Estimating the cost savings and avoided CO2 emissions in Brazil by implementing energy efficient policies

The marginal operating cost is computed for medium term planning of the dispatching of power plants in the hydro-thermal system using Stochastic Dynamic Dual Programming, after incorporating stochastic energy efficiencies into the demand for electricity. We demonstrate that even for a modest improvement in energy efficiency (<1% per year), the savings over the next 5 years range from R$ 237 million in the conservative scenario to R$ 268 million1 in the optimistic scenario. By comparison the new Belo Monte hydro-electric plant will cost R$ 26 billion to be repaid over a 30 year period (i.e. R$ 867 million in 5 years). So in Brazil EE policies are preferable to building a new power plant.