A role for gas in renewables-rich Brazil
Inside Energy

A role for gas in renewables-rich Brazil

Brazil can tap an abundance of renewable energy resources, but with the country’s energy demand expected to double in 20 years, the use of natural gas for power is increasingly in the mix.

By Thomas Francis on Apr 7, 2021

Brazil boasts one of the world’s most enviable bounties of renewable power – it is flush with hydroelectric, wind and solar resources.

But adverse weather like droughts can reduce supply from hydroelectric plants, which account for roughly two-thirds of the power grid’s output.

Now the country is turning to natural gas to add stability and flexibility to power supplies for economic growth.

Marlim Azul, on track to start operations in early 2023, will be the first of a number of power plants fuelled by home-produced gas due to come online over this decade. The joint venture, called Arke Energia, consists of Shell, Mitsubishi and the Brazilian private equity firm Patria Investimentos. The plant will draw its gas from oil fields off the Atlantic coast, where production has been growing rapidly over the past decade.

Much of this gas is currently reinjected into offshore wells to increase oil production, or collected by the national oil company, Petrobras, to be burned for power in ageing thermoelectric plants. This power is then sold chiefly to industrial facilities.

The 565-megawatt Marlim Azul – located in Macaé about 200 kilometres north of the city of Rio de Janeiro – will provide enough power to supply around 2 million people.

“Of course we’re concerned about carbon dioxide emissions in Brazil,” says Thiago Ivanoski, who works for EPE, a state-owned energy research agency that advises the national government on energy investment and planning. “But our main concern is ensuring that our electricity system is reliable, flexible and technically robust – and natural gas is a good match for that role.”

EPE’s analysis is driven in part by the likelihood that continued economic growth will drive more demand for electricity in Brazil.

The Brazilian Ministry of Mines and Energy says demand for power in Brazil has nearly doubled over the last 20 years, and it is expected to double again over the next 20 years as the population of 220 million grows. More families are seeking modern conveniences – currently only 40% of Brazilian households have air conditioning. Today the per-capita energy consumption of Brazil is only half that of Spain and one-fifth of the USA.

Solar remains Brazil’s fastest-growing energy source, with natural gas second. Solar supply is expected to grow six-fold by the end of this decade, while gas is expected to nearly triple, according to a 10-year energy expansion plan EPE outlined for the Brazilian government. Wind power is also expected to grow significantly, but at a rate slightly behind natural gas.

The Marlim Azul site lies north of Rio and will begin supplying power in 2023.
The Marlim Azul site lies north of Rio and will begin supplying power in 2023.

The south-eastern location of the Marlim Azul site – which is designed to allow room for a second and third plant, if need be – puts it closer to cities where demand is concentrated, like Rio de Janeiro and São Paulo. This reduces the need to build more transmission lines for carrying power across vast distances from areas of high wind, hydro and solar supply, in the north, which would bring energy losses while increasing costs and the risk of outages

It also is likely to displace sources of power generation that cause more carbon emissions.

“When there isn’t enough power being generated to keep pace with demand, it triggers generation from power plants that burn imported natural gas, fuel oil and diesel fuel,” says Guilherme Perdigao, who manages the Renewables and Energy Solutions portfolio for Shell Brazil.

“But since Marlim Azul will access a domestic supply of gas and channel it through an ultra-efficient turbine, it will deliver power more reliably, at a cheaper price and with fewer carbon dioxide emissions.”

José Eduardo Carramenha, a long-time Petrobras engineer now working for Arke Energia to strengthen relationships with business partners and governments, says that the project is being warmly received locally, as the state of Macaé has suffered job losses due to demand slumps caused by the COVID-19 pandemic. The plant will employ some 1,500 workers at peak of construction.

“To have the Shell brand as part of the Marlim Azul venture, it brings confidence for energy customers as well as other companies,” says Carramenha, adding that investment from those other companies has provided a boost to the Macaé economy, which has traditionally been dependent on oil.

And for the country as a whole, the hope is that Marlim Azul is one step on the path to a more stable, more flexible power system.

“In other countries, they talk about getting rid of the old energy sources to make way for the new,” says Bruno Chavalier, CEO of Arke Energia. “But in Brazil, for what we need to complement all the intermittent renewable generation on our grid, natural gas is in the perfect position to play that role.”

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