All 14 anti-rationing gas thermals are behind schedule

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The construction of all 14 gas-fired thermal plants contracted in the emergency energy auction in October last year, to guarantee supplies this year in the event of a new drought, is delayed. The projection is that none of them will go into operation on the scheduled start date, May 1st.

A survey that details the risk of non-compliance with the schedule and asks for the application of the appropriate measures is contained in a letter sent, this Tuesday (26), by Abrace, an entity that represents large energy consumers, to Aneel, the agency that monitors the sector. .

Monitoring considers the data provided by the agency itself.

According to the correspondence, an ordinance from the MME (Ministry of Mines and Energy) allows delays of up to 90 days in this type of undertaking. That is, the thermal plants would have to be on and generating energy by August 1st.

However, the projection is that half of them will struggle to meet even this maximum deadline; four of them don’t even have a defined location for the installation.

Contracts raise costs for energy consumers

Creg (Chamber of Exceptional Rules for Hydropower Management) approved the contracting of thermal plants in September 2021 with the goal of reinforcing the recovery of Brazilian hydroelectric reservoirs between 2022 and 2025. At that time, the reservoirs in the Southeast and Midwest regions , the water tank of the Brazilian electric sector, had 19.59% of their energy storage capacity.

The modeling of the emergency auction came to be questioned in court, but the government managed to maintain the auction.

In the correspondence with Aneel, Abrace reinforces that, now, the scenario is different. The reservoirs of the national system operate with 70% of the storage volume, opening space to avoid the use of more expensive energy, such as thermal energy.

The entity highlights that it is necessary to comply with the contracts signed in this emergency auction, but, on the other hand, asks the agency to also apply the punishment provided by the MME in case of non-compliance with the maximum term, the termination of the contract.

Gas-fired thermal plants are in different stages of delay, according to monitoring.

Five have a chance to start operations before the deadline, in August: MP Paulínea, RE TG 100 02 01, Viana 1, Povoação 1, Luiz Oscar Rodrigues de Melo. Barra Bonita 1, Karkey 013, Karkey 019, Porsud 1 and Porsud 2 will hardly be ready by then.

Four thermal plants are so late that they have a low chance of getting off the ground, according to the document: Edlux 10, EPP 2, EPP4 and Rio de Janeiro I.

Projects totaling 1,220.8 MW of installed power were contracted: if they operated full-time, they would guarantee enough capacity to supply 6 million inhabitants, practically a city in Rio de Janeiro.

Of this total, most, 1,177.8 MW, went to more expensive projects, powered by gas. Only 43 MW will be covered by renewable energy projects. According to the Abrace survey, all three renovation projects are on schedule (Fênix, which has already been completed, Buritis and Machadinho).

The delays mentioned above reaffirm the need for Aneel to rigorously monitor the implementation schedule of these plants. It is extremely important that the responsible areas carry out a detailed follow-up, in order to ensure that the auction rules are respected, without flexibility”, says the text.

Sought by the report, Aneel said that it is monitoring the progress of the works.

In the evaluation of Embrace, it would not make economic sense for consumers for the agency to make the deadline even more flexible.

The entity reinforces that, according to the contract, these thermal plants should operate for about three and a half years, at a high cost. According to estimates, consumers will be charged R$ 11 billion per year via the Reserve Energy Charge, increasing a tariff that is already high.

The total cost may reach R$ 40 billion at the end of the period, weighing on the electricity bill of residential consumers and also on the production cost of the industry.

Government defends the use of gas-fired thermal plants

The government has defended the use of gas-fired thermal power within a larger program that seeks to encourage the use of national reserves. Today the country produces gas along with oil and reinjects most of the gas into the well. The Ministry of Economy participated in the organization of a new regulatory framework and there are private companies interested in doing business with this commodity.

However, gas is on the global list of polluting fossil fuels that, in the fight against climate change, are going to waste space in the long term for renewable energies. Its price has been suffering successive rises. This year, it has been especially affected by the war in Ukraine, as Russia is a major producer and supplier of gas.

There is a fear that the excessive use of gas-fired thermal plants in the generation of electric energy will contribute to further increasing the cost of energy in Brazil.

An example of the impact on prices is in the October emergency auction itself. The average price at the auction was around R$1,560 per MWh (megawatt hour), more than seven times the value reached in auctions for the regulated market, which was R$210/MWh in 2019.

In the six months that have passed since then, the value of gas has risen sharply and is already around R$3,000 per MWh, considering the value on the spot market.

If the country was in need of emergency energy now and held an auction for gas-fired thermal plants, the values ​​would be in this range.

This is a big difference in relation to renewables, which have seen a sharp drop in recent years. In the same October auction, two solar energy projects and a wood chip thermal one were contracted at a much lower price, on average, R$ 345/MWh.

By the time the auction for this energy reserve was evaluated and released, the government was under pressure from the risk of rationing. Thus, it authorized more flexible rules, which were questioned. In the end, the proposals focused on gas power, despite being more expensive.

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