1 ensuring sustainable access for the poor through internal revenue generation - electricity"...

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“Ensuring sustainable access for the poor through internal revenue

generation - electricity"

André Felipe SimõesD.Sc. Researcher

Centro Clima/COPPE/UFRJ.

Visitant Professor at Unicamp.

Multi-stakeholder consultations on “Financing access to basic utilities for all”

Brasilia, 11-13 December 2006

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Poverty Definitions Sachs (2004): the poverty concept

developed over time;

In the medium age the poverty was analyzed as a matter of access to land;

Actually, poverty is also associated to the lack of access to the land, more precisely access to home (McAuslan, 1987) and not to the land as supplying of goods;

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Poverty Definitions In the decade of 1940 the definition of global

poverty was based on the comparison among levels of joined national incomes and there was a hierarchization of the countries second a line of defined poverty;

Starting from the decade of 1970 a subjective dimension appeared purely as alternative to that dimension quantitative. The form as each one considers, in terms that to feel or not poor, it started to be incorporate.

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Poverty and Energy

Many are the poverty definitions, what results in different articulations between poverty and access

to the energy.

However, in any modern definition, poverty reduction is linked with expansion of the access to the energy (and considering the Global Climate

Change…access to the clean energy, whenever possible).

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Poverty and Energy Although the consumption of energy is not an absolute

indicator of life quality, due to possible inefficient and unsustainable use, it can indicate some important differences among areas in terms of wealth patterns;

In fact, great differences exist among developed countries and in development countries in terms of social - economical indicators and energy consumption.

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Poverty and EnergyPopulatio

n(million)

GDP/Pop(US$/capita)

Electricity Consumption(kWh/capita)

Brazil

164 4.9 1,969.5

USA 268 30.3 12,235.1

China

1,244 0.7 768.5

India 966 0.4 411.0

Africa

731 0.6 478.8

(Source: EIA,2000)

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Poverty and Electric Power Nowadays, exists a consensus in Brazil as

for the imperative need to supply electric power for the whole population as a basic public service;

This is a more general politics thrown by government institutions, financial and business in international level that it impels the subject internally to the developing countries.

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Poverty and Electric Power Aggregated data to 2000 show the number of people

without access to the electricity in the world: 1,64 billion or 27% of the world population;

More than 99% of the population without electricity inhabit developing countries and 4/5 of this population lives in rural areas;

The World Bank esteems that the percentile of people without electricity was reduced from 51% in 1970 to 41% in 1990. However, in absolute terms, the numbers are 1.9 billion in 1970 and 2 billion in 1990.

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Poverty and Electric Power While many efforts have been driven in the rural

areas, the access to the electricity to the poor of the urban area has not been deserving the same attention;

The growth of the urban areas in the world was quite expressive in the last 50 years. While only 30% of the world population lived in urban areas in 1950, in 2000 this percentile one already reached the landing of 47%, and it is waited that is of 60% in 2030 (Molina & Molina, 2004);

The growth of the cities, in general, it is accompanied by the growth of the urban poverty and, consequently, of illegal establishments. Nowadays, 40% of the poor of the world live at slums.

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Poverty and Electric Power The connection in urban area, on average, is 7

times cheaper than in rural areas due to the largest proximity between the homes and the electric net.

This aspect also has the negative side. The proximity with the net of low tension can cart great losses for the electric system.

These losses no-techniques include illegal connections, interferences in the meters and damages in the readers of measures, besides no payment of the tariffs.

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Poverty and Electric Power: Brazil

The Northeast area presents about 30% of the population of the country and the lowest per capita domestic consumption (262 kWh/cap in 1999);

The Southeast area with about 42% of the population and area of larger industrial development, presents the highest per capita consumption (678 kWh/cap in 1999).

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Poverty and Electric Power: Brazil While the almost totality of the urban homes in Brazil is

assisted by the electric power service, 2,113,276 of rural homes are not it, according to the Demographic Census of IBGE (2000);

About 10.3 million Brazilians live without access to the electricity. This contingent is dispersed, in majority, in a dispersed way and in rural and isolated areas;

Such a characteristic the dealerships of energy, in general, are not interested in the installment of the service, given the prolongation difficulty of the existent net at bearable costs and in technically appropriate way .

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Poverty and Electric Power: Brazil

The access to electric power services in Brazil developed, if measured as

covering of homes, from 89% in 1992, to 96% in 2001 (MME, 2003).

It must emphasize the significant variations among areas different from the country in

the subject of the electricity access.

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Poverty and Electric Power: Brazil The subject of the access to the electricity in Brazil is

more flagrant in the rural areas (71% homes possess access) than in the urban areas (99% homes possess access).

It is also possible to verify that the North and Northeast areas responds for the worst access levels.

Not for coincidence, such areas are also the ones that

register the worst Human Development Index (HDI) of all of the Brazilian area

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Trends in ElectrificationAccess Level at Brazilian Regions

Versus HDI

Northeast South Southeast

Brazilian Geographic Regions Middle-West North

HDI

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Tends in Electrification: Evolution in the Rural (IBGE, 2001)

BRAZIL

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Trends in Electrification: Evolution in the Urban Areas (IBGE, 2001)

BRAZIL

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Map of Electrical Exclusion

500.0002006

600.0002007 e 2008

500.0002005

400.0002004

500.0002006

600.0002007 e 2008

500.0002005

400.0002004

INDEX OF SERVICE HDI

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Poverty and Electrification in

BrazilThe people without access to electricity are located,

in largest part, in the areas of smaller of Human Development Index and in the families of low

income.

About 90% of these families have income inferior to three minimum wage and 80% are in the rural

way.

There is a close relationship between poverty and energy access in Brazil

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Poverty and Electrification in Brazil

The decentralization of the energy generation appears as one of the viable solutions for the problem, because it presents the option of use of the local resources for the electricity generation, besides the flexibility of energy supply in small climbs, favorable to serve also to the demand for energy in small it climbs;

In such context, it is considerable the Brazilian potential of use of renewable resources with base in national technologies for the decentralized service of energy.

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Poverty and Electrification in Brazil

The access to the energy through renewable and alternative sources such as PV panels,

aeolian generators, among other technologies, and the approach of programs with emphasis in decentralized energies, it

has been object of several nets in international extent (Iike GNESD Project, for

instance) and it has been serving as a opening market for technologies developed

in industrialized countries.

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GNESD – Global Network on Energy for Sustainable Development

(http://www.gnesd.org) Facilited by UNEP; Knowkedge network of industrialized (Germany,

Netherlands, France, Sweden, Denmark, UK, USA, Japan, ...) and development world (Brazil, South Africa, Senegal, Kenya, Argentina, India, Lebanon, China, ...);

Brazilian Team: Centro Clima/COPPE/ UFRJ (Emilio Lèbre La Rovere - Head, André Felipe Simões, Tatiana Lauria) and CENBIO/USP (José Goldemberg - Head, Suani Coelho - Head, Patricia Guardabassi).

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Electrification in Brazil and Sutainable Development

• The use of technologies returned to the implementation of systems of electric generation based in renewable energies is especially important to provide off-grid access off-grid to electric power services for the poorest layers of the Brazilian population.

Renewable energy is a basic ingredient for the sustainable development

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Renewable Energy in Brazil

Renewable Energy (RE) is a basic ingredient for sustainable development

The use of Renewable Energy Technologies (RETs) in Brazil are specially important to provide off-grid energy access for the poor

Diesel in isolated systems (mainly Amazon) RE means:

Dependence (people cannot afford to buy diesel oil);

Pollutant and carbon emissions (carbon market Kyoto Protocol).

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Renewable Energy in Brazil

Its necessary to define the role of RE (mainly biomass) in the universal access process

Obstacles to RETs (mainly in off-grid systems):• Technical barriers not so significant (matter of

adapting technologies)• Political and institutional barriers significant (PROINFA

is addressed only to grid systems)• Financial and economic barriers most significant (high

initial costs and the production of small scale systemsTo overcome these barriers:• a market of minimum size equipment is essential;• projects including energy access and sustainable

development activities.

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Government Policy

Universalization of the access to the electricity (Resolution ANEEL 223, May 2003)

Discounts for low-income population and survival of distributors

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Government Policy

Universalization - LUZ PARA TODOS (LIGHT FOR ALL) main action returned to the poverty reduction through electric power provision;

Decree 4,873 November 11, 2003 : creates the LIGHT FOR ALL Program (that includes previous programs and of same philosophy: PRODEEM and Light in the Field) ;

It advances national goals for 2008 ; Financing sources: CDE (Bill of Energy Development)

and RGR (Reserves Global of Reversion) as economical subsidy and resources of the states and of the executive agents

Budget = US$ 3.5 billions (Executive Agent 14%, State and Municipal districts 14%, Federal Govern Federal 72%: subsidy and financing).

•

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Government Policy

• Bill of Energy Development (CDE) it is a sectorial responsibility, established in law, and paid by the distribution companies, whose annual value is fastened by ANEEL with the purpose of providing resources for the energy development of the states, to make possible the competitiveness of the electric power produced starting from aeolian sources (wind), small hydro plants (SHPs), biomass, natural gas and mineral coal in the areas assisted by the interlinked electric systems, and to take the electric power service to all the consumers of the national territory (universalization).

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Government Policy• RGR - Reserves Global of Reversion it is a responsibility of

the Brazilian electric sector paid monthly by the concessionary companies of generation, transmission and electric power distribution, with the purpose of providing resources for reversion of the public services of electric power. The RGR, also, has legal destination to finance the expansion and improvement of those services, as well as to finance alternative sources of electric power such an as those constant of PROINFA, for inventory studies and viability of uses of new hydraulic potentials, and to develop and to implant programs and projects destined to the combat to the waste and efficient use of the electric power. THE RGR annual value is equal to 2.5% of the investments made by the dealership in assets linked to the installment of the electricity service, and is limited to 3.0% of it’s annual income.

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Government Policy

Low-income population:

The consumers' of low-income definition in the extent of the Law 10,438 includes all the

consumers with a monthly consumption of up to 80 kWh/month, and those that

consume between 80 and 220 kWh/month, registered in social programs and below certain defined regional limit for ANEEL (National Agengy of Electric Power) .

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Government Policy on RE• Interconnected System Law 10438/02

determined the Incentive Program for Alternative Electric Generation Sources (PROINFA) incentives to wind, small hydro, biomass thermoelectric plants

PROINFA Objectives:

• 3,300 MW from RE until 2006

• Second phase: 10% of alternative renewable sources for electricity production in the next 20 years

• 15 years guaranteed electricity purchasing contracts with ELETROBRAS

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PROINFA: Electricity Purchase Prices

RET R$/MWh (considering a exchange tax of US$ 1.00 =

R$ 2.2)

Small hydropower plant 117.02

Wind energy 180.18 – 204.35

Biomass  

Sugarcane 93.77

Wood residues 103.20

Rice husks 101.35

Landfill biogas 169.08

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Government Policy on RE

Off-grid Systems The CCC (Fuel Consumption Account) policy, expanded

for renewable energy sources

this policy in fact can collaborate to expand the energy access in isolated

communities

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Geographical targeting for RE

Interlinked system (energy access in general)

Wind: 23 MW = installed 28,900 MW = potential (mainly in the coastal

of the Northeast region) (39-84 US$/MWh) Biomass: 992 MW installed (159 biomass

– based thermoelectric plants, mainly in São Paulo State)

Small hydro (less than 30 MW): 1.2 GW installed in 242 plants; 3.5 GW = potential

Isolated / rural communities

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Geographical targeting for RE

Isolated (remote systems) Vegetable oils Amazon region

enormous diversity of native oil plants environment and social advantages CCC can make some projects economic feasible

Biomass residues substitutes fossil based generation in isolated regions (mainly Amazon region)

PV 3 MW installed 34 MW until 2024 higher radiation in the Northeast ( 260 Wh/m² in Rio São Francisco Valley)

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Candidate RETs for Electrification of the Poor Isolated Systems (Biomass,

SHP and PV Systems)

CCC subsidies US$ 85/MWh only biomass and SHP appears as potential candidates (under economic aspects).

Despite high generation costs, PV systems appears as solution where no other sources are available.

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Comparison between different RETs for remote areas

RET Fuel Current

situation MW

Potential MW

Installation

Cost Generation Cost US$/

MWh

Biomass Wood / Agriculture residues

14 170 US$/kW 38.68

  Vegetable oil

0.2 36 1,150.00 (imported)

88

Small Hydropower Plants

9,456 235.00 2.4

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Global Prospects for RETs

The most significant prospects to increase energy access in isolated systems include the use of renewable energy sources solar PV, biomass and SHP local resources, lower environment impacts, higher energy independence, more jobs, economic revenues.

In agree with the decisions from the WSSD – World Summit on Sustainable Development.

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Final Considerations

As the use of technologies for renewable energies induces to the reduction in the

emissions of GEE, there are several possibilities for obtaining resources through the international market of carbon credits of

carbon.

The government performance tends to be decisive in the process of reception of

resources through the CDM (Clean Development Mechanism).

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Final Considerations

In the short, in the medium and in the long period, the interns generation of incomes, proportionate by the electric power tariffs to the consumers, from middles of the nineties, became insufficient to finance the expansion of the offer and to mitigate in an effective way the electric exclusion.

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Final Considerations

In Brazil there is a great market for the net extension and also for the use of technologies for renewable energies in off-grid systems.

However, the expansion of those markets will depend on a more efficient system of information.

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Final Considerations MDG represents an international pact to

eliminate the poverty. The subject of the access to the electric power is a fundamental point that it permeates all of the constant initiatives in the objectives of the Millennium;

Without access the energy the populations

don't have accesses to productive way that join income, to techniques that guarantee the environmental sustainability, education, and adequate health treatment.

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Final Considerations The covering of public services and the development

indicators in Brazil and in Latin America got better in the last two decades. This expansion was accompanied of changes in the level and in the composition of the expenses.

In the case of the social services, the alterations resulted of a considerable increase of the public resources.

While in the infrastructure – such as telecommunications, water and electricity – there was reduction in the investment and the private financing started to be fundamental.

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Electricity = promotion of human development!

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Electricity = promotion of human development!

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Thank You !

André Felipe Simões,

andre@lima.coppe.ufrj.br

afsimoes@fem.unicamp.br