PNE 2050: Ministry of Mines and Energy publishes a long-term strategy for the Brazilian energy sector

Industry News – June 2021

Given its size and geographical extension, Brazil is an energy-heavyweight. It consumes 500 TWh p.a. of electric energy, boasts an extraordinary solar and wind potential, and is a major producer of oil and gas. Needless to say that this large and complex energy sector requires careful planning. The government regularly publishes detailed planning documents, among them the so-called PDEs (Plano Decenal de Expansão de Energia, i.e. 10-year Energy Expansion Plan) and the PNEs (Plano Nacional de Energia). In December of 2020, the Ministry of Mines and Energy launched the new PNE 2050. Its purpose is to provide a ‘set of studies and guidelines for the design of a long-term strategy for the Brazilian energy sector’.

Before delving into the PNE 2050, let’s revisit one of the previous documents – the PDE 2021, published in late 2012. Among other things, that document offers an optimistic outlook on energy demand, which was supposed to reach 656 TWh in 2021. The authors anticipated that most of the additional capacity needed to meet that demand would come from hydropower, biomass, and natural gas. Solar was briefly mentioned and not yet considered relevant: Despite the great potential, the current costs of this technology are very high and do not allow its use in the significant volume’.

The authors were wrong on all those accounts. Even before the outbreak of the COVID pandemic, energy demand stagnated around 482 TWh, p.a. Concerning hydropower, many new projects never made it out of the planners’ drawers in Brasília. And solar energy grew from basically zero in 2012 to 12,5 GW in mid-2021.

The new PNE 2050 goes to great lengths to provide a holistic view of the Brazilian energy sector. Concerning energy consumption, the document, yet again, presents an extremely optimistic economic growth scenario – up to 3,1% p.a. for 30 years. However, the authors also acknowledge the possibility of a ‘stagnation’ scenario, extrapolating past economic growth. The document proceeds to analyze so-called transversal questions, including decarbonization, decentralization, and energy transition. It provides detailed analyses for different sources of energy, including solar, and dedicates one chapter to the so-called ‘distributed energy sources’ also touching upon energy storage.

For Brazil’s future energy mix, the authors present a flurry of different scenarios – economic stagnation, 100% renewable energy mix, a climate change scenario, repowering of hydropower plants, etc. Readers looking for a clear strategy or at least an energy roadmap might end up being confused once they are done with the 243 pages of the main document and the 78 pages of the numerical annex. Those wishing to learn more about the complexities and challenges of the Brazilian energy sector will find the exercise quite rewarding, though.

I would have been happy to find a roadmap among the numerous scenarios. Something that could serve as an indication of future public policy and of choices the government intends to make. And as Brazil is facing yet another year with record droughts and shrinking water volumes in its hydropower plants, an in-depth analysis on how to deal with the impact of climate change would have been appreciated. As I finished reading, I could not help but remember a quote from Mario Henrique Simonsen, a well-known economist and finance minister back in the 1970ies. When asked what he thought of the so-called 2nd National Development Plan, he simply replied: ‘I have no time to read science fiction’.

THE AUTHOR: MARKUS VLASITS, FOUNDER AND MANAGING DIRECTOR NEWCHARGE ENERGY

Markus is the managing director of NewCharge Energy, an engineering and project development company, focused on energy storage and PV energy and headquartered in Florianópolis. Markus has a long history in the photovoltaic sector - he was vice president of Q-Cells in Germany, executive director of Yingli Green Energy of Brazil and co-founder and commercial director of Faro Energy, an investment company focused on photovoltaic projects for commercial and industrial clients. He also coordinates the energy storage working group at ABSOLAR, Brazil's leading solar association. He is Austrian and has lived in Brazil since 2012.