Use renewable energy through distributed generation
Summary
Neutralizing GHG emissions from Iguá's electrical matrix using renewable energy from distributed generation.
Context
In 2022, renewable energy sources represented 87.9% of the Brazilian electrical matrix, according to data from the National Energy Balance (1). Still, the portion of energy generated through non-renewable sources is responsible for significant GHGs emissions contributing to climate change.
Due to the large volume of energy used in water supply and sewage systems, the country’s sanitation sector consumes a significant amount of energy. Consequently, in 2022 Iguá emitted more than 7,500t of CO2e, equivalent to about 10% of Igua’s total emissions.
Given this, the company wants to shift to using innovative technologies with lower environmental impacts. One of the solutions adopted is the implementation of distributed generation plants using renewable energy for the company's energy supply.
Solution
Distributed Generation (DG) is the generation of electrical energy carried out by consumers themselves, at or near points of consumption, and is valid for certain types of renewable sources.
This type of generation brings a series of benefits, including increased traceability of consumed energy and the reduction of technical losses related to transport over long distance, since energy generation and consumption are close together.
In an effort to reduce its impacts on the environment, Iguá has been using DG plants to partially supply electricity since 2019, starting with one small hydroelectric plant. In 2022, four photovoltaic generation plants commenced operations, with Iguá currently operating five distributed generation plants, including:
1. Águas Cuiabá
Source: CGH (Hydroelectric)
Installed power: 1,000 kW
2. Sanessol
Source: Photovoltaic
Installed power: 1,332 kWp
3. Águas Andradina
Source: Photovoltaic
Installed power: 856 kWp
3. ESAP
Source: Photovoltaic
Installed power: 459 kWp
4. Águas Castilho
Source: Photovoltaic
Installed power: 280 kWp
Together, the plants have an estimated annual generation of 12.5 GWh, equivalent to the annual consumption of around 6,250 Brazilian homes, according to data from the Energy Research Company (EPE) (2). With the plants installed, emissions were 7371tCO2e, versus 7623tCO2 before installing the plants. Therefore, Igua considers avoided emissions of around 250t in 2022.
The project supports the company in achieving SDG 7, contributing to increasing the share of renewable energy in the global energy matrix; and SDG 13, acting to reduce emissions in the economic transition to a low-carbon economy, which are central themes of its sustainability strategy.
Impact
Climate impact
Targeted emissions sources
Scope 2, acquisition of electrical energy
Decarbonization impact
Considering the emission factor of the National Interconnected System, in 2022, each MWh emitted around 0.0426tCO2.
Iguá stopped emitting around 250tCO2e in 2022, which is around 3% of scope 2 emissions, through distributed generation, with the potential for greater reductions in subsequent years. In addition to reducing indirect Scope 2 emissions, the use of distributed generation of renewable energy supports Brazil’s NDC goals, increasing the share of renewable generation in the national energy matrix.
Business impact
Benefits
Improved grid stability and security
Reduced transmission and distribution losses
Emergency supply of power during power outages
Reduction of peak power requirement
Costs
The plants are the result of partnerships between Iguá and companies that work with the development of assets for distributed generation. In this business model, partner companies invest to build the plants, support their operation and maintenance, and Iguá also makes monthly payments based on the amount of energy consumed. Companies that want to implement DG need to consider the initial investment costs and maintenance costs.
Impact beyond climate and business
Co-benefits
We can consider the following advantages:
Reduction of technical losses
Job creation
Positive impact on the national energy matrix, with an increase in the share of renewable energy
Expansion in electricity supply.
Implementation
Typical business profile
This solution may be of interest to companies with significant levels of energy consumption that want to reduce their environmental impacts by encouraging the generation of electrical energy through renewable sources. It is also necessary to consider local legal and regulatory requirements. In Brazil, the use of distributed electrical generation is already mature and available in many parts of the country.
Approach
For companies interested in adopting a similar strategy, it is necessary to find a partner company for the development and, if necessary, financing of the asset. It is important to find a partner with relevant experience in developing, building, and operating a power plant, because the process involves several critical steps, such as environmental licensing and access approval from the local energy distributor. The partner must have experience in the process, including the legal and regulatory context of each nation.
Stakeholders involved
It is important that the company has an internal team with expertise in electrical energy management, and knowledge of the energy market, which has specific characteristics in each country or region.
Furthermore, it is necessary to establish partnerships with asset development companies, like those specialized in the construction and operation of photovoltaic plants, small hydroelectric plants, and other renewable energy sources.
Key parameters to consider
Solution maturity: Distributed generation is already a well-known technology, with a recent increase in use in Brazil
Lifetime: The process is governed by contracts, which can last different periods, depending on the contracting regime
Additional specificities: It is very important to highlight the need to establish a contract regarding the environmental attribute linked to the generation of renewable energy. In Brazil, there is a market for renewable energy certificates, and energy generation companies can sell these certificates to a company, even while selling the energy generated to another company. Therefore, ensuring through contractual support that both energy and the environmental attribute of reducing emissions are part of the process is a key part of the decarbonization journey.
Implementation and operations tips
It is worth highlighting that the process must be part of an organization's larger strategy linked to the sustainability of the business. The decarbonization of energy generation is a fundamental pillar for achieving the goals of the Paris Agreement, and Brazil has great opportunities to develop in this area.
DG plants are generally (but not necessarily) close to consumption locations. Due to the ease of installation, the vast majority of DGs operating in Brazil are of photovoltaic origin, but they can be hydroelectric, wind, or biomass.
Studying the general context is recommended, as this is the only way to identify the best alternative.