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Brazil intends to revolutionize the way hydroelectric power stations are built, and might just push natural gas and coal-burning power companies even further to the sidelines.

Brazilian President Luiz Inacio Lula da Silva said Tuesday that the new "platform-style hydroelectrics" will be "a revolution in the construction and production of energy in the world," he told the Estado newswire.

Lula was discussing studies being conducted by federal energy holding company Eletrobras (EBR) to build around five new hydroelectric plants that operate on a platform model, sort of like oil platforms, only they will be "drilling" for Tapajos River water in the northern state of Para.

"Whether these projects ever see the light of day will be another story, but one thing is for sure, thermal electric power plants are going to find it harder to compete with all these hydroelectric dams the way we are going," Priscilla Simon, an energy analyst at Victoire Brasil Investments in Sao Paulo, said in a telephone interview.

Hydroelectric power stations account for around 85% of Brazil's total energy use, according to Eletrobras.

Brazilian and international power company GDF Suez SA is building two new power plants in the western Amazon state of Rondonia. Both power stations are being built to eventually have a capacity to produce 3,300 megawatts each of electricity annually.

There is also the Belo Monte hydroelectric station, also located in Para state. Although the Belo Monte project is still on paper, the Rondonia stations will be up and running by 2012. As it is, Brazil is currently facing a surplus of energy, energy regulator Aneel said last week.

"It's good news. More energy means cheaper energy," Alexandre Kogake, an analyst at BES Investments in Sao Paulo, told Dow Jones Newswires.

Brazil's electric power demand grows an average of 3,000 megawatts annually, according to Walter Vitto, an energy consultant at Tendencias in Sao Paulo. That's the equivalent of nearly one new mid-sized hydroelectric dam annually.

"Going forward, natural gas and coal will have a harder time competing," said Vitto. "That doesn't mean they won't have a place in the market. They will, but they will be a minority whereas a few years ago we thought that they would gain much more market share. Those that are selling coal and natural gas energy now still have their long-term contracts locked in and revenues guaranteed in the regulated market, but ideally the government would rely more on hydro," Vitto said.

According to Estado, Lula said the Tapajos River projects will have less environmental impact than traditional hydro stations. Workers would be flown in by helicopter to work on the platforms, like oil workers are on deep sea oil rigs. Nowadays, forest clearing is require not only to set up the construction site of a hydroelectric dam, but also to house workers who travel long distances to build the dams on uninhabited rivers. With the workers often come small merchants who set up shop to serve the laborers, often resulting in even more deforestation and permanent environmental degradation.

If built, the power stations would have a combined capacity to generate more than 14,000 megawatts of electricity, roughly the power equivalent of Itaipu, the largest hydroelectric power station in Latin America. Viability studies are expected to be complete by year's end, Eletrobras said in May.

-By Kenneth Rapoza, Dow Jones Newswires; 5511-8812-5961; kenneth.rapoza@dowjones.com