Government works with risk of energy ‘suffocation’ also in 2022 – 13/09/2021 – Market

The decision to hire emergency thermal power plants to strengthen the electricity sector in 2022, announced on Thursday (11), was based on a study that indicates the risk of an energy crisis also in the next dry period, which starts in the autumn of next year.

An assessment made by the ONS (National Electric System Operator) and the EPE (Energy Research Company) considers that the country will start the year with reservoirs at much worse levels than in early 2021 and that the occurrence of the La Niña phenomenon would maintain the low rainfall.

Details have not yet been released, but according to ONS general director Luiz Carlos Ciocchi, the conclusion is that, in this scenario, the entry of new generation projects planned may not be enough to guarantee some slack in the system in the dry period of 2022.

“In order not to be suffocated and have any chance of recovering the reservoirs, we need to hire more generation,” he told sheet this Saturday (11), on a trip by a government delegation for a ceremony to start operations of the transmission line that expands the capacity for exporting energy in the Northeast.

The emergency contracting was suggested by the CMSE (Electrical Sector Monitoring Committee) last week and approved by the Creg (Chamber of Exceptional Rules for Hydroenergy Management) on Thursday, a move that worries the market due to the potential pressure on the electricity bill.

“Energy generation falls on the consumer’s bill. Evidently, energy generation is for consumers,” said the Minister of Mines and Energy, Bento Albuquerque, when asked about the costs of thermal plants in an interview after the ceremony in Janaúba (MG ).

He argued, however, that the government opted for longer contracts to ensure predictability to investors, who could negotiate better fuel prices and offer more competitive energy in emergency contracts.

“We are going to make five-year contracts and this will bring down the cost of this energy,” he said. Aneel (National Electric Energy Agency) is preparing the notice of an auction to contract the thermal plants.

As generation should start in April, the auction will be disputed for finished projects and currently without contracts. These are power plants that the government is now activating in an effort to reduce the risk of rationing until the beginning of the summer rains.

One of them is the William Arjona thermal plant, located in Mato Grosso do Sul, the most expensive in the country, with a tariff of R$2,443 per MWh (megawatt-hour). The high use of these plants led to the creation of a water scarcity rate on the electricity bill, with a charge of R$ 14.20 for each 100 kWh (kilowatt-hours) consumed.

The MME and the ONS say that the contracting of thermal plants for longer terms will also ensure faster recovery of the hydroelectric reservoirs to more reliable levels in the coming years.

“We will have to refill our reservoirs and how will this be done? Not only with the rain, but also with the use of other energy sources, such as wind, solar, biomass and also with thermal power,” said the minister.

He again stated that the measures already taken by the government avoid the risk of blackouts in 2021 and rejected criticisms of the pace of reaction to the crisis. “Those who say we take a long time don’t understand the electricity sector, which for 20 years hasn’t built hydroelectric plants with reservoirs,” he countered.

According to Albuquerque, emergency actions have been adopted since October, but it would not be feasible to maintain large thermal generation at the beginning of the year, since the Belo Monte plant has its peak of generation precisely in this period.

To resort to thermal plants, he says, would be to waste water from the largest 100% Brazilian hydroelectric plant, which does not have a storage reservoir.

This Saturday, Albuquerque, Ciocchi and the general director of Aneel, André Pepitone, visited a substation in Janaúba that is part of a 542-kilometer transmission line that connects Bahia to Minas Gerais, allowing a better use of the wind and solar power plants of the region. North East.

Pepitone highlighted that, with the capacity to transport 1,600 MW (megawatts), the line expands by 25% the energy transfer capacity from the Northeast to the Center-South of the country. With it, there is less chance that the ONS will have to shut down wind and solar power plants due to lack of transport capacity.

Still this month, the government intends to participate in the inauguration of the GNA 1 thermal plant at Porto do Açu, on the north coast of Rio de Janeiro, which will add another 1,300 MW to the system, in a new reinforcement of the generation capacity.

On the demand side, ONS reported that it had received proposals from the industry to shift consumption outside peak hours with a total volume of 237 MW in September. Ciocchi avoided assessments of the offer saying that the process is new in the country and there is no basis for comparison.

There are also no evaluations yet on the response of residential consumers to the program that rewards voluntary reduction in consumption, since consolidated data must be presented by energy distributors only at the end of the month.

The reporter traveled at the invitation of the MME