OREANDA-NEWS. November 23, 2016. Brazil added a record 8.61GW of new generation capacity in the first 10 months of 2016 and is on track to reach 9.88GW of new installed capacity by year end, according to the Mines and Energy Ministry (MME).

Brazil has already broken its annual record of new generation capacity of 7.5GW, set in 2014, with the new capacity brought on line in January-October 2016.

With the increase in capacity accompanied by slumping demand, the National Systems Operator (ONS) is projecting that electricity supply will enjoy a comfortable margin for at least the next two years.

In the first nine months of 2016, electricity demand has declined by 0.9pc, largely because of a 3.7pc drop in industrial demand in the period.

Even with the increase in generation capacity, the ONS has been forced to restore thermoelectric dispatch because of an extended drought that has depleted some hydroelectric reservoirs. In the arid northeastern region, reservoirs reached 9.5pc of capacity on 21 November, down 1.5 percentage points from 1 November.

According to preliminary estimates by Argus, total thermoelectric generation in the first 21 days of November reached an average of 11,612MW, up from an average of 10,790MW in October. If confirmed, November thermoelectric generation will be the highest monthly level since December 2015.

Because of limited transmission capacity, the northeastern region can only receive a share of its electricity needs from other regions of the country.

An additional 4,138km of new transmission line began operating in the January-October period, with the government projecting that a total of 6,000km of new transmission lines will be brought on stream this year, but myriad project delays continue to limit inter-regional transfers.

Hydroelectric plants contributed 3.98GW of new capacity during the first 10 months of 2016 and are expected to add another 1.44GW in the remainder of the year.

Large hydroelectric plants, including 1,820MW Teles Pires on the Teles Pires river and 1,988MW from 11.23GW Belo Monte on the Xingu river, contributed to this year's increase, as did additional turbines from 3,750MW Jirau and 3,568MW Santo Antonio on the Madeira river.

With the increase, hydroelectricity continues to account for 64.7pc of Brazil's installed generation capacity.

New biomass capacity totaled 689MW this year, with pulp and paper company Klabin's 330MW plant in Parana state contributing the largest share. An additional 133MW of new biomass capacity is expected to come on stream before year end.

Biomass is the second largest source of installed capacity, making up 9.4pc of the country's generation mix.

A total of 803.8MW of fossil fuel-powered thermoelectric plants began operating in the first 10 months of the year. The largest plant was local power generation company Eneva's 518MW Parnaiba 2 natural gas-fired plant in the northeastern state of Maranhao. Brazil's electricity regulator Aneel is projecting an additional 287MW of new thermoelectric capacity before the end of the year.

The next large natural gas-fired thermoelectric plant scheduled to begin operating is the Maua 3 plant, located in Manaus, the capital of Amazonas state. The plant is scheduled to bring its first 189.55MW turbine online in late January 2017, a second in February and a third and final turbine in April. The plant will be nearly two years ahead of schedule and will use domestically produced natural gas as feedstock.

Fossil-fuel powered plans account for 8.8pc of Brazil's installed capacity.

New wind capacity reached 2.1GW through the end of October and the industry is on target to bring a total of 2.47GW of new capacity on stream this year. If confirmed, the volume will fall short of last year?s total additions of 2.66GW, and the 2014 record tally of 2.78GW.

Wind generation accounts for 6.4pc of installed capacity.