ONS suspends energy saving program for industries

The ONS (National Electric System Operator) decided to suspend the program that provided financial compensation for industries to save energy, implemented in September to help save water in hydroelectric reservoirs.

The operator claims that supply conditions improved with the arrival of the rains, but the sector claims that Brazil continues to ship more expensive thermal plants than the amounts paid to companies that were willing to save.

According to the ONS, “the improvement of hydropower conditions, the effectiveness of these emergency actions and the guarantee of energy supply in 2021 are the main motivators of the decision”.

“The arrival of the wet period within the expected period, in addition to the participation of various agents and society in the adoption of the proposed measures were fundamental factors to ensure that, in 2021, the peak (peak energy period) is met without the need for use of operative reserve.”

In its first month, the program had an offer of 442 MW (megawatts) on average. In October, 720 average MW were offered, but the ONS stopped calling the companies on the 11th of that month, according to Abrace (Brazilian Association of Energy Consumers).

“For the month of November, the Operator has offers of up to 454 MW offered, approved on October 29 by the CMSE [Comitê de Monitoramento do Setor Elétrico], and the execution of these offers in the operation depends on an assessment carried out daily throughout the month, according to the need for the peak of the National Interconnected System (SIN)”, informed the ONS.

The program aimed to reduce consumption during peak hours, to avoid the risk of blackouts. The industries that committed to participate received per MWh (megawatt-hour) saved, but the amounts paid or a balance of the program have not yet been disclosed.

Its suspension is questioned by industry experts, who advocate a more active role for consumers in managing the country’s energy supply.

“This program is adopted in various parts of the world, even outside critical periods. It takes us decades to implement it here and when it is achieved minimally and by leaps and bounds, the decision is taken to interrupt it”, says the former director from the ONS, Luiz Eduardo Barata.

The ONS, in turn, stated that the decision to suspend the program was due to the improvement of electrical energy conditions and “the successful adhesion of companies to the emergency measure, which had as its main objective to meet the high-end demand of the system throughout the transition between the dry and wet periods of the main SIN basins”.

“With the positive advance of hydro-meteorological perspectives, there is no need, at this moment, for additional energy to meet the needs”, he stated, noting that he continues to monitor the system.

Industry representatives argue that the economy cost consumers less than thermal plants called to operate as an emergency during the water crisis, which continue to generate energy. For November, for example, the ceiling price for compensation was R$1,250 per MWh.

This Sunday (7), the most expensive thermal plant in the country, Araucária, in Paraná, delivered 466 average MW to the electric system, a volume lower than the energy savings offer, at R$ 2,533.20 per MWh. The second most expensive, William Arjona, in Mato Grosso do Sul, delivered 140 average MW, at R$ 2,276.74 per MWh.

“We are sure that most of the offers [de economia de energia] they were and continue to be cheaper than the more expensive thermal plants that the operator is dispatching”, says the manager of Electric Energy at Abrace, Victor Iocca.

The association says that the option for more expensive energy will lead the ESS, a charge paid for thermal generation in the country, to exceed R$ 20 billion in 2021, reaching the highest value in history. This charge is paid by all energy consumers in the country.

At the same time that the bill for thermal plants explodes, the price of energy in the free market plummets with the forecast of good rains in the arrival of summer.

Last week, the PLD, the price that guides the settlement of contracts in this market, reached R$ 101.07 per MWh in the Southeast and Midwest regions, a decrease of 37% compared to the previous week – between the end of June and the end of September, the PLD was at its maximum of R$ 583.88.

The market says that the abrupt drop with reservoirs still at critical levels is a sign of distortion in the electricity sector’s price model, which is more impacted by the forecast of rain than by the current level of stored energy.

The problem is hurting residential consumers right now, as electricity distributors have spare power and could be making money from free market sales, a profit that would then help reduce pressure on tariffs.