With the crisis worsening, the government wants to hire thermal plants in a simplified way and facilitate licensing – Economy

BRASILIA – With the worsening of the scarcity in the main reservoirs of the Parents, the government intends to make a simplified contracting of energy and capacity reserve to face the crisis. The measure is seen as necessary to guarantee the supply of electricity to Brazilian consumers. To ensure the construction of the new plants, the team of Jair Bolsonaro it also signaled its intention to facilitate the projects’ environmental licensing processes.

The recommendation of the Electric Sector Monitoring Committee (CMSE) held at a meeting this Friday, 3, provides for the contracting of projects in subsystems Southeast/Midwest and South, which should go into operation as early as 2022 until 2025. The regions are the most affected by the drought at this time. The forecast is that the reservoirs in the Southeast/Midwest and South will register only 15.2% and 22.6%, respectively, of their storage capacities at the end of September.

The possibility of carrying out a simplified process for contracting a capacity reserve to face the crisis was authorized through Provisional Measure 1.055, edited by the government to create the Chamber of Exceptional Rules for Hydropower Crisis Management (CREG). The text, however, does not say how the contracting should be done, which, in theory, can dispense with the holding of auctions. The MP indicates that competitive procedures must be established by the Ministry of Mines and Energy (MME).

In a note published this evening, the folder states that the hiring is provided for in the MP as a measure “to optimize the use of hydro-energy resources and to face the current situation of water scarcity.” “Thus, it will represent a complementary measure to the various other actions that have already been adopted since October 2020, in order to guarantee the continuity and safety of electricity supply in the country”, the statement informs.

According to the MME, the additional measures were deliberated after the presentation of studies that showed the need to have additional energy resources to ensure continuity and security in the supply of electricity to Brazilian consumers in the years 2021 and 2022”. The studies were carried out and presented by the National Electric System Operator (ONS) and for Energy research company.

“The preventive and anticipated nature of the measure is also highlighted, with the delivery of resources from 2022 and completion by 2025, at lower costs. In this way, the contracting of capacity reserve will contribute to guaranteeing the service and structural elevation of the storage levels of the reservoirs of hydroelectric plants, especially at the end of dry periods, in line with the resolution of the 234th Meeting held in September 2020.”

Exceptional Measures

The acquisition of reserve capacity was recently authorized through Provisional Measure 998, issued last year. In practice, the plants will be available to meet the energy demand of the National Interconnected System (SIN). The costs of this contract, including administrative and financial and tax charges, will be apportioned among all energy users in the electricity system, including consumers operating in the so-called free market and some self-producers.

The presidential decree that regulates the new legislation provides that thermoelectric and hydroelectric power plants may participate in disputes. The CMSE recommendation, however, indicates the contracting of plants in places where water scarcity is more serious at the moment, which should favor the participation of thermal plants in the simplified processes.

In parallel with the contracting, the committee decided to recommend to Creg that it take “measures by Organs competent bodies in the environmental licensing process for projects associated with the increase in the country’s electricity supply”. According to the note, the measure aims to enable the aggregation of the energy generated by the plants that will be contracted in the form of capacity reserve in terms of need. The measures still need to be analyzed by the interministerial committee.

In the note, the MME also informs that the exceptional measures in progress are proving to be “fundamental” to face the current conditions of service. “The CMSE, in its legal competence, will continue to permanently monitor the conditions of supply and service to the country’s electricity market, adopting measures to guarantee the supply of electricity.”