Presentation made by Tiago de Barros Correia, Brazilian Electricity Regulatory Agency Regulator - ANEEL, at the Symposium on Governance of Infrastructure held at the OECD, Paris, on 29 February 2016

1. Tiago de Barros Correia
Director
February 29, 2016
Paris, France
Impact and Value During and
After Construction

2. 22
Topics
 Brazilian tidbits and Brazilian Power Sector
overview
 About us
 Brazilian strategy to develop key
infrastructure projects
 Impact and value

3. 33
 Total area 8,515 million km2 (83% of Europe)
 Total Population – 2015 205 million inhabitants (27% of Europe)
 Overall GDP – 2014 U$1,715 billion
 Installed capacity 141,631 MW
 Peak load 84,958 MW (Feb 2014)
 Electricity Consumption per Capita 2,664.15 kWh
 Average Energy Consumption Growth Annual Rate 4%
BRASIL SUMMARY

4. Electricity Supply Mix
80% of the electricity supply
mix is renewable
4,441 plants in operation
with a total 141 GW of
installed capacity
834 new projects granted,
increasing the capacity by
27% (39 GW) by 2021
Fossil Fuel
19%
Nuclear
1%
Biomass
9%
Hydro
65%
Wind
6%
Solar
0%

5. Transmission Grid
230kV ac
345kV ac
440kV ac
500kV ac
700kV ac
600kV cc
800kV cc
125,644 km of transmission
lines
Expansion of 10,400 km
until 2019 (8%)
Auctioning of R$ 30 billion
of new Investments only in
2016

6. If our Transmission Grid Were in Europe...

7. 77
Topics
 Brazilian tidbits and Brazilian Power Sector
overview
 About us
 Brazilian strategy to develop key
infrastructure projects
 Impact and value

8. ANEEL Board of Directors Open
Sessions
› Decisions are made by the Board of Directors (5)
› Board sessions are open to the public participation and is
transmitted live over the web
› Cases are distributed to each Director by lottery
› Case settling relies on technical and legal analyses

9. 99
Topics
 Brazilian tidbits and Brazilian Power Sector
overview
 About us
 Brazilian strategy to develop key
infrastructure projects
 Impact and value

10. 1010
Infrastructure governance cycle
1. Evaluation of
infrastructure
needs
2. Decision and
prioritization
3. Project preparation
4. Auctioning
5. Executive project and
licensing
6. Construction
operation and
maintenance

11. 1111
Topics
 Brazilian tidbits and Brazilian Power Sector
overview
 About us
 Brazilian strategy to develop key
infrastructure projects
 Impact and value

12. 1212
Value for Money
“How much is too much?”
Economics Efficiency
Can we get equivalent
infrastructure for less
money?
Can we get the same results
while saving money and
time depending on how we
manage the process?
Would savings regarding the economics and efficiency of the Project risk
its effectiveness and sustainability?

13. 1313
Sustainability trail
Goal
 GHG emissions
 Renewable
sources
 Distributed
generation
 Power losses
Pathway (Long Term Plan)
Resources and
technology
availability
Budget
constraints
Regulation
Subsidies
Strategic
Projects
Externalities (Global and Local)
Life Time Analysis
Environmental
 Economic
 Social
Jobs
Health
Mitigation and
Compensation
Execution
Assurance of
project
commitments
Accountability
Secure
stakeholders
acceptance and
approval

14. 1414
Learning by Doing
But we deal with uncertainty and
sometimes we need to get back
on trail and try harder
To do that we need stakeholders
support
Again, accountability appears as a
key concept

15. 1515
Impact and value – Transmission
Good Economics
Since 1999 the Brazilian Government has been conducting
auctions to contract transmission services from greenfield
projects. The auctions procure long term contracts (30 years)
and define the transmission services to be delivered and the
construction time line.
Applicants need to meet certain criteria in order to be accepted
for participation in the auctions. This design intends to ensure
that the project offered will meet environmental, technical and
economic requirements of quality .
Bidders with the lowest proposed prices are the winners.

16. 1616
1.0
7.7
0.8
2.2
3.5
6.1
5.0
3.0
1.7
13.9
4.5
2.5
7.0
10.5 10.2
13.3 13.3
30.6
0
5
10
15
20
25
30
35
Investment in Billions of (R$)
Concessions Granted and Expected till the end of 2016* - present
value
(*assumes all contracts signed)

17. 1717
Impact and value – Transmission
Low Efficiency
% of projects with delays for each required
phase.
With delay
Early start
In time
Unknown

18. 1818
8/28/2013 - Last Major Disturbance
taken place in the Interconnected Grid.
Load Loss: ~11GW
Cut off Consummers : 17.5 million
Fault Clearance Time: 4 hours
Cause: Fire
Impact and value – Transmission
Good Effectiveness
Availability of transmission lines in the last 5 years (%)
Load Restoration in the Northeast

19. 1919
Scope
 General goals
 Governance arrangement
 Budget (funding and
finance)
Public Policy
Major Risks
 Unrealistic goals
 Bad governance
 Insufficient resources
Risk-Bearing
 Government
 Society
Scope
 Strategic Projects
 Pricing and Timing
 Previous License
 Stakeholders support
Planning
Major Risks
 Social and Environmental
feasibility
 Stakeholders support
(not in my backyard!)
Risk-Bearing
 Government
 Society

20. 2020
Scope
 Contract design
 Auction design
Auctioning
Major Risks
 Collusion
 Bidless Auctions
 Winner’s Curse
Risk-Bearing
 Government
 Society
 Winner (Entrepreneur)
Scope
 Executive Project
 Final Licenses
 Construction
 Project Compliance
Construction
Major Risks
 Licensing delay
 Exchange rate
 Capital cost
 Bad Project
 New Environmental
Agency requirements
(studies and mitigation
measures)
 Weather
Risk-Bearing
 Government
 Society
 Entrepreneur

21. 2121
Scope
 Power Capacity
 Energy Generation
 Transmissions Services
Operation
Major Risks
 Inflation
 Non concatenation
(generation and
transmission)
 Blackout (bad planning)
 Bad performance
 Market exposure
Risk-Bearing
 Consumer
 Entrepreneur

22. 2222
SGAN – Quadra 603
Módulos “I” e “J”
CEP: 70.830-110 /Brasília – DF
Tel.: 55 (61) 2192-8604
tiago@aneel.gov.br
Thank you!