The losses caused by cuts in renewable energy generation imposed by the National Electric System Operator (ONS), known by the jargon “curtailment” must be shared among agents in the electrical sectorsaid the legal and compliance director of Chinese CGN Brasil, Silvia Rocha.
In an interview with the program High Voltageyes CNN Infrathe executive said that the “curtailment” represents a systemic inefficiency and that discussions with the government and regulatory agency seek ways to dilute the financial impacts without directly putting pressure on the consumer’s electricity bill.
“Any cost of system inefficiency is shared. . There is a discussion with Aneel and the Ministry of Mines and Energy that part of these amounts be covered by the system’s reserve accounts in order to prevent this from reaching the final consumer”, he stated.
The speech takes place amid the impasse over who should bear the losses accumulated by renewable generators due to operational restrictions imposed by the ONS. The most current data points to losses exceeding R$4 billion in recent years.
According to Silvia Rocha, CGN recorded losses close to R$100 million only in the last year because of generation cuts. The executive highlighted that the financial impact goes beyond the energy that is no longer produced, as a relevant part of the company’s contracts is linked to the regulated market.
The executive explains that the cuts lead companies to suffer a double loss: ceasing to produce energy and still needing to buy electricity on the market to fulfill contracts concluded in regulated auctions.
“These are contracts signed at the auction in which the system called on companies to offer this energy. It is ungenerated energy and the generator needs to buy energy to honor this contract”, he said.
According to her, around 60% of CGN’s energy is committed to contracts closed in regulated auctions promoted by the federal government. A proposal to reimburse generators was included in the provisional measure for the electricity sector. The text provided for payments to be made through System Service Charges (ESS), a mechanism shared among electricity consumers. In exchange, the companies would drop the lawsuits filed to recover billion-dollar losses related to generation cuts.
The device, however, ended up vetoed by the federal government on the grounds of avoiding an increase in energy tariffs. The Minister of Mines and Energy, Alexandre Silveira, promised a term of commitment to solve the problem, but nothing has happened so far.
