Asoenergia comments

Regulation & Policy    Jun 23, 2021 4:57 PM

Asoenergia’s Sandra Fonseca spoke about the increase in production costs, the increase in energy demand and the new renewables auction.

Fonseca told La Republica that the energy production cost has increased 10% in just five months.

“That impact, which does not respond to changes in the tariff components, is worrying when we have not even reached the middle of the year,” Fonseca said.

The expert said that the association has supported the new auction, but there are concerns about this process.

The first warning is about forcing marketers to contract demand from unregulated users, as this may lead to less competitive prices, according to Fonseca.

The second is that the commercial borders are restricted to a single marketer, taking away flexibility in contracting.

Fonseca acknowledged that it will not be possible to reach the installed capacity goals.

“The projects have a development period that is difficult to meet in the scenario proposed by the government. We believe in the generation goal, but not in the date of entry into operation,” Fonseca said.

She said that the UPME’s Generation – Transmission reference expansion plan has a bias towards unconventional expansion only, and this is worrying in reliability terms.

“We support renewable energies, but we cannot require that the only expansion will be these sources. The reliability criterion is not met. There might be no reliable energy flow to meet demand between 2027 and 2034,” Fonseca warned.

The expert said that unconventional renewables are intermittent and only available in certain circumstances.

“The only way to manage an energy security scenario is to have reliable generation backup in terms of readiness with thermal plants, which use fuels such as coal and gas,” Fonseca said.

Bottom-Line: The government has done a good job in boosting renewable energy in the country, but has fallen short in developing new natural gas projects, which is the fuel of the energy transition.

Authorities should do more on this issue, considering that natural gas is a low pollution fuel and will give the reliability that the country needs.

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