Price decrease imposed by the government shakes trust in the electric sector model and inhibits investments
Tatiana Bertolim
Brazil stands before a structural paradox. The country needs to double its power production in the next 15 years to face a 4% economic increase per year, according to estimates of the Ministry of Mines and Energy, which will demand a unique volume of investments. That increase in capacity necessarily moves towards a matrix diversification. However, the conditions to generate through other sources in addition to water sources still make it little competitive. One of the main difficulties in the area are the thermoelectric plants powered with natural gas – exactly the option which, in theory, is the most viable to complete the country’s power production.
Delays in projects of new hydroelectric plants and the draught that has reached a significant part of the Brazilian territory this year have increased from 4.4% to 11.3% the share of thermoelectric plants powered with gas in the Brazilian energy matrix since 2011. Intended to be periodically activated, this source has started to be used without interruptions.
So far, so good. Trouble is the new projects of gas-powered thermoelectric plants disposing the installation of over 20 thousand Megawatts (MW) in the next years have not been able to close any deals in the energy auctions because the cost is not competitive for them. The criterion of the auctions has been low prices.
“The solution has to be better planned and it has to contemplate water resources, wind power and thermal power”, says Erik Eduardo Rego, executive director of Excelência Energética Consulting. The problem is, says he, the offer of natural gas is not enough and it is monopolized by Petrobras. “It depends on Petrobras’ whims, but the planning is thought only in the power sector”.
A big dilemma is that the new hydroelectric plants – such as Belo Monte, Jirau and Santo Antônio, under development – have been built with reservoirs as small as possible. The idea is to reduce the environmental impact of those undertakings, particularly because they are in the Amazon region, but the other side of the coin is that the potential of generating energy of those plants falls to 20% of their nominal capacity in the dry season.
As to this matter, using thermoelectric plants as complementary source is indispensable. However, the government has not reached a model able to make new investments in that matrix feasible. Gas-powered projects have not been winning bidders at auctions to buy and sell energy since 2011, which entails interruptions in the construction of the facilities of new plants of this type in the next three years.
“There may be lack of investments, which compromises the offer of energy”, says Jorge Trinkenreich, director of PSR Consulting specialized in this area.
Government is optimistic
The government’s projections, on the other hand, are optimistic, as usual. Expectations are that the energy area receives public and private investments of R$1.5 trillion by 2022, out of which R$835 billion in oil and gas (mostly from Petrobras), R$260 billion in electricity and the rest in biofuels. According to an estimate presented by the secretary of Energy Planning and Development of the Ministry of Mines and Energy, Altino Ventura Filho in a seminar held at the end of May in São Paulo, expenditure will stand for 2.3% of the annual GDP in that period.
In addition to increasing the installed capacity, that record amount’s objective is to diversify the Brazilian energy matrix. Even representing the majority of the expenses forecast for the next years, the government’s expectations are that oil and gas industry reduces its participation, currently around 39%. Hydroelectric plants are also expected to reduce their participation from 70% to 47% by 2022, thus contrasting with the growth of sources such as wind power (from 3% to 20%) and biomass (which may reach 22%) – but it is worth stressing that many wind farms set up in the country are not generating any power because transmission lines are not ready yet.
However, there are setbacks in that path arising from companies dissatisfied with the policy of cost reduction imposed during President Dilma Rousseff’s office. At the same time it has to attract private investments, the power industry is not able to leave aside the dependence of state companies to close deals for with new projects – whether generation or transmission ones.
“All the last invitations to bid for hydroelectric plants have had the participation of large state companies. It is an inappropriate economic sign”, says Jorge.”We have to refine power commercialization, and the planning of the area has to have a more indicative character”.
For that consultant, one of the keys to the problem is that sector planning has gone from one extreme to the other – it used to be loose during Fernando Henrique Cardoso’s office, but now it has become excessively centralized during the offices held by PT. According to his assessment, the Ministry’s resuming its role in preparing long-term policies was positive. Its quantity that was negative. “It is not here, nor is it there. We have to plan energy policies, but the government cannot take the role of the market”.”
The summit of that dichotomy happened when 579 provisional remedy was passed, in September 2012. That provisional remedy, whose objective was to cut prices just before municipal elections provided the base for an early and “forced” renewal of the plants’ concession contracts. Its text, whose contents took companies by surprise, was unwelcomed by the market and made the electric industry’s stocks crash – the very government destroyed the capitalization value in the market of its own electricity companies with that remedy.
“The provisional remedy indeed contained a good idea, which was to look for lower prices. But when it passed the remedy, the government thought that all companies would accept it, but that was not what happened”, remembers PSR consultant. Even with lower prices in a first moment, the future shows that increases in the electricity bill will inevitably have to be made.
Self-generation
Improving dialog and planning is a matter that the next government will have to tackle in order to ensure investments able to double the system’s current capacity, currently at 120 GW. For Erick, with Excelência Energética, it will also be necessary to invest in self-generation programs. According to him, the government should stimulated self-generation programs in residential and commercial buildings based on photovoltaic and wind sources, which would generate part of the energy for their own consumption, “The public area gets coy about it. However, in addition to producing energy, this system makes savings in distribution and transmission”, says he.
&
nbsp;
Adopted in countries such as Germany and Spain, the model ensures the purchase of any exceeding energy. In Brazil, there is a resolution of the National Agency of Electric Energy (Aneel) dealing with this subject. Trouble is, however, it involves tax issues. Some States do not accept that the ICMS be levied only on the difference between the energy consumed and that produced by a self-generating unit. This myopic view targets on increasing tax collection base and fails to take into account the fact that abundant energy enables attracting new industrial and commercial undertakings which, consequently, will be able to generate more income from tax, more jobs and more income in general.
The debate on this proposal is just another example of the complexity that lay ahead to be faced by the Brazilian market in its search for a diversified energy matrix.
Fonte: Revista O Empreiteiro
