OUTLOOK FOR ALTERNATIVE RENEWABLE ENERGY IN BRAZIL

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OUTLOOK FOR ALTERNATIVE RENEWABLE ENERGY IN BRAZIL XIX Annual Latin American Energy Conference - The La Jolla Conference Renewable Energy Plenary Institute of the Americas

Mauricio T. Tolmasquim CEO Energy Research Office - EPE May 11th, 2010

ENERGY SUPPLY STRUCTURE IN BRAZIL: AN EXAMPLE FOR THE WORLD

ENERGY SUPPLY STRUCTURE BRAZIL X WORLD

BRAZIL 2009 Oil 37.8%

Sugar Cane 18.1%

OECD 2008 Hydraulic Energy and Electricity 2.0%

Biomass (*) 13.9% Natural Gas 8.7% Hydraulic Energy and Electricity 15.3%

Uranium (U3O8) 1.4%

Renewables (*) 5.2%

Oil 37.8%

Uranium (U3O8) 5.9%

Coal 4.8%

(*) includes firewood, charcoal and other

Renewables in the Energy Matrix = (Hydraulic + Sugar Cane Products + Biomass) = 47.3%

Coal 20.9% Natural Gas 23.7% (*) includes renewable fuels, waste, solar power, wind power, geothermal and other

Sources: EPE [BEN 2010 - Preliminary Results] and IEA [Key World Energy Statistics - 2009]

QUALITY OF THE ENERGY MATRIX BRAZIL X WORLD

OECD Countries (2008)

World (2007)

7.2

12.7

87.3

47.3

Brazil (2009)

Renewable

92.8

0%

Non-Renewable

20%

52.7

40%

60%

80%

100%

Sources: EPE [BEN 2010 - Preliminary Results] and IEA [Key World Energy Statistics - 2009]

ELECTRIC POWER SUPPLY STRUCTURE ATUALIZADO AMILCAR BRAZIL X WORLD

WORLD 2007 BRAZIL 2009 Hydraulic ³ Hidráulica 85.0% 85,0%

Nuclear Nuclear 2,5% 2.5% Gás Natural Natural Gas 2,6% 2.6%

Wind Eólica 0.24% 0,24%

Nuclear 13.8%

Carvão e Derivados ¹ Coal 1,3% 1.3%

Biomass (*) (*) Biomassa ² 5.4% 5,4%

Derivados de Oil Petróleo 2.9% 2,9%

Coal 41.5%

Natural Gas 20.9%

90.6% Renewable

Oil 5.6% Hydraulic 15.6%

Other 2.6%

18.2% Renewable

(*) mainly generated from the co-generation with sugar cane

Sources: EPE [BEN 2010 - Preliminary Results] and IEA [Key World Energy Statistics - 2009]

WE CAN KEEP OUR “CLEAN” ENERGY SUPPLY STRUCTURE HYDRAULIC SUGAR CANE BIOMASS ALTERNATIVE RENEWABLE SOURCES

SUGAR CANE BIOMASS

COSTS Custos de ETHANOL produçPRODUCTION ão do etanol Ethanol Productivity

Source: O. Henniges and J. Zeddies, ”Economics of Bioethanol in the Asia-Pacific: Australia-Thailand-China”, in F.O.Licht´s. World Ethanol and Biofuels, vol. 3, n. 11, 2005.

Source: IEA (2005) and MTEC

FLEX FUEL SHARE - BRAZIL

FLEX FUEL - VendaLIGHT deVEHICLES veículos SALE leves

Source: ANFAVEA - Monthly Bulletin of Biofuels – April 2010

FLEET BY FUEL - BRAZIL LIGHT VEHICLES

45 40 35

Million of Vehicles

30

26.31

24.84

27.79

29.29

30.79

32.29

33.79

35.29

36.78

38.25

39.71

25 77.9% 20 15

37.2% 5.9%

10 5

1.2% 56.8% 20.9%

0

Source: EPE (PDE 2019)

Gasoline

Ethanol

Flex Fuel

TOTAL DEMAND FOR ETHANOL PROSPECTS

70

64.0 1,7 1.7 60 9,9 9.9

Bilhões Litros billiondeliters

∆ 36.5 50

40 52.4 52,4

30 1,4 1.4 20

27.5 3.3 3,3 22.8 22,8

2009

2010

2011

2012

2013

2014

Domestic Demand forCarburante Fuel Ethanol Álcool Demanda Interna Source: EPE (PDE 2019)

2015

2016

Exports Exportação

2017

2018

Other Uses Outros Usos

2019

SUGAR CANE DEMAND PROSPECTS

million tons Milhões de Toneladas

1200 1000 800 600

270

278

287

297

306

315

325

400 200

415

453

489

533

2010

2011

2012

2013

574

614

654

2014

2015

2016

334

344

351

695

741

784

2017

2018

2019

0

Source: EPE (PDE 2019)

Sugar Cane foroEthanol Cana para etanol

Sugar Cane Cana paraforoFood açúcar

COGENERATION POTENCIAL FROM SUGAR CANE BAGASSE

Source: EPE (PDE 2019)

The estimated cogeneration potential in 2019 is about 89.1 TWh

20 BIOMASS THERMAL POWER PLANTS IN OPERATION [ 514 MW ] RESULT OF THE INCENTIVE PROGRAM FOR ALTERNATIVES SOURCES (PROINFA)

UTE Giasa II – 20 MW UTE JB – 33.2 MW UTE Cururipe – 16 MW UTE Iolando Leite - 5 MW UTE Goiasa – 42.52 MW UTE Jalles Machado – 12 MW

UTE S. Terez. Tapejara – 48.1 MW UTE Winimport – 7 MW UTE Usaciga – 40 MW UTE Ecoluz – 10 MW

Sources: Aneel, Eletrobrás and MME

UTE Jitituba Sto. Antonio – 15 MW UTE Volta Grande – 30 MW UTE Água Bonita – 15.8 MW UTE Canaã – 30 MW UTE Cerradinho – 50 MW UTE Mandu – 20.2 MW UTE Maracaí – 36.82 MW UTE Pioneiros – 28.4 MW UTE Ruette – 24.4 MW UTE Fartura – 29.9 MW

58 BIOMASS THERMAL POWER PLANTS [3,515 MW] RESULTS OF NEW ENERGY AUCTIONS 2005-2009 1st New Energy Auction 2nd New Energy Auction

UTE BEN Bioenergia; 30 MW

3rd New Energy Auction 1st Alternative Energy Auction

UTE Baía Formosa; 32 MW

1st Reserve Auction 7th New Energy Auction 8th New Energy Auction (*) Capacity Expansion

UTE Costa Pinto; 66 MW

UTE Paraúna; 114 MW

UTE Rafard; 43 MW

UTE Interlagos; 40 MW

UTE Colorado; 34 MW

UTE São José; 50 MW

UTE Santa Isabel; 40 MW

UTE S. João Biogás; 20 MW

UTE Quata; 54 MW

UTE Bonfim; 41 MW

UTE Ferrari; 27 MW

UTE Florida Paulista; 55 MW

UTE S. João B. Vista; 70 MW

UTE Pioneiros 2; 50 MW

UTE Sta. Cruz AB 1; 25 MW

UTE Sta. Cruz AB 2; 25 MW

UTE Ester; 30 MW

UTE Iacanga; 12 MW

UTE Morro Velho; 73 MW

UTE Clealco Queiroz; 35 MW

UTE Cocal 2; 160 MW

UTE Jataí; 105 MW

UTE Ferrari (*); 35 MW

UTE São Luiz; 70 MW

UTE Barra Bioen.; 136 MW

UTE Bonfim (*); 45 MW

UTE Biopav 2; 140 MW

UTE Rio Brilhante 1; 40 MW UTE Rio Brilhante 2; 50 MW

UTE Alto Taquari; 73 MW

UTE Angélica; 32 MW

UTE Quirinópolis; 40 MW

UTE Costa Rica; 73 MW

UTE Quirinópolis (*); 40 MW

UTE Chapadão; 192 MW

UTE Água Emendada; 73 MW

UTE Santa Luzia 1; 130 MW

UTE Cia Bio Brasileira; 18 MW

UTE S. Fernando; 48 MW

UTE Boa Vista; 80 MW

UTE Lagoa Prata 1; 40 MW

UTE Porto das Águas; 70 MW

UTE Lagoa Prata 2; 20 MW

UTE Caçu I; 130 MW

UTE Conq. Pontal; 100 MW

UTE Vale Paracatu; 80 MW

UTE Tropical Bio. 2; 85 MW

UTE Dest. Andrade; 33 MW

UTE Decasa; 70 MW

UTE Vale S. Simão; 50 MW

UTE Cach. Dourada; 80 MW

UTE Noble Energia; 30 MW

UTE NO Paulista; 60 MW

UTE Vale do Tijuco; 45 MW

UTE Codora; 48 MW

UTE Xanxerê; 30 MW

WIND

BRAZILIAN WIND POWER POTENTIAL

Estimated Potential (CEPEL-2001) 143.5 GW - 50 m towers -

GREATER POTENTIAL

The estimated generation potential is about 271 TWh, as much as 53% of the actual electricity supply in Brazil [ 509 TWh ]

SECOND RESERVE AUCTION - WIND (2009)  Date

December 14th, 2009

 Registration for the Auction

13,341 MW / 441 projects

 Initial Price

108 US$/MWh

 Medium Price

84.8 US$/MWh (21.5% discount)

 Operation

Until July 1st, 2012

 Contracts

20 years

 Capacity

1,806 MW

 Energy

6.9 TWh

 Projects

71

 Total amount transacted

11.2 US$ billion 1 US$ = 1.75 R$

SECOND RESERVE AUCTION - WIND (2009)

number capacity of (MW) blades

location

number of projects

number of wind turbines

BA

18

255

765

390

1.6

46.4%

CE

21

295

885

543

2.0

41.6%

RN

23

361

1,083

657

2.6

45.3%

RS

8

108

324

186

0.6

38.3%

SE

1

17

51

30

0.1

35.0%

TOTAL

71

1,036

3,108

1,806

6.9

Cfmed = 43.5%

Source: EPE

energy (TWh)

capacity factor (%)

WE STARTED TO USE OUR WIND POWER POTENTIAL

1,436 MW

1,436 MW

22 MW

3,241 MW

Evolution of installed capacity in Brazil, 2003-2012

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sources: Electricity Atlas, 2nd ed.. Brasília: ANEEL, 2005, Global Wind 2009 Report GWEC 2010 and EPE (PDE 2019).

THIRD RESERVE AUCTION – RENEWABLE SOURCES (2010)  Registration for the Auction Source

Projects

Capacity (MW)

Wind Power Plants

399

10,569

Small Hydro Power Plants

18

255

Biomass – sugar cane bagasse

55

3,518

Biomass – wood waste

2

57

Biomass – other sources

4

131

478

14,529

Total Source: EPE

NATIONAL ENERGY EXPANSION PLAN FROM 2010 TO 2019

ALTERNATIVE RENEWABLE POWER EXPANSION - 2010-2019 14,655 MW Expansão de2010-2019 Fontes Alternativas (SIN) Biomass Biomassa 5.4 GW 5,4 GW 37% 37%

FONTE:  EPE.

Small Hydro

PCH 3.9 GW 3,9 GW 27% 27%

Eólica Wind 5,3 5.3 GWGW 36%36%

Source : EPE (PDE 2019)

NATIONAL POWER CAPACITY EXPANSION - 2010-2019 63,482 MW

Alternative Renewable Uranium

14,655 MW - 23.1% 1,405 MW - 2.2%

Fossil Fuel

12,175 MW - 19.2%

Hydro

35,247 MW - 55.5%

Source: EPE (PDE 2019)

63,482 MW

EVOLUTION OF THE GENERATION SOURCES SHARE ON ELECTRIC POWER SUPPLY STRUCTURE

Generation Sources Participation

Participação das Fontes (% Potência  (% ofInstalada) national capacity)

RENEWABLES FONTES RENOVÁVEIS

THERMAL UTE

NUCLEAR NUCLEAR

90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

2010  FONTE:  EPE. Source: EPE (PDE 2019)

2011 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

ENERGY SUPPLY STRUCTURE PROSPECTS

Sugar Cane 20.3%

Other  Renewables 3.2%

2010 Oil 35.0%

2019 Firewood and  Charcoal Hydraulic Uranium (U3O8) 10.8% Coal 14.0% 1.4% 5.5%

Natural Gas 9.8%

Firewood and  Charcoal 9.9% Source: EPE (PDE 2019)

Sugar Cane 21.5%

Hydraulic 12.7%

Other  Renewables 3.7%

Uranium  (U3O8)  1.5%

Oil 31.0%

Coal 7.4%

Natural Gas 12.2%

QUALITY OF THE ENERGY MATRIX RENEWABLE X NON-RENEWABLE

Source: EPE (PDE 2019)

(Energy Research Office)

Ministry of Mines and Energy