“Hydro is treated as an evil” in Brazil, claims Furnas president
“Hydropower has become something of a curse that should not be mentioned” in Brazil, according to the boss of one of the country’s largest energy firms.
Speaking at the inaugural POWER-GEN Brasil conference and exhibition in Sau Paulo, Flavio Decat de Moura, president of Furnas, said: “Hydro is treated as an evil.”
He said it was viewed with suspicion and added that “we are losing this communications battle, yet hydro is clean and good”.
And he added that his company would be striving to win its share of all potential power business, hydro or otherwise.
Explaining that Furnas had suffered a BR$2bn ($908m) loss of revenue in 2012, he said: “We need to grow. We should be taking part in all OEM tenders in Brazil – it’s a fantastic opportunity for us.”
He was delivering one of the keynote speeches at POWER-GEN Brasil, which this year made its debut alongside established shows HydroVision Brasil and Distributech Brasil. Together, the three events boasted 144 exhibitors, 40 conference sessions and 162 speakers from 15 countries.
The contribution that hydro and other renewable forms of power can make to Brazil’s bid to decarbonize its energy sector was emphasized.
Britaldo Soares, president of Brazil’s AES group, said that “sustainability is not a topic that we discuss of the sidelines”, stating that it was at the heart of all talks in every part of the business. He said the future for Brazil’s energy make-up was a hydro-gas mix: “We have to strike a balance.”
And Sao Paulo energy secretary Jose Anibal talked up wind power, saying that the state had a potential of 4734 MW and harboured ambitions to emulate Germany’s scale of wind farm development.
He added that to help drive this ambition, current tax exemptions for wind were being extended to 2020.
Brazil must “reopen nuclear discussion” says Alstom boss
Brazil must diversify its “fragile” energy mix by utilizing more renewables and embracing both gas and nuclear, according to a boss at French engineering giant Alstom.
Roberto Miranda, Alstom’s global power sales director, said the country’s hydropower industry would come to have “shrinking participation in a more fragile system”.
He stressed that now was the time to plan for the future, adding that “the Brazilian industry is well poised to support this growth”.
Speaking on the first day of conference sessions at POWER-GEN Brasil, Miranda said: “It is very important that we reopen the nuclear discussion – we cannot postpone it any longer. Brazil should have a clear cut position on nuclear.”
He predicted that gas would “become indispensible: if we can switch-on/switch-off thermal plants, it will bring stability to the grid”.On renewables, he highlighted the dangers of allowing biomass to become the forgotten form of renewable generation: “We must have a stronghold in biomass. We must keep the industry alive – particularly because Brazil is so rich in agriculture.”
Wind, meanwhile, had “extraordinary potential”, Miranda said, not just as a further power source but also as a driver for economic development.
He told the audience that the renewables division of Alstom was the company’s “strongest arm in Brazil”, pulling in revenues of BR$4.9bn last year, which accounted for 7 per cent of Alstom’s global turnover.
Amazon is Brazil’s “last electric frontier”
The Amazon is Brazil’s “last electric frontier” and the government must ensure that it gives backing to power projects in the region, otherwise its energy potential will lie untapped.
That was the message at a special conference session at POWER-GEN Brasil in Sao Paulo.
Nivalde Jose de Castro, professor at Brazil’s Institute of Economics UFRJ, said 70 per cent of Brazil’s power potential was within the Amazon but added “you can’t cut off a tree branch without government support”.
He said private firms needed the backing – if need be, financial, in the form of a state stake – to be persuaded to go ahead with Amazonian projects, because without government support the opposition from environmental groups to power projects was too great.
He said that with the support of state electricity company Electrobras, “all the ongoing projects face huge challenges. I doubt that they will take off – there are too many barriers”.
Electrobras holds a 49.98 per cent stake in the consortium behind the 11,223 MW Belo Monte project currently under construction.
Primtech in Brazilian alliance with Figener
German energy software supplier Primtech has formed an alliance Brazilian engineering and consulting firm Figener.
The deal comes following a search by Primtech for a Latin American partner so it could break into Brazil’s booming market.
Speaking to PEi at POWER-GEN Brasil, Primtech’s Sabrina Heuser said: “Figener is our Gold Partner.
“That means they are a Primtech reseller, an authorised training centre and Primtech support centre.”
She explained: “Figener will use Primtech in their own projects. At the same time, they are a Primtech reseller and will do the Primtech sales in Brazil as well as give training and support to Primtech customers in Brazil.”
She also explained Primtech’s decision to choose Figener as its partner.
“Figener has experience as an engineering and consulting company in the power sector and in substation projects. They have been working in this field for several years.
“Additionally they have experience in selling software to the power sector and they are familiar in dealing with power and energy clients in Brazil and have Brazilian companies as customers.”
Algeria power deals help push GE to record order backlog of $229bn
The energy division of GE has helped push the US company to a record order backlog of $229bn.
Standout deals for the group in the third quarter of this year were a $1.9bn contract to supply Algeria’s Sonelgaz with power generation equipment and services for six new combined-cycle plants – one of the biggest power pacts in the company’s history.
GE also won an order of around $600m to provide turbomachinery equipment to Russia’s Yamal liquefied natural gas project.
Announcing its third quarter profits, GE revealed operating earnings of $3.7bn and net earnings of $3.2bn. Revenues were $35.7bn, down 1 per cent from the same period a year ago, driven by lower revenues in GE Capital due to planned asset reductions and a negative foreign exchange impact of $132m.
GE chairman Jeff Immelt (pictured above)was upbeat on the figures: “Our third-quarter results were very strong in an improving global business environment.
“Orders grew 19 per cent with growth around the world. Our industrial strength was broad based, with six of seven businesses growing earnings. As expected, our power and water business is strengthening in the second half of the year.”
In a company statement, GE used an alliance with China on electricity grids to highlight the breadth of its strategic goals.
The company formed a global partnership with XD Electric Group to offer high voltage transmission and distribution solutions and provide customers in China with localized grid automation equipment and services.
Immelt said: “This quarter we delivered on our major strategic goals for investors. We grew industrial segment profits 11 per cent with good margin expansion.”
He said with the record backlog of $229bn on its books, GE was “winning in the market and is well positioned for 2014”.
China leads growth as global switchgear market heads for $58bn
New research reveals that the global switchgear sector grew from $46.8bn in 2008 to $58.6bn in 2012, with China grabbing the biggest slice of market share.
Over the same period, the Chinese market increased from $7.7bn to $9.9bn, accounting for a total share of 16.9 per cent.
The report, from research and consulting firm GlobalData, reveals that low-voltage switchgears had the highest share of global revenue, with 49 per cent in 2012, while medium-voltage and high-voltage switchgears accounted for 36 per cent and 15 per cent respectively.
GlobalData says this is because, for a single high-voltage installation, multiple medium-voltage switchgears are deployed.
Sowmyavadhana Srinivasan, GlobalData’s senior power analyst, said growing installed capacity was a major driver of the market, and added that GlobalData expects installed capacity worldwide to increase from 5645 GW in 2012 to 7671 GW by 2020.
“Additionally, power is usually produced at a medium-voltage level and is then stepped up to a higher voltage for transportation over longer distances,” Srinivasan said. “As the number of generation units increases, the number of medium-voltage switchgears used also rises in generation as well as the distribution segment.”
The report states that another boost to the switchgear market is the substantial investment in transmission infrastructure, which will demand high-voltage switchgear devices in the future.
This would be followed by investments in both medium-voltage and low-voltage switchgears to ensure connectivity of the electricity to the end user.
“Developing countries such as China and India have introduced various initiatives in order to cater to the electricity demand that is being linked with rapid economic growth,” said Srinivasan.
“Ultra-high-voltage grids are expected to be the core focus of investment for transmission and distribution.”
Srinivasan added that “as urbanization and industrialization increase around the world, there is a substantial increase in infrastructure, which means heavier investment in the end-user segments for power which supports the growth of the low-voltage switchgear market”.
However, the report highlights that growth in prices of raw materials, such as copper, aluminium and steel, has directly increased the costs of transmission equipment, including high-voltage switchgear.
Additionally, the presence of a large number of companies, especially in India and China, has introduced competitive pricing pressure in the switchgear market.
“In the absence of much scope for product differentiation, pricing becomes an important criterion for gaining a market share,” Srinivasan explained.
“Multinationals are struggling to keep their costs and prices competitive in both emerging and developed markets in order to match competition from Chinese and Indian players.”
Worrying decline in global clean energy investment
Global investment in clean energy this year is on track to be significantly lower than it was in 2012, according to new figures.
Data reveals that total worldwide investment was $45.9bn in the third quarter of this year, down 14 per cent on the second quarter of the year and 20 per cent below the number for the third quarter of 2012.
If this trend carries on, the end-of-year investment total in renewables, smart grid, energy storage and electric vehicles will fall short of last year’s $281bn.
The report, compiled by Bloomberg New Energy Finance, said in the third quarter of this year there was “weakness almost across the board, with investment in China, the US and Europe all down on 2012’s equivalent period”.
The only region to show a rise in activity on both the quarter and the year was the Americas outside the US and Brazil, due to “firm figures” from Canada, Chile and Uruguay.
Michael Liebreich, chief executive of Bloomberg New Energy Finance, said: “After the slightly more promising second quarter, we now have a very disappointing third quarter figure for investment.”
He said that while $45.9bn was “still a substantial amount of money”, the “loss of momentum is worrying. The latest setback reflects policy uncertainty in Europe, the lure of cheap gas in the US, a levelling-off in wind and solar investment in China, and a general weakening of political will in major economies.
“Governments accept the world has a major problem with climate change but appear too engrossed in short-term domestic issues to take the decisive action needed.”
Overall clean energy investment declines were most noticeable in major countries. The US saw its total fall to $5.5bn in Q3 from $9.4bn in Q2, China was down at $13bn from $13.8bn, India was $1.2bn from $1.5bn, and Japan $7.3bn from $7.4bn. Brazil showed a modest rise, from $950m to $1.1bn.
In Europe, German investment was $1.6bn, down from $1.7bn in Q2; France saw a fall from $1.2bn in Q2 to $727m in Q3; Italy a modest rebound to $1.3bn from $1.2bn, and the UK “a somewhat bigger rally” from $1.6bn to $2.6bn.
Europe’s energy and utility firms “resilient” to economic woes
The European energy and utility market is proving “particularly resilient” to the economic downturn, according to analysis from consultants at EY (Ernst & Young).
In its annual sector survey for investment attractiveness, energy and utilities comes second only to information and communication technologies as a lure for investors and is ahead of the pharmaceutical and biotechnology industries.
The report states that there are two key drivers behind European investment – renewables and nuclear: in particular nuclear in the UK, which has attracted interest from France, China, Japan and Russia.
On renewables, the biggest investment decisions from the likes of RWE, Vattenfall, Dong Energy and EDF are being made in regard to offshore wind projects.
Looking to the future, EY says the European utility sector “has much to gain from further innovation in technology”.
The report quotes Hendrik Bourgeois, vice-president of European affairs for GE, who said: “The cost of energy is high in Europe, and natural gas is notably more expensive than in the US. We need to use technology to bring down costs. This includes extracting unconventional fuels in an environmentally sound manner.”
He added: “Europe also needs to continue to invest in renewable energies, such as wind, solar and biogas, and to build more interconnected and ‘smarter’ power grids.”
Marc Lhermitte, EY’s head of international location advisory services, said: “The crisis has led foreign investors to actively pursue scarce opportunities.
“Consequently, we have in fact witnessed an investment rebound in key destinations including the UK, Germany and Ireland, but also in Poland and Russia. Foreign investors are for the most part confident that Europe will weather these hard times, and emerge stronger and different.”
CCS could save UK £32bn in energy system costs
|The UK hopes to replicate the success of Vattenfall’s €70m pilot plant in Lausitz, Germany, which processes and stores its CO2 emissions
Successful commercial deployment of carbon capture and storage technology could save the UK £32bn ($51bn) in energy system costs by 2050.
George Day, head of economic strategy at the Energy Technologies Institute, told a CCS conference in London that the figure would be preceded by £13bn of savings in 2030 and £20bn by 2040.
However he stressed that to realise these savings, a total investment of £65bn in CCS would have to take place between now and 2050.
Earlier in the conference, which was organised and hosted by the Institute of Mechanical Engineers, delegates were told that Britain’s Electricity Market Reform – the new energy framework currently being driven through government – is “arguably the only model in the world that will facilitate CCS deployment”.
Luke Warren of the Carbon Capture and Storage Association said that for too long CCS had been “an orphan” within government, with no department looking to drive the technology to commercialization.
However, he said that the EMR – part of the government’s Energy Bill – offered the best chance yet to get projects off the drawing board into demonstration and then into commercialization.
But he stressed that the EMR framework would need to be adapted for CCS. Under EMR, each low carbon technology will have a contract for difference – a sum guaranteed by the government to be paid to power generators. But CfDs have been set up primarily for renewables and nuclear and Warren explained that “the cost structure for CCS is different so we will have to bend the CCS model”.
“The real test is whether government is willing to distort their design for CCS,” he added.
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