Government tries to lower energy cost by reducing price for thermal activation

The CMSE (Committee for Monitoring the Electricity Sector) decided to reduce the price ceiling for the activation of thermal plants in the country, removing from the system projects that cover more than R$ 600 per MWh (megawatt-hour) generated.

The value is lower than the R$ 1,000 per MWh defined as a ceiling at the last committee meeting, in January. The decision, says the CMSE, responds to the improvement in the level of dams and the expectation of rain for the coming months.

To face the drought in 2021, the government authorized the use of the entire thermal park available in the country, activating plants that cost R$ 2,500 per MWh. To cover the extra costs, the water scarcity tariff flag was created, valid until April.

The flag adds BRL 14.20 for every 100 kWh (kilowatt-hour) consumed, a value well above the BRL 9.49 per 100 kWh of the red flag level 2, until then the highest surcharge charged on the electricity bill to pay for the thermals.

The CMSE also established a ceiling of BRL 1,000 per MWh for energy imports from neighboring countries. In addition, it established a limit of 10,000 MW for thermal generation and energy imports. In January, this limit was 15,000 MW.

This Wednesday, the country generated around 9,000 MW in thermal energy and imported 0.1 MW from Uruguay, according to data from the ONS (National Electric System Operator). Exactly six months earlier, the volume of energy generated by thermal plants reached 18,945 MW.

“This change in the operational policy should translate into a reduction in the costs perceived by electricity consumers”, said the MME (Ministry of Mines and Energy) in a note.

The CMSE highlighted that the level of Brazilian hydroelectric reservoirs reached 49.4% at the end of January, 5.1 percentage points higher than expected. At the end of February, the indicator is expected to be between 55.2% and 60.6%, above the 38.3% recorded in the same period in 2021.

The recovery reflects the heavy rains that have fallen on the country since the beginning of the summer, causing deaths and disorders in Bahia, Minas Gerais and São Paulo, for example.

experts consulted by leaf say that with the recovery of the level of the reservoirs and the entry of new generation projects during the year, there is no risk of problems in the energy supply in 2022.

The consultancy PSR Energy estimates that the country will reach the beginning of the dry season, in April, with the reservoirs in the Southeast and Center-West, considered the main water tank of the Brazilian electric sector, with 65% of its capacity – this Wednesday , were with 42.2%.

“The amount of new supply that enters the system from 2022, added to this level of reservoir, gives us a lot of tranquility for 2022 and 2023”, says the president of PSR, Luiz Barroso.

The former director-general of the ONS, Luiz Eduardo Barata, also discards risk, but remembers that the consumer will still pay dearly for the measures adopted by the government to contain the crisis in 2021, such as the activation of thermal plants at high costs.

The electricity bill, he says, will be impacted by the transfers of this energy and by a loan negotiated by the electricity distributors with the government to cover part of the gap caused by the purchase of energy from thermal plants.

In addition, the government contracted an average of 775.8 MW of additional thermal generation capacity at the end of 2021, claiming that the country needed new thermal plants to bring the level of reservoirs to safe levels.

The winning projects have an average fixed cost of R$ 1,563.61 per MWh (megawatt-hour) and the contracts are valid between 2022 and 2025. The total cost of the auction for the consumer will be R$ 39 billion.

With the rains, hydroelectric plants in the North started to release water without generating energy at the turn of the year, due to lack of capacity to transport production to the Southeast. In January, the ONS negotiated with the Porto Sergipe thermal plant to reduce its production to free up space on the transmission lines.