Opinion: The risks and costs of the blackout for Brazil

By Wagner Victer

Opinion: In 2001, we had a widespread energy shortage in our energy matrix due to a lack of rainfall and installed generation and transmission capacity.

The Brazilian economy suffered a strong impact with a drop in industrial production, paralysis of operational activities, increased factory costs, loss of competitiveness, and increased unemployment. Thus, we had the famous “blackout“.

Domestic, commercial, and industrial consumers were forced to reduce their energy consumption. The electricity bills, for example, had mechanisms that foresaw charges, fines, and even cuts for consumers who did not reach the energy-saving targets.

Last year’s water crisis, the biggest in Brazil in the last 91 years, led to a drop in the GDP in the second half of the year and a negative impact on the harvest performance in the same period.

The consequences did not stop there: the IPCA (National Wide Consumer Price Index) approached two digits. The accumulated variation until July 2021 was 8.99%.

High prices, in an environment of high unemployment and weakened income, have shaken household consumption.

It is worth remembering that, although we had a good rainy period last summer, the level of the Cantareira System is still falling. The volume of the main water reservoir in the State of São Paulo has registered a drop every day of September.

In other words, we are still in an energy situation that is not comfortable for the country, contrary to what some experts say.

Two decades have passed, and we need to do our homework: the Federal Government’s decision to contract – via the Simplified Contracting Process (PCS) – about 1.2 GW of reserve energy was the right one.

The initiative promotes energy security in the country for the next four years. It is as if the government took out an insurance policy to guarantee the due supply with a long-term vision, even though it is more expensive energy.

In fact, in the same way, as they were contracted in the 2001 blackout. We still have an energy generation base very dependent on hydro sources, and we should not wait for the potential amplification of the intensity of climate change in the coming years with longer periods of drought.

A recent National Electric System Operator (ONS) study shows that thermoelectric plants have systemic relevance for the National Integrated System and will contribute to the security of supply until the end of 2025.

A new period of drought or accelerated economic growth could bring supply problems. The country is still in the critical period of hydrology. The hydroelectric reservoirs have not yet been fully recovered.

Karpowership was one of the winners of this reserve energy auction.

The Turkish company brought Brazil a floating unit technology that respects the main international global sustainability indexes, does not demand construction on the land, has a low environmental impact, has vessels of high energy efficiency and low emissions, and respects all the strict criteria of Conama for the use of water resources.

It can be quickly connected to high voltage grids to ensure energy supply in a few hours and uses natural gas, considered the energy transition fuel.

Aneel, Brazil’s regulatory agency, has already released the commissioning and operation tests of the four floating units. All the analyses of the transmission towers connected to the Furnas substation have been concluded with total success and safety.

It is important to remember that we are talking about a venture that produced more than 100 maritime, operational, environmental, and safety studies to obtain 50 licenses from a different state and federal authorities, such as ONS, Aneel, ANP, Antaq, Inea, Fire Department, Navy, and Docks.

We also need to understand that Brazil must be competitive to attract new investments, provide legal security and stability, and improve its geo-electrical positioning, considered fundamental for the fixation and attraction of new industries, potentializing future gains for all of society.

I participated directly in the group that combated the effects of the 2001 energy crisis. One of the lessons I learned was the importance of preventive measures to ensure the country’s energy security.

The reserve energy auction in October 2021 was held; its rules were published by the Ministry of Mines and Energy under Public Consultation clearly and transparently.

In my analysis, the project must have operations in the Port of Itaguaí, in the State of Rio de Janeiro, which has full capacity and is suited to receive this activity.

From the point of view of movement and ships, it is also clearly not impactful for fishing activities because the ships will be anchored and stationary, not generating additional flow in that bay.

The noise level generated by the engines, developed with state-of-the-art German and Finnish technology, is also small and much lower than the number of ships that already circulate in the region.

For the municipality of Itaguaí (Rio de Janeiro), the enterprise will also represent increased revenue not only in taxes related to services (ISS) but fundamentally in tax transfers through the increase of percentages in the state and federal participation funds.

It is very strange, therefore, to potentiate the environmental polemic of this enterprise when our ports and bays have been used to export commodities from other states that generate practically no income but only pollution, as in the case of the exportation of iron ore and soy.

On the positive side, the arrival of new energy enterprises in Itaguaí and regasification plants open other important favorable externalities, such as the beginning of the gas market and big new investments, like the so-called Rota 4b gas pipeline.

Our behavior in issues like this should follow, besides the normal rules, the “reasonableness principle,” and evaluate the technology technically and pragmatically to not make an error in judgment nor to use political ideologies just to criticize.

With information from Poder360