Brazil: “There Was No Energy Crisis, Which Will Likely Continue”

The image “” cannot be displayed, because it contains errors.
Daily dashboard from the ONS: Daily energy consumption (above) and reservoir status, by region (below). This is actual one of the best data-driven public information Web sites I have seen down here.

Um país sem gás e energia para crescer (Hora do Povo): “A nation without the gas and energy needed to grow.”

In the print edition of Valor Econômico, meanwhile, the top headline reads:

Rains relieve gas crisis and thermoelectric generators are now offline

I find myself honestly puzzled about what to think about the state of energy supply and delivery here in Brazil at the moment. The issue seems to be highly politicized, and judging from the density of fuzzy numbers published on the subject, seemed likely to be one of media-driven tempests in a teapot.

See also

But then again, I am not really informed enough to judge. I know hardly anything, really. If you are reading this post expecting to learn something, you are probably wasting your time. Go find a good newspaper — choose carefully — and read that.

Which is why I have been reading about the “energy crisis” for a week or so now. The thing is that only now that I have read the report from reporter Chico Santos have I really started to grok the basic facts of the situation.

I think maybe now that the W$J no longer wants my $100 a year subscription fee, I might use the savings to pay what Valor is asking for a subscription.

The for-dummies version, as I understand it: Brazil’s National Electricity System Operator (ONS) orders thermoelectric plants to start or stop generating power based on the water levels in resevoirs used for hydroelectric generation. On the ONS:

O Operador Nacional do Sistema Elétrico é uma entidade de direito privado, sem fins lucrativos, criada em 26 de agosto de 1998, responsável pela coordenação e controle da operação das instalações de geração e transmissão de energia elétrica no Sistema Interligado Nacional (SIN), sob a fiscalização e regulação da Agência Nacional de Energia Elétrica (Aneel).

ONS is a private non-profit created on August 26, 1998, which coordinates and controls the operations of generation and transmission facilities that make up SIN, [the national electricity grid], with regulation and oversight provided by ANEEL, the National Electrical Energy Agency.

O ONS é constituído por membros associados e participantes. São membros associados os agentes de geração com usinas despachadas de forma centralizada, os agentes de transmissão, os agentes de distribuição integrantes do SIN, além de agentes importadores e exportadores e consumidores livres com ativos conectados a Rede Básica.

ONS is composed of associate members and participants. Associate members are generators with centralized plants, transmission operators, and distributors who are members of SIN, as well as importers and exporters and independent consumers with assets tied into the basic grid.

São membros participantes o Poder Concedente por meio do Ministério da Minas e Energia, os Conselhos de Consumidores, geradores não despachados centralizadamente e pequenos distribuidores (abaixo de 500 GWh/ano).

The participating members are the Concession-Granting Authority (federal government), through the Mines and Energy Ministry, as well as non-centralized generators and small distributors (less than 500 GWh per year.)

So anyway, when a dryer October than expected was recorded, ONS ordered the thermoelectric plants online, and Petrobras announced it would deliver less gas to natural gas distributors in the Southeast in order to guarantee supply to those plants.

I think I can honestly say that not too many people I read for sane opinions on such things think this was exactly a good thing, or handled with much finesse.

The government immediately thereafter announced the discovery of a monster offshore petroleum reserve.

Chico explains:

The emergency activation of the thermoelectric plants on October 29 set up off a crisis in the supply of natural gas for other purposes, such as consumption in motor vehicles. Petrobras, in order to meet demand from the ONS, reduced the supply of gas on offer to two Rio distributors — CEG and CEG-Rio — and for Comgás in São Paulo.

Rainfall in November so far has been 86% higher than the historic average, however.

The Hora do Povo:

Na última quinta-feira, especialistas em energia do Centro Brasileiro de Infra-Estrutura (CBIE) encaminharam à imprensa um artigo intitulado “Um novo apagão no horizonte: a crise do gás natural”. Nada a se estranhar, depois que a Petrobras chegou a cortar parte do gás de São Paulo e Rio de Janeiro. O detalhe é que o artigo foi publicado há seis meses e se juntou a uma série de opiniões semelhantes emitidas anteriormente por analistas do mercado energético – ou seja, a crise atual foi fartamente anunciada. Os primeiros indícios datam de 2005.

Last Thursday, energy specialists fom the Brazilian Infrastructure Center (CBIE) sent the press an article entitled “New big blackout on the horizon: The crisis in natural gas.” This was not unexpected, given that Petrobras had just cut gas supplies to São Paulo and Rio de Janeiro. The surprising detail was that the article had been prepared six months and was joined by a series of similar opinions issued before now by energy market analysts — that is, the current crises was fully expected. The first indications date from 2005.

The unspoken undertone here, I think, is Brazil, and Petrobras in particular, should stop coddling those goddamn commie Bolivians.

Goni did the right thing during the “gas wars.” They should be giving him a medal rather than trying to extradite the guy. Brazil should be sending troops, not diplomats. Bolivian indigenous peoples movements are the moral equivalent of al-Qaeda (as José Maria Aznar memorably said). The white man’s burden. Yada yada yada.

That sort of thing.

O problema, principalmente para indústrias que consomem muita energia, é que a crise do gás ocorre simultaneamente a um forte aumento nos preços da energia elétrica – sinal de que o mercado prevê dificuldades de abastecimento. Na semana passada, o preço da eletricidade no mercado de curto prazo, que aponta como geradoras e distribuidoras avaliam as chances de apagão, atingiu R$ 237 por megawatt-hora, o mais alto desde o fim do racionamento de energia, em 2002.

The problem, principally for industries that consume a lot of energy, is that the gas crisis comes at the same time as a strong rise in the price of electrical energy — a signal that the market foresees supply problems. Last week, the price of short-term electricity contracts, which indicate how generators and distributors evaluate the odds of a blackout, hit R$237 per MW-hour, the highest since the end of energy rationing in 2002.

Where do you look up spot-market prices here, anyway?

A expectativa média de bancos e consultorias é que o país cresça 4,8% neste ano e 4,4% em 2008 – portanto, a demanda por gás e energia continuará subindo. Com tantas incertezas nesses dois setores, o crescimento econômico pode estar em xeque.

The average prediction from banks and consultancies is that the Brazilian economy will grow 4.8% this year and 4.4% in 2008 — for which reason energy demand will continue to rise. With so much uncertainty in these two sectors, economic growth could be held in check.

Or possibly not.

It does seem kind of counterintuitive that a huge and incredibly rainy nation with 25% of the world’s fresh water, and the world’s largest river system — one that tends to slope drastically from the Andes to the Atlantic and Caribbean — should ever run out of hydroelectric reserves to stick a millwheel or turbine in front of.

Therein, in fact, lies a tale.

But another time.

I need to read up on the subject better before essaying a gist.

The Hora do Povo (a Globo newpaper) offers a sidebar on the subject to go along with the dire risk scenarios featured in its main coverage of the situation

Questões ambientais e falta de planejamento costumam ser apontados como principais entraves à expansão do parque hidrelétrico brasileiro. Mas um levantamento feito pela consultoria Enercons a partir de informações da Agência Nacional de Energia Elétrica (Aneel) sugere que o problema pode estar na lentidão da agência reguladora em liberar os projetos.

Environmental issues and lack of planning are normally pointed to [by whom?] as the main obstacles to expanding the Brazilian hydroelectric system. But a study by the Enercons consultancy based on information from the National Electrical Energy Agency (ANEEL) suggests that the problem may lie in the regulatory agency’s delay in okaying the projects.

Look, I am just starting to readi a couple of basic papers on energy risk-management here — ones not recommended by Globo, which tends to gabble viciously — to try to become less of a dummy on the subject.

Meanwhile, most of the coverage features dire — or sunny, but mostly vastly dire — prognostications, without any hard numbers behind them.

Somebody please do me up a chart that shows exactly how much it has to rain in the Serra da Bocaina — where just week we saw it raining like the absolute dickens (knocking over trees and causing a blackout to the coastal area we were staying at, of course: the last mile is really more of a headache for the average user than anything else) — for non-generator industrial gas customers not to have to worry too much about their supply.

(Isn’t there a derivatives markets for this sort of thing?)

If less than 100 boi zebu drown in one of those torrential afternoon downpours — my browser weather gizmo indicates one scheduled for every day this week — be x% afraid.

That sort of thing.

E-mail me a spreasheet model, if you have one.


Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s