The Ministry of Energy and Mines (Minem) would have ready in September the decree that will prioritize the use of natural gas for electricity generation in the face of a possible increase in costs due to the arrival of the phenomenon of The boy. This does not imply that, within the portfolio, disruptions have been generated encouraged by a sector reluctant to cede the gas that has been separated for export.
It works like this: when there is low hydrology (low river strength), the hydroelectric plants cannot supply the national electrical system (SEIN). To avoid blackouts, other sources are used, such as diesel. The problem is that its use by thermoelectric plants increases generation costs five times, which can be transferred to the 32 million Peruvians in the medium and long term.
The government plans to implement a supreme decree that prioritizes the use of natural gas in homes if costs increase due to El Niño. Photo: diffusion
The Economic Operation Committee of the National Interconnected System itself (COES) recently warned that marginal costs have risen to more than US$150 MWh today, “a lousy price signal for upcoming long-term supply tenders” scheduled for 2024.
These warnings were not an impediment for the Vice Ministry of Hydrocarbons to propose modifications to the original project proposed by its Electricity counterpart, even when El Niño knocks on the door.
Industry sources informed The Republic that now it will seek not to affect the current contracts of gas exporters, whose volumes would be reduced if more of the resource is allocated to electricity during water stress.
electric vs. gas
The information was corroborated by the general director of Hydrocarbons (this vice-ministry remains headless), Luis García, who stated that the decree “was still under review”, since now it is proposed not to prioritize the transport capacity of the TGP pipeline for the domestic market, but to redirect the surplus gas that is not consumed daily.
“The solution is not to take gas away from people, but to agree. Domestic users are the most important, we cannot take gas away from them, but there is availability, since consumption fluctuates,” said García Cornejo at the XII Natural Gas Conference Peru 2023.
Director García refers to the warning issued by the private sector regarding an alleged affectation for 250,000 homes that they would run out of gas in the northa speech that has been rejected by various specialists, including Gustavo Navarro, who clarifies that domestic consumption does not reach 10% of national demand, while generation can take 70%.
It is even proposed to solve the problem of the increase in the cost of electricity no longer by decree, but through “management with committees between private companies.” However, there is also no certainty that this new modality will be ready before the arrival of El Niño.
However, within the ministry the delay that the decree has already had is questioned and it is expected to have it ready, after its trapped socialization, in the coming weeks.
“Obviously, no company [involucrada en la exportación] wants to lose, and the feedback from the project within the hydrocarbons sector is that the wording should be revised,” said the source.
Pablo Campana, commercial manager of Large Pluspetrol Clientsalso said that the “reliability in the energy transition” could be affected.
In the energy sector, long-term (firm) and non-interruptible contracts are required to ensure investments; that is, they buy gas intermittently. With this standard, thermogenerators no longer have to secure their supply with firm ground in the event of a dry season, and gas traders do not like the idea.
“It is important not to give contrary stimuli, it is necessary to review this norm that is prepared for this kind of redistribution in case of emergency of the transport of the gas”said Bell.
Gas generation in the eye of the storm
Electricity cost overruns are not passed on immediately to domestic users, but in the long term, according to COES.
Osinergmin also recommends prioritizing the gas transported by TGP for the domestic market.
By drag, when the generation with diesel is activated in the SEINall other sources (such as hydroelectric or wind) benefit from a better price.
The National Society of Mining, Petroleum and Energy (SNMPE) and the Peruvian Hydrocarbons Society (SPH) defend the burning of diesel in case of drought.
Source: Larepublica
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