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energy transmission

Energy transmission infrastructure

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Energy transmission infrastructure

Compare IOA
Country
Brazil
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Utilities
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
5% - 10% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Auctioning of 52,000 km of transmission lines projected until 2022. (12)
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Affordable and Clean Energy (SDG 7)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Responsible Consumption and Production (SDG 12) Reduced Inequalities (SDG 10) Gender Equality (SDG 5) Decent Work and Economic Growth (SDG 8) Sustainable Cities and Communities (SDG 11) Climate Action (SDG 13)

Business Model Description

Provide project financing for large-scale energy transmission

Expected Impact

Expand transmission capacity to provide electricity to more Brazilians and enhance energy efficiency by reducing excess carbon emissions

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

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Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

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Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Brazil
Region
  • Brazil: Bahia
  • Brazil: Rio Grande do Norte
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Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
Brazil is held back by chronic underinvestment in infrastructure spending only 2.5% of GDP (2) This leads to critical structural inefficiencies: deficient existing transmission lines are responsible for a 20% energy loss (5); lack of investment in wastewater treatment is responsible for epidemics in over 1/3 of Brazilian households (6)

Policy priority
Infrastructure development is a top priority for the new administration, who has pledged to invest nearly US$ 50 billion in infrastructure in 2019 alone (vs. e.g., US$ 7 billion in 2018) (3) (4)

Gender inequalities and marginalization issues
Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7)

Investment opportunities introduction
New administration's infrastructure development pledge means closer collaboration with private investors (e.g., continuity of PPI program and concessions timeline from past to current administration)

Key bottlenecks introduction
Licensing, funding for land acquisitions, capital requirements

Sub Sector

Utilities

Development need
Blackouts and power outages have increased in frequency (8) across a country with one of the highest urbanization rates. The absence of effective energy transmission infrastructure keeps energy projects stalled e.g., over 10% of wind farms (1) Over 100M Brazilians have no access to wastewater management services and over 35M have no access to clean water (9)

Industry

Electric Utilities and Power Generators

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Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Energy transmission infrastructure

Business Model

Provide project financing for large-scale energy transmission

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Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Auctioning of 52,000 km of transmission lines projected until 2022. (12)

Between 2000-2013, over 55 thousand kilometers of transmission lines were auctioned, and another 52K kilometers are projected through 2022. The top transmission lines projects have generated an annual revenue of US$ ~100 thousand per kilometer of line (12)

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

5% - 10%

A market assessment showed an average IRR for studied projects of ~8% (12)

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

Construction takes an average of 1-4 years, but annual revenue is paid from year 1 since the concession contract establishes a fixed annual revenue paid by the energy producer (12)

Environmental regulations may take long to get, as well as to get environmental safety checks

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - Requires Subsidy

Investment has arrived at scale in the past, but public policy and incentives have focused more on generation than on improving distribution

Market - Highly Regulated

Environmental licenses may take long to get since transmission lines often cross protected lands. This may cause long delays, since funding disbursement is conditioned to the license's issue

Capital - CapEx Intensive

Most transmission projects need to acquire some land, yet BNDES loans do not include funding for land acquisitions, which poses a barrier to scalability
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Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Brazil's Northeast concentrates the largest transmission need. For instance, nearly 15% of windfarm projects in the Northeast have been paused due to transmission needs (10) (11) (13).

Large hydroelectric plants are the main energy suppliers to South and Southeastern consumers and have historically showcased large transmission deficiencies (12)

In addition to a lack of transmission capacity, deficient existing transmission lines are responsible for a 20% energy loss (10) The absence of effective energy transmission infrastructure keeps energy projects stalled e.g., over 10% of wind farms (1)

Gender & Marginalisation

"Poor access to core infrastructure services forces women to allocate a large fraction of their available time to family chores (7) "

Expected Development Outcome

Guarantee sufficient transmission capacity for energy generation to connect to the national grid and efficiently reach consumers and markets

Enhance energy efficiency and reduce excess carbon emissions by ensuring reliability of supply

Gender & Marginalisation

Improved access to infrastructure services may free women’s time in such a way that they could devote more time to building their own human capital (7)

Primary SDGs addressed

Affordable and Clean Energy (SDG 7)
7 - Affordable and Clean Energy

7.1.1 Proportion of population with access to electricity

7.3.1 Energy intensity measured in terms of primary energy and GDP

Current Value

100 % (2018) (18)

4.11 Megajoules per Constant 2011 Purchasing Power Parity GDP (2017) (19)

Target Value

100%

Target 7.3: By 2030, double the global rate of improvement in energy efficiency (19)

Secondary SDGs addressed

Responsible Consumption and Production (SDG 12)
12 - Responsible Consumption and Production
Reduced Inequalities (SDG 10)
10 - Reduced Inequalities
Gender Equality (SDG 5)
5 - Gender Equality
Decent Work and Economic Growth (SDG 8)
8 - Decent Work and Economic Growth
Sustainable Cities and Communities (SDG 11)
11 - Sustainable Cities and Communities
Climate Action (SDG 13)
13 - Climate Action

Directly impacted stakeholders

People

Energy consumers, including households and businesses, particularly those facing frequent blackouts/ power cuts

Indirectly impacted stakeholders

Planet

The environment, given improved transmission infrastructure reduces the risk of energy volatility and uneven use across the grid

Corporates

Energy generation plants that are either outside the grid or within the grid but lacking quality transmission capacity

Outcome Risks

While the model is based on good evidence, external factors such as delays in securing environmental licenses may affect project viability and impact

Since transmission lines need to go through large amounts of land, projects have potential for causing a loss in biodiversity, destruction of natural habitats and rural landscapes (12)

Impact Risks

External risk - due to factors such as delays in securing environmental licences disrupting ability to deliver intended impact

Unexpected impact risk: negative risk on environment and biodiversity due to transmission line constructions

Impact Classification

B—Benefit Stakeholders

What

Expanded transmission capacity could help provide electricity to more Brazilians and connect more electricity production plants to the grid

Who

Energy generating companies and energy consumers are underserved by the lack of transmission capacity

Risk

While the model is based on good evidence, external factors such as delays in securing environmental licenses may affect project viability and impact

Impact Thesis

Expand transmission capacity to provide electricity to more Brazilians and enhance energy efficiency by reducing excess carbon emissions

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Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Energy transmission is a renewed policy priority following Eletrosul's inability to complete a series of transmission projects mainly in Rio Grande do Sul. Projects for over 7K kilometers will be auctioned this year (14)

Financial Environment

Financial incentives: Brazilian Development Bank (BNDES) finances up to 80% of the project. Concessions are for 14 years (13)

Regulatory Environment

(Concession contracts): establish a fixed annual revenue for the transmission operation. Aneel is the promoter of the auction, and bids are for 35 years (12)

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Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

Electrobras Eletronorte, Eletrobras Fumas, Eletrobras Fumas, Eletrobras Chesf, Eletrobras Eletrosul, State Grid Corporation of China, CYMI, Abengoa, TAESA, ISA, Alupar (12)

Government

Brazilian Electricity Regulatory Agency (ANEEL), Brazilian Development Bank (BNDES)

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Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map

Brazil: Bahia

Brazil's Northeast concentrates the largest transmission need. For instance, nearly 15% of windfarm projects in the Northeast have been paused due to transmission needs (1) (2) (8).

Brazil: Rio Grande do Norte

Brazil's Northeast concentrates the largest transmission need. For instance, nearly 15% of windfarm projects in the Northeast have been paused due to transmission needs (1) (2) (8).
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References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.
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