Brazil set to widen lead as cleanest major power sector

A view of the Furnas hydroelectric dam, running at only 15 percent of capacity due to low water levels, according to the dam's operator, in the city of Sao Jose da Barra in the state of Minas

Brazil generated nearly 93 percent of its electricity from clean sources during the first nine months of 2023, up more than 2 percentage points from the same period in 2022 and the largest clean-power share among major economies.

France has historically boasted the cleanest power sector among top economies, but has lost ground to Brazil over the past year or so due to reduced nuclear power output in France and sharp increases in solar and wind generation in Brazil, data from the Ember think tank shows.

Green energy capacity growth in 2023 will extend Brazil's lead, revealing that it is possible to boost both clean and total power generation despite economic headwinds in the form of rising interest rates, patchy consumer demand and strained supply chains.

SOLAR OUTSHINES HYDRO

Brazil's massive hydro power facilities have formed the backbone of its energy system for decades, and hydro accounts for about 68% of its total electricity generation in 2023.

But the chief source of renewable power growth has been the solar sector, which boosted electricity output by more than 75 percent over the first 9 months of 2023 from the same period in 2022.

Total Brazilian photovoltaic solar capacity has surpassed 30 gigawatts (GW) this year thanks to 4.4 GW of new capacity that has entered operation since January, according to the National Electric Energy Agency (Aneel).

Solar power accounted for 6.8 percent of Brazil's electricity generation in 2023, up from about 4.2 percent in 2022, according to Ember.

Alongside greater output from wind farms - which lifted output by nearly 18 percent through September from the same period in 2022 - higher solar output allowed Brazil's power producers to lift total electricity generation by 4 percent in 2023.

REGIONAL AND GLOBAL IMPACT

The roughly 483 terawatt hours of electricity produced through September is a record, and marks a more than 17.5 percent expansion in total Brazilian electricity generation during that period since 2018.

That expansion in electricity output has significant domestic and international repercussions.

At home, higher electricity supplies have helped meet increased power demand from homes and businesses, not just across Brazil but also in Argentina due to Brazil's ability to export electricity.

Brazil's relentless expansion to clean energy generation capacity is also supportive of regional efforts to lift green energy supplies, as Brazilian firms engaged in renewable power production share manpower and expertise throughout Latin America in an effort to build regional market share.

On the global stage, Brazil's ability to lift both clean and total electricity output contrasts with key power systems in Europe, where total power output has declined due to restricted fossil fuel supplies, emissions curbs and output dips from outdated production infrastructure.

The proportion of clean energy flowing through Europe's grids has increased this year to new highs, thanks to speedy expansion of wind and solar capacity in most countries.

But overall power generation in key European economies such as Germany remains well below peaks seen around 2018-19, as power generators face shortages of key power fuels such as natural gas in the wake of Russia's invasion of Ukraine.

In turn, restricted power output has kept energy costs elevated above long-term averages, which curbed consumption from energy-intensive industries and hobbled overall economic growth.

Europe's power producers have also been hit by sharply rising interest rates, which have lifted the costs of energy infrastructure projects while reducing consumer purchasing power.

But Brazil's businesses and consumers have also endured a sharp climb in overall interest rates in recent years, and have managed to record steady power capacity growth despite them.

In addition, Brazil's import costs of key renewable energy parts such as solar panels and wind turbines frequently run higher than for markets in Europe, which benefit from shorter supply chains to manufacturers in Asia and greater pricing power due to the number of large economies in the region.

The fact that Brazil's power sector has managed to overcome those challenges to create a world-leading clean power sector may offer counterparts in other regions clues on how to maintain growth rates.

Brazil's new position as the cleanest major power sector may also help challenge assumptions that clean power expertise is concentrated in wealthier economies, and may widen the perspective of power sector developers who are trying to map out energy system expansion plans over coming years.

The opinions expressed here are those of the author, a columnist for Reuters.