The blackout inevitable in the electricity sector in brazil in 2015

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The blackout inevitable in the electricity sector in brazil in 2015

  1. 1. 1 THE BLACKOUT INEVITABLE IN THE ELECTRICITY SECTOR IN BRAZIL IN 2015 Fernando Alcoforado * The flagship brand of Rousseff's government is the incompetence in all sectors of government activity. However, their incompetence is most prominent in the management of the energy sector, particularly in the Brazilian electric sector that is facing the threat of blackout of electricity supply in 2015. Survey by the Brazilian Center for Infrastructure (CBIE) reveals an alarming date about the difficulty the national electricity system has to meet the needs of the country. Since January 2011, until February 4, 2014, 181 blackouts were recorded. The calculation takes into account all faults in the power supply, regardless of the size of the affected area, period of interruption or interrupted charging. According to CBIE, only in 2013, it were recorded 45 blackouts with interrupted power load above 100 megawatts. Of these, the research highlights the blackout of 10,900 megawatts occurred on August 28, in the states of Piauí, Maranhão, Ceará, Rio Grande do Norte, Alagoas, Sergipe, Pernambuco, Bahia and Paraíba. In 2012, there were 62 blackouts. The most serious occurred in October, 25. With interrupted load of 12,900 megawatts, the Brazilian electrical system left throughout the northern region in the dark. The risk of energy rationing is just one of the problems that have accumulated in the energy area of Brazil in recent years and are not restricted to the electricity sector. The risk of electricity rationing may occur because it is increasing the likelihood of its occurrence given that has passed the threshold of 5% which is considered acceptable. In February 2014, the risk of rationing in Brazil was already 18.5%, as reported by PSR, which develops softwares for the operation of the electrical system of Scandinavian countries and the distribution system on the East Coast U.S.A. [See Article by Ricardo Setti under the title O calcanhar de aquiles de Dilma: o setor elétrico com o risco de apagão (The Achilles heel of Dilma: the electricity sector with the risk of blackout) posted on the website <http://veja.abril.com.br/blog/ricardo-setti/politica-cia/o- calcanhar-de-aquiles-de-dilma-o-setor-eletrico-com-o-risco-de-apagao/>]. In other words, Brazil is exposed to a risk far above acceptable. Despite the high risk of rationing, the Brazilian government denies the existence of this problem for not publicly demonstrate their incompetence in managing the electricity sector particularly at this juncture eve of the presidential elections. One of the reasons alleged by the Brazilian federal government to the vicissitudes through which passes the electricity sector is that Brazil is experiencing one of the worst droughts in history. With this, hydroelectric reservoirs, the largest power generators in the country, fell to the lowest level since 2001. Complicating the situation, in January 2014, the electricity consumption was 12% above the same month in 2013. Occurs that neither dry nor increased consumption should surprise the government because the Brazilian electrical system should be sized to meet this type of extreme event. In other words, the Brazilian government demonstrates incompetence in planning the electricity sector. One fact is clear: the vulnerabilities of the electric sector are structural and the federal government demonstrates incompetence in its solution. A major problem with the electricity sector relates to delays in the construction of power plants and transmission lines that have caused energy supply grow less than demand. Last year, the energy supply grew 40% less than expected. Currently, 71% of
  2. 2. 2 the transmission lines are under construction with more than 13 months late. All these problems were compounded by the decision of the federal government to establish the Provisional Measure 579 in September 2012 with the purpose of reducing the price of energy, on average, by 20% from 2013, besides proposing the early renewal of granting of generating and transmitting power, whose contracts would expire by 2017. Measures taken to reduce electricity tariffs provoked serious breakdown in the electricity sector because the Brazilian federal government reduced the price of energy at a time when consumption increased and the energy supply did not grow in the same proportion. This situation forced the federal government to fire thermal power plants of extremely high cost to avoid rationing of electricity in Brazil. The decision of the federal government to make an early lease renewal of generating and transmitting power disrupted the market because three large generators (Cemig, Copel and CESP) refused to renew the lease. This meant that, not having enough energy supply to do the government make auctions with long-term contracts for all distribution power, the free market price has skyrocketed. In 2013, distribution companies that had previous contracts of just over 100 dollars a megawatt hour now pay 400 dollars in the open market. In 2014, the price has reached 822 dollars. The attempt to control prices to fight inflation has been a constant in the current government. This governmental policy has been used to control the price of fuel for years. The political control of fuel prices also hurt ethanol producers and dismantled the sector in Brazil. By preventing the rising price of petrol and diesel, the federal government contributed to generate a trade deficit in 2013 from 20 billion dollars on fuel imports and 4.5 billion dollars worth of damage in Petrobras. By reducing the electricity tariff of 28% for industry and 20% on average, the Rousseff government contributed to creating a deficit in the public accounts in 2014 of 24.5 billion reais and 6.8 billion reais worth of damage in Eletrobras whose value of its shares on the Stock Exchange fell by half. Insecurity of blackouts in the power sector and shortage of fuel in the oil and gas sector is the price that the country's economy is paying for the incompetence of the Brazilian federal government in the management of the energy sector in Brazil. Compensation between the renewal of concessions the electricity sector and losses using thermoelectric due to lack of rain, the damage of the electric sector already reached 32.4 billion dollars. If one considers the loss of value of power companies on the Stock Exchange the account has already exceeded 60 billion dollars and may increase further. At some point, this crisis will weigh on the consumer's pocket in the future. Mismanagement of the Brazilian energy system and the lack of investment to diversify the energy matrix in Brazil, or even extend the current energy matrix is open to criticism because the Brazilian government continue betting big on hydroelectricity, while there are other alternatives as is the case of wind and solar generation as well as the use of biomass that receive very little investments from the Brazilian government. In fact, the Brazilian energy matrix is very dependent on the energy produced by the force of the waters. About 80% of electricity consumed in the country comes from hydroelectric plants. Therefore, the occurrence of drought as this year can stop Brazil as happened blackouts in July 2001 to September 2002, when drought left many dams without water and the government decreed rationing. Data from the Energy Research Company (EPE) indicate that the Brazilian electrical system went through in 2013, the Northeast, the worst drought of the last eight decades.
  3. 3. 3 In January 2014, the Southeast / Midwest, the volume of rainfall was the lowest for the month since 1954. Numbers of Consultancy Excelência Energética (Energy Excellence) show that if the rains do not arrive to feed the hydroelectric power the risk of fails to supply the electrical system of the South / Southeast and Midwest, accounting for nearly 70% of the energy supply in Brazil is higher than 20% in the coming months. Based on data from the website Canal Energia (Energy Channel), the reservoir levels of Southeast and Midwest regions are operating below 40% of its maximum capacity despite the use of thermal power plants in Brazil. * Fernando Alcoforado, member of the Bahia Academy of Education, engineer and doctor of Territorial Planning and Regional Development from the University of Barcelona, a university professor and consultant in strategic planning, business planning, regional planning and planning of energy systems, is the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova (Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado. Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011) and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012), among others.

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