Howard Geller, Marcos de Almeida, Marcos Lima, Geraldo Pimentel, and Antonio Pinhel
June 1999
Executive Summary
The government of Brazil established a national electricity conservation program known as PROCEL at the end of 1985. PROCEL, housed at Eletrobras, funds energy efficiency projects carried out by state and local utilities, state agencies, private companies, universities, and research institutes. Eletrobras/PROCEL also helps utilities obtain low-interest financing for major energy efficiency projects from a revolving loan fund within the electric sector. As of 1998, PROCEL's core budget for grants, staff, and consultants was approximately $20 million, with approximately $140 million per year going towards project financing.
Eletrobras/PROCEL estimates that its cumulative activities resulted in approximately 5.3 terawatt-hours per year (TWh/yr) of savings in 1998, equivalent to 1.8 percent of electricity use in Brazil. In addition, PROCEL took credit for approximately 1.4 TWh of additional power production due to power plant improvements that year. The electricity savings and additional generation enabled utilities to avoid constructing approximately 1,560 megawatts (MW) of new capacity, meaning approximately $3.1 billion of avoided investments in new power plants and transmission and distribution (T&D) facilities. In contrast, Eletrobras/PROCEL and its utility partners spent approximately $260 million on energy efficiency and power supply improvement projects during 1986-1998. Consequently, the overall benefit-cost ratio for the utility sector was 12:1.
Approximately 33 percent of the savings in 1998 were due to efficiency improvements in refrigerators, freezers, and air conditioners; approximately 31 percent from lighting efficiency improvements; 13 percent from installation of meters; 11 percent from motors projects; 8 percent from industrial programs; and 4 percent from other activities. In addition to the energy savings, PROCEL has contributed to the development and commercialization of various new technologies in Brazil. Moreover, PROCEL has produced environmental benefits by reducing the need for new power plants that are increasingly based on fossil fuels.
The importance of improving distribution and end-use efficiency has not been forgotten as Brazil undergoes utility sector restructuring. In July 1998, the new federal regulatory agency for the electric sector announced that it is requiring all distribution utilities to spend at least 1 percent of their revenues on energy efficiency improvements, with at least one-quarter of this amount (representing approximately $50 million per year) spent on end-use efficiency projects. This is leading to expansion of energy efficiency programs by most utilities. In addition, Eletrobras/PROCEL is seeking a $43 million loan from the World Bank and a complementary $20 million grant from the Global Environmental Facility (GEF) in order to increase its funding base and range of activities. These recent developments and other factors should help the growth of electricity savings in the coming years, thereby magnifying the benefits already achieved by PROCEL.
12pp., 1999, $11.00, I992
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