Toward Cleaner, Cheaper Power: Streamlined Licensing of Hydroelectric Projects in Brazil

Brazil is confronted with steadily increasing demands for electricity. The country has the ability to meet that demand by developing its considerable hydropower potential, but the regulatory process that governs the approval of new hydroelectric plants imposes unnecessary delays that push up project costs and increase uncertainty. The process, among other reasons, has created a shortage of investment in otherwise viable hydropower projects in favor of less efficient and more harmful technologies. Brazil's electricity sector serves roughly sixty million residential and commercial customers and generates revenues of US$20 billion. With demand growing at a rate of 4.4 percent annually, an additional 3,000 megawatts of generating power will be needed by 2015. The cost of the new power plants needed to provide that power is estimated at US$40 billion. Presently, five-sixths of the country's power needs are met by hydroelectric plants, though in recent years only half of the new plants receiving licenses to begin construction have been hydroelectric. The other half of the licenses have been issued for coal, diesel, and nuclear plants that provide electricity at higher unit costs than hydroelectric plants and have greater adverse effects on people and the environment. The seeming anomaly can be explained by the fact that the licensing process for thermal plants is simpler and more predictable than that for hydroelectric plants