Table: Power Risk/Reward Indicators .. 60 Sources . 61 Table: Brazil Total Electricity Generation Data And Forecasts . 17 Table: Brazil Total Electricity Generation Data And Forecasts . 22 Table: Power Auction 002/2011 (A-3) . 30 Table: Power Auction 003/2011 (Reserve) . 30


Table: Brazil Total Electricity Consumption Data And Forecasts . 33 Table: Brazil Total Electricity Consumption Data And Forecasts . 33 Table: Brazil Electric Power Transmission And Distribution Losses Data And Forecasts . 34 Table: Brazil Electric Power Transmission And Distribution Losses Data And Forecasts . 35 Table: Brazil Trade Data And Forecasts . 35 Table: Brazil Trade Data And Forecasts . 35 Table: Power Plants & Transmission Grids . 41 Table: Regional Country Risk/Reward Ratings . 47 Table: Glossary of Terms . 54 Table: Power Risk/Reward Indicators . 60


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