Favorable Environment for Free Contracting Sustains Natural Gas Power Plant Market in Brazil, Finds Frost & Sullivan The market in the country's northern region is expected to witness the highest growth
SAO PAULO, Feb. 26, 2013 /PRNewswire/ -- Climate change and droughts in Brazil will decrease the potential of hydroelectric energy and increase demand for energy from alternative sources, particularly thermoelectric energy from natural gas. Regulations favorable for free contracting will further boost the Brazilian natural gas power plant market.
New analysis from Frost & Sullivan (http://www.energy.frost.com), The Natural Gas Power Plant Market in Brazil, finds that the market earned revenues of more than $966.2 million in 2012 and estimates this to reach $1,211.0 million in 2017.
The implementation of free contracting regulations in Brazil will allow users to negotiate their own energy sources, providing an opportunity for natural gas power plants to become the primary source of alternative power for energy-intensive industries looking to reduce energy costs.
"Environmental concerns and high costs have compelled certain power plants to reconfigure power generation and shift from oil to natural gas, thereby broadening market scope," said Frost & Sullivan Energy and Environmental Leader Juliana Passadore. "Brazilian engineering's high degree of expertise, especially in thermoelectric power plants, reduces the time required for construction, and facilitates market expansion."
The country's northern region is expected to record the highest growth, although the mature markets in southern and central Brazil are expected to slow down considerably.
In fact, several plants have suspended operations owing to the unpredictable supply of natural gas, while others are operating with less than 50 percent of their installed capacity. This limited supply of natural gas, along with its high prices, leaves the outlook for natural gas plants uncertain and limits their competitive edge.
To sustain revenues, power plant operators in Brazil must build a complete vertical framework, from power generation to natural gas transportation. Access to raw materials and affordable production costs will differentiate them from competitors.
"The government's willingness to regulate and decrease the price of natural gas will popularize natural gas plants," concluded Passadore. "Incentives for market entrants will heighten the prospects for market development in the country."
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The Natural Gas Power Plant Market in Brazil
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