Brazil authorized thermoelectric plants to function without contracts for six months!

Brazil | 8th June 2021 | Virtual Wire

On 7th June 2021, Brazil authorized its thermoelectric plants to function without any contracts for up to six months “on an exceptional and temporary basis”. The reason, the government says, is the worst drought in almost a century.

As published in the Official Gazette, the authorization extends itself to every thermoelectric plant in the country, not just gas-powered ones as first planned, and also includes the usage of other more expensive fuel sources.

This measure was taken in an effort to integrate more suppliers into the electricity system, aiming to avoid energy rationing in the face of the growing concerns about the drought in hydroelectric reservoirs.

Under this new rule, the government can better fund these thermal plants, which now can be activated whenever the National Electricity System Operator considers it to be necessary, without any authorization.

This would prevent any risks of history repeating itself: during the events of the year 2001, the water level in the reservoirs of Brazilian hydroelectric plants dramatically decreased. At the time, there was a great possibility of large-scale cuts occurring in the country, especially in large cities.

But 2021’s energy crisis, as informed by a senior Economy Ministry official, has also been aggravated by new structural problems, a situation that would make the planned privatization of state power giant Eletrobras even more urgent.

The measure will also allow thermal plants to include fixed costs in the revenue they are entitled to receive when they are called on to operate, the Variable Unit Cost (CVU). This, as said by the energy analyst Urias Martiniano, could mean that those fixed costs will most likely end up being paid by the population.

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