Energy for Brazil

The vast majority of Brazil's energy already comes from hydropower and they're looking to add the world's third largest hydropower project. The cast of Avatar has been protesting in the Amazon, but the auction went ahead this week, and the Belo Monte project will be built.

The fundamental question is how to walk the line among environmental preservation, forcible relocations and economic development. Some of the fundamental problems with developing hydropower in the Amazon are that in many places the river carries quite a large load of silt, which will eventually diminish the power generation, and that because the Amazon is so far from where the power will be consumed, the line losses in transmission can be 20-30%.

Brazil’s rapidly growing economy needs more energy, preferably renewable. The scale of the dam—it will be the world’s third-largest hydroelectric station after China’s Three Gorges and Brazil’s own Itaipu—is epic. So is the investment, of at least 19 billion reais (nearly $11 billion). But ever since the engineers in Brasília rolled out the blueprints for damming the Xingu two decades ago, the project has attracted powerful opposition.

Environmental groups and river dwellers say Belo Monte will flood vast patches of rainforest while desiccating others. “The forest is our butcher shop, the river is our market,” Indian leaders wrote in a newspaper. They were aided by greens from Europe and the United States, including the tribes of Hollywood. James Cameron, a film director, flew in to daub his face in red paint, hug an Indian and join the protest...

Yet greens were not alone in their lack of enthusiasm for the project. Some of the country’s leading builders, such as Odebrecht and Camargo Corrêa, pulled out of the auction, convinced that the government-dictated power rates, capped at 83 reais ($47) per megawatt-hour, were too low to assure a fair return on their investment. (The winning consortium offered a slightly lower rate.) The government had to pledge billions of dollars in soft loans and tax breaks to lure bidders. Even so, two firms in the winning consortium immediately dropped out, apparently because they thought the tariff too low.

Not since a military government quartered the Amazon basin with roads, dams and settlements in the 1970s has Brazil seen such a row over the rainforest. Ironically, Belo Monte is a project shaped by the lessons of the past, drawn and redrawn to cull the power of the forests without razing them. That challenge—developing the wilds and having them too—is in many ways the riddle of modern Brazil. The rest of the developing world is watching closely to see whether it can be solved.

A generation ago similar protests over an earlier version of the same dam—known then as Kararao—forced officials to rethink their strategy. They came up with Belo Monte. It was not just a marketing ploy. Instead of building a great wall across the Xingu to create a massive reservoir, Belo Monte is designed as a run-of-river dam, a technique that harnesses the natural flow of the river to drive the turbines. [economist.com]