Still thinking about that electricity problem in Venezuela…

January 7, 2010

Well, I continue to try to understand the electricity problem. I want to know both qualitatively and quantitatively how big the problem is. Thus, another post on the subject and thanks to those that really participated in the comments in helping understand whether the rules made sense or not and how much in deep s… we are or may be in the near future. I will summarize some of what I have learned.

First of all there is clearly a big problem, which can be illustrated with this pictures of the Uribante river where the dam is, which compares the same location in November 2008 and October 2009.

A picture is clearly worth 10,000 words as you can see the water level is very bad shape.

While graphic, the problem is that Uribante is almost a footnote in Venezuela’s power generation picture, since Guri, the dam in the Guayana region generates 63% of the electricity in the country. Unfortunately, in the Corpoelec report where the pictures above were taken from, those of Guri are not as dramatic as the picture above, for a very simple reason: The level of water at Guri, while low, is not at a historically low level, as this graph shows:

each vertical line indicates the height of the water level on January 1st of each year. As you can see, the level is at 264 meters above sea level. In both 2003 and 2004, the level was found to be lower on Jan. 1st than it is today. Thus, at first glance one would think that given that this crisis seems to be playing out to be much more dramatic than in 2003 and 2004, this is not justified.

But it is, because in 2003 and 2004 the Rio Caroni that feeds the Guri dam was not running at such a low level as it is running today as shown in the next graph:

This is a plot of the day by day flow of the Caroni river (in red) during 2009 where it is compared to the worst flow recorded in history (in green)  and the historical average (in purple). As you can see the water flow is 50% of the historical maximum at this time of the year and very close to the historical minimum. And this is precisely the problem, the dam is not filling as fast as usually is which means that if you keep using it at full capacity, the wtaer level will drop to critical levels much faster tahn it did in 2003 and 2004.

And yes, you can blame El Niño for that, but this is not an unusual phenomenon either, it comes and goes in periodic cycles. But since you can not longer blame the previous Government (even if it was tried) you might as well assume the usual “don’t blame me” attitude of the Chavista Government.

But in the end, El Niño is not the real problem either. The real problem is that demand since 2004 has grown by ~40%, as can be seen in the next graph:

And what is the reason for this growth? Well, the main reason was the oil boom, which led to a spending and consumption boom, but there is also a factor of the lack of any incentives to save energy or electricity. Not only have rates been frozen for 7 years, but 32% of residential homes steal their electricity and many Government offices and institutions do not pay Corpoelec or pay with considerable delay.

But nothing was done about the rates. In fact it was the Government’s policy to keep them low. And like Petkoff says in the previous post, this growth which originated in the oil boom, was not accompanied by the investments that could have been made using part of the funds from the oil boom.

But it was worse that this. When Chavez got to power in 1998, there were two large power plants under constructions that were supposed to be finished before 2003 and three hydroelectric plants planned for the Alto Caroni region. Of these only one was completed in 2007 (four years late). One is scheduled for 2011-2012 and the three hydroelectric plants were replaced by about two dozen fuel plants of which only two or three have been built and only two are fully operational. Remarkably, those ineffective Governments of the much maligned IVth. Republic planned sufficiently ahead in the 70’s, 80’s and 90’s such that there was always over capacity.

Not any more…

Through lack of investment and planning and despite Giordani, as noted by someone in the comments, having a Bachelors in Electrical Engineering and spending eight of Chavez’ eleven years as Planning Minister, the whole field was mismanaged and it is fully and completely this Government’s fault that the country faces this crisis.

But it is interesting to look at some other numbers which tell us a lot of about the industrial and electrical power infrastructure of the country.

First of all, the following graph shows the power produced by Edelca (mostly Guri) and how it is used:

The last line is truly amazing, it represents the electricity consumption of all of the basic industries in the Guayana region, they use 1,840 MW of power, more than all of Caracas or all of Zulia State. In fact, it is more, because the cities of San Felix and Pto. Ordaz are fully devoted to those basic industries and they use another 540 MW, so that the combined consumption of the Guayana Industrial Complex reaches 2,380 MW in total. (Edelca generates a total of 9,780 MW and Guri 6,200 MW)

Which is why the focus of the savings program is in this region. The Government plans to cut production of Aluminum and Steel, chopping off 500 MW of power, cut off supply to Brazil (60 MW), install an additional 35 million energy savings lightbulbs (200 MW), increase thermoelectric generation (adds 100 MW) and finally, reduce electricity demand at shopping centers (20 MW)

The last number is what is ridiculous. The misguided policies proposed by the Government, only to be withdrawn when the outcry forced them to, represented barely 2% of all of the savings and cuts proposed. As I have suggested elsewhere in this blog, this improvised decree could have been replaced with forcing shopping centers to cut 10-20% of the energy usage in November 2009, by policies chosen by them under the penalty of paying four or five times the going rate in any excess of the power used above the targets.

You can bet that shopping centers would have happily complied, choosing what to do so as to maximize business, jobs and convenience to their customers.

But stupid Big Brother thinks he knows it all, while the opposite has been shown to be the case in this field.

Finally, the presentation by Corpoelec has ince again over optimistic projections like saying Planta Centro will be up to 400 MW by next month. Sure…I also understand that Guri is below performance due to a number of turbines being off line.

There are other topics that are interesting in all this, such as whether the Guayana complex makes sense, why the Chavez Government decided to buy Sidor, the economic impact of these plants running at half capacity while the Government pays everyone’s salary. But for now, I think this post is long enough and I am sure you agree.

31 Responses to “Still thinking about that electricity problem in Venezuela…”

  1. moctavio Says:

    Veneconomia article: Guri near collapse. Date: 2003

    http://bit.ly/88hlh6

    Whose fault is it?

  2. moctavio Says:

    Ghostbar: I am very clear in the post that indeed there is a drought, but I do note that the picture is not of Guri, which is the main problem, I note Uribante is a footnote compared to Guri. The drought is one of three components, the other two being lack of investment and lack of maintainance.

  3. moses Says:

    Miguel:

    Here is a nice overall view of the Uribante Caparo project, from ghostbar´s link:

    http://www.soberania.org/Articulos/articulo_443.htm

  4. laughing Says:

    bill simpson

    Hugo bought at least 20 advanced large combustion turbines since 2005, I think a few more were just sold. 3 or 4 of them are running by a shoestring and bound to have catastrophic failure at any moment

    The gas supply is so poor they switch to oil and the oil is sent in like tar fouling all the systems, its the three stooges running power plants episode in the making

    The idle units are not generating megawatss but rather they have generated billions in dollars of corruption to people who all have the money in dollars or euros outside of venezuela.

    The units should have been running between 2-3 yrs ago. We are talking about thousands of MW sitting idly. Some of the units if ever deployed will need complete refurbishment before they are ever used due to poor storage and cannibalization. Its comical yet tragic

    No excuses , there is no chance foreign companies invest in a quagmire like venezuela

  5. ghostbar Says:

    I think you should read this before using the Uribante-Caparo picture again: http://joseluisrivas.net/2009/12/11/la-sequia-no-es-la-causa-de-la-falta-de-electricidad/ 🙂

    Uribante is not producing energy since about 10 years ago and was used as a tourist center and lately as a guerrilla training center.

  6. deananash Says:

    Miguel, great work as usual.

    Your detailed efforts are enough to provide any thinking person with a good foundation. That there is undoubtedly more to be uncovered, is a given.

  7. Hans Says:

    @Bill Simpson “Natural gas powered turbines can be built rapidly and generate electricity very efficiently. ”
    PdVSA has already problems to provide the needed gas to the existing plants…

    Regards from germany, we´re in the middle of an heavy snow storm.

  8. Hans Says:

    @Halfempty I knew I had seen a picture with a church in the middle of a lake before 🙂
    Near the town where I was born in germana they took one church away in the 1980`s because of the expanding mine that was there. And they took it away stone by stone and build it new in other place, the church was not even something special.

  9. Bill Simpson of Slidell USA Says:

    Venezuela has the largest hydrocarbon reserves on planet Earth (The Orinoco deposits, I read a study about the heavy oil done by Rice University in Texas. You can’t keep that kind of potential money a secret.) and the electricity goes out! Someone is doing something really wrong. I once calculated what the oil was worth. (I left out all the gold, iron, aluminum and other stuff found in Venezuela.) You need to write the number in scientific notation because it is in the quadrillions of dollars.
    Natural gas powered turbines can be built rapidly and generate electricity very efficiently. They produce little pollution, carbon dioxide and water.
    Venezuela running out of electricity is like Greenland running out of ice-crazy. If all foreign investment was welcomed, and contracts honored, trillions of investment dollars would flow into Venezuela overnight. Think Kuwait or Qatar. In 15 years, everyone could have their own jet.
    I think we got all your rain, 64 cm in December, a new record.
    Wikipedia ‘peak oil’ and you will see how rich Venezuelans will eventually be. Hopefully, most of the money will get spread aroung. I hope you all live long enough to see it happen. Good luck from frozen Louisiana.

  10. Charly Says:

    An article in STRATFOR seems to have a pretty good handle on the situation. You may view it here below the editorial:

    http://www.petroleumworld.com/ed10010601.htm

    or get it from STRATFOR who will deliver it to your mailbox.

    http://www.stratfor.com/memberships/151509/analysis/20100103_venezuela_electricity_crisis

  11. framethedebate Says:

    The Fat Man grants $130 million to be invested in Nicaragua. Perhaps the majority of Venezuelans that elected him can feel good about helping everyone else while they sit in the dark. Very generous!

  12. Gringo Says:

    LVS: the article I cited supports your point of view.

    “Lobao said the hydro plant at the dam itself was working, but there were problems with the power lines that carry electricity across Brazil. Brazil uses almost all the energy produced by the dam, and Paraguay consumes the rest.

    In Paraguay, the national energy agency blamed the blackout on a short-circuit at an electrical station near Sao Paulo, saying that failure shut down the entire power grid supplied by Itaipu.

    All of Paraguay went dark for about 20 minutes, the country’s leading newspaper, ABC Color, reported.

    The agency in charge of the dam, Itaipu Binacional, said the blackout did not start at the hydroelectric complex. It said the most likely cause was a failure at one or more points in the transmission system.”

  13. LVS Says:

    Yes there was a major blackout – like the one in the Northeast a few years ago – but it was a one-off event and with issues with transmission and transformers – so far I have not heard about low damn levels and Niño affecting their generating capacity – I may be wrong in that but will keep looking ….

  14. Gringo Says:

    Kepler:
    I think I read somewhere there were blackouts in Brazil now, although by far not as Venezuelan as in Venezuela.
    Many pictures, a thousand words:blackout in Brazil.

  15. Kepler Says:

    LVS,
    I think I read somewhere there were blackouts in Brazil now, although by far not as Venezuelan as in Venezuela

  16. Halfempty Says:

    Over here in europe they would have taken the church stone by stone to rebuild it somewhere else… Hans, not always. 🙂

  17. jsb Says:

    Right, I see your point, Miguel. Either way, not enough of anything has been built.

  18. LVS Says:

    The best systems are diversified – in more than just fuel source – One of the issues is that all of Venezuela’s hydro is Guri – so we depend on one river.

    As I have been thinking about this, Brazil comes to mind – it is a neighboring country, so it should be affected by El Niño as well, it has 77% of its capacity in hydro ( although diversified through different areas of the country) and yet we have not heard of shortages or blackouts there. Here is some info on that system http://en.wikipedia.org/wiki/Electricity_sector_in_Brazil

    So what would be the difference – maintenance, management, losses, investments – take your pick all of the above will apply one way or another

  19. Charly Says:

    jsb, right, the best systems are both mixed generation and interconnected.

  20. jsb Says:

    Just to be the Devil’s Advocate for a moment:

    “and the three hydroelectric plants were replaced by about two dozen fuel plants”

    Seems you wouldn’t want to put all your energy eggs in one basket. If those three hydroelectrics were online instead of the two dozen fuel plants, wouldn’t it have exacerbated the el nino problem today? I mean, in good times I suppose it would be better to have as much hydro as one can get, but you’ve got to develop means to overcome the dry seasons. And yes, the market could have helped solve some of this. But in the end, when you’ve got so much hydro, you set yourself up for these kinds of situations.

  21. LVS Says:

    Miguel –

    To better understand the problem the Corpoelec presentation is not very useful – Most of the graphs ( apart from one ) refer to “potencia” or capacity – meaning the installed capacity of the plant.

    To give an example Planta Centro can have 2000 MW installed, but if its not operated properly or has not been maintained, its ability to generate deteriorates over time, same goes for weather conditions etc they all affect production, which is usually measured in MWh or GWh ( the actual amount produced by the facility) meaning if you have a capacity of 9800 MW – you assume what the availability of the plant is ( meaning units not in maintenance, days out of service etc, and you multiply that by the number of hours it is actually producing and you get GWh)

    Guri for example – if the damn levels go lower you don’t have enough water to move all turbines so you need to manage the plant – you shut some of the turbines with the intention to increase the pressure in others so they can generate. If in addition you have units out of commission ( they mention somewhere unit 2 which has vibrations and leaks) it means you can operate it properly) for every hour that unit is not operated you generate less electricity regardless of what the capacity of the plant is.

    So when we talk about the basic industries consuming large quantities of power – it is true – it takes bundles of energy to produce steel and alluminium – but its only what is consumed when the smelters are operating its is not constant. The advantage of our industry has always been the cheap power – not the abundance of the mineral resource – so this is not news for anyone – the fact that is mismanaged and we are not continuing to be a leading producer is another mismanagement topic.

    So we go back to the original discussion of hours and peak demand – blackouts will ocurr when demand increases during the day – and there is no electricity to cover that demand – Guri has always been finite and varaiable like any other hydro plant.

    My guess is that the problem in shortages has more to do with whats happening with the rest of the power plants. If Caracas for example takes the bulk of its load from Tacoa and other plants – and does plants are not operating to their best potential, have not been maintained are constantly being shut down for maintenance, there is a need to wheel power from somewhere else ( Guri ) if Guri’s production is also declining then that is your problem –

    Guri is not the main problem, although it is not helping – but the fact that either the other plants are not working together with no new capacity installed and you have a perfect storm of a problem.

    It is interesting also to mention that the basic industries ( and btw that should include PDVSA as refineries and such also consume a lot of power ) are base load – meaning they should be running 24 hours a day – you cant just start and stop steel smelters at will – so that may solve temporarily the problem and provide excess capacity during the non-peak periods.

    Does that help clarify a bit –

  22. Hans Says:

    @kepler thats one think about the venezuelans I experience nearly everytime that I am over there, no respect for history.

    And on the other hand most are also catholics and flooding a church??

    Over here in europe they would have taken the church stone by stone to rebuild it somewhere else…

  23. Kepler Says:

    Good analysis.
    OT: It would be interesting to know from what time that church is.

  24. Charly Says:

    Good analysis that shows that nothing beats good planning. In the case of the Caroni River, what is really important is the volume rather than the flow since all water gets stored in the reservoir (unless it is already full) for latter use. I notice that January to April 2009 are above normal. Would be interesting to compare all 3 volumes, minimum, 2009 and average. Notice too that historically the river went dry end of March.

  25. Jose Manstretta Says:

    I was working at Sidor in the previous electricity crisis, which was more severe than this one and we help to summarize with Edelca officers to the goverment what should be done to recover in just of 2 to 3 years some real big generation and transmission projects, but before they really understand the problem, god gives a hand to this goverment and start to rain heavily, so they discharged our work. Now, most of the people I worked with in Edelca are not anymore there and the only company who used to generate and paid dividends to the goverment has been taken over and takes for them just one year to generate big losess… Any goverment shall be better than this…

  26. moctavio Says:

    Corrected, sorry, slip of the tongue, has to eb average since red line exceeds it regularli.

  27. Halfempty Says:

    Between 32% (!) of residential customers free-riding, the goverment slow paying and the rate freeze, who ever is running the system must be masters of by-the-seat-of-the-pants engineering.

  28. Hans Says:

    The comment in slide 7 of the ppt says:

    “La presente gráfica presenta el comportamiento en el presente año del caudal de aportes del Rio Caroní comparándolo con los máximos, mínimos y promedios históricos de los 60 años registrados. Cabe señalar que las curvas de máximos, mínimos y promedios son curvas de referencia. .Se observa que en los primeros 5 meses del presente año se registraron aportes por encima del promedio llegando incluso a registrar máximos históricos. Este comportamiento permitió que el nivel del embalse Guri se mantuviese dentro de la zona segura de operación. Sin embargo a partir del mes de mayo los aportes sufrieron un fuerte descenso ocasionando que el nivel del embalse alcanzara a finales del invierno la cota máxima de 268,14 m.s.n.m., casi 3 metros por dejado de su máxima capacidad. Es importante mencionar que los aportes durante los últimos 3 meses se han ubicado cerca de los mínimos históricos, excepto a principios de noviembre. Actualmente los aportes al embalse estan registrando valores por debajo de los mínimos históricos.”

    Means in Jan. of 2009 – May 2009 the flow of the charoni river had the highes levels in history…
    But it is like everywhere spend all, tomorrow we see what we do.

    H.

  29. Daniel Says:

    Miguel, there is a small mistake in the paragraph explaining the chart of the Caroní flow. It reads “…where it is compared to the worst flow recorded in history (in green) and the best (in purple)…”, where it should say “… where it is compared to the worst flow recorded in history (in green) and the AVERAGE (in purple)…”


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