Electricity prices for domestic users will inevitably begin to rise as the long-term contracts that guarantee their supply begin to expire from 2024, due to the costs of their production have more than quintupled in recent months for him climate changeas La República reported last July.
It works like this: various sources are used to produce electricity, such as wind and solar, but above all hydroelectric (rivers) and thermoelectric (coal, natural gas and diesel). Occasionally, when there is a lack of rain, the lagoons do not fill and the rivers do not have strength. Then, the electricity deficit is covered with diesel, which has the highest costs in the system.
Are these cost overruns immediately passed on to families? No. Rafael Laca, Enerkory specialist, explains that the regulated market of 32 million Peruvians is protected by long-term contracts. However, this does not prevent subsequent contracts from taking the new values as a reference and, with this, electricity bills from joining the upward spiral.
Osinergmin points out that, in the short term, there are around 30 contracts to expire in the regulated market, which reach 10% (320 MW) of all demand from users of the public electricity service.
Tension with gas carriers
The System Economic Operation Committee (COES) is the body that operates the Peruvian electrical system and plans its transmission with criteria of economy, quality and safety. Its owner, César Butrón, warns that we are experiencing the “most critical drought in the last 22 years.”
As a result, today it burns diesel almost 24 hours a day, not only due to low hydrology, but also due to two hydroelectric plants out of service (Chaglla and Quitaracsa). Until two years ago, he explains, the use of diesel was “exceptional.”
“The ideal in the system was not to burn because we have gas [a precio regulado para el mercado interno] and water. Since 2015 it has only burned in emergencies or failures. But natural gas is no longer enough and future contracts will, in any case, be affected,” he anticipates.
In July, marginal costs for generation went from US$24.23 MWh to US$153.84 MWh, when compared to the same month last year. Butrón assures that in September, they range between US$185 MWh and US$220 MWh. A record that will only end if the rains arrive in November, but El Niño is approaching.
Aware of this, the Vice Ministry of Electricity is finalizing details of a decree that prioritizes the use of natural gas (although also fossil, it will always be cheaper than diesel) for generation destined for the domestic market, a proposal that is not to the liking of its exporters. , according to other sources in the sector.
It happens that, due to private contracts, there is a limit on the use of gas for generation that can only be broken if the system is declared in emergency: earthquake, terrorist attacks. But a climate crisis was not causal, until now.
If the decree is approved, every time the electrical system is declared in emergency due to lack of rain, the levels of gas that are exported through Peru LNG – a business that moves billions each year – will be drastically reduced, and will be used to thermogenerate.
Vice Minister Jaime Luyo Kuong clarifies, however, that the priority for the use of Camisea gas is the domestic market, while the “surpluses are those that are destined for export, and not the other way around.”
Luyo rules out, along these lines, that the device, now collecting the contributions of its hydrocarbon peers, could affect the gas massification process in homes. The decree is expected to be published between this and next week.
Lack of rain hurts the electricity sector
The main generation sources are hydraulic and thermal gas, diesel, coal, waste and biomass (95%). The remaining 5% is generated with renewable resources (wind and solar).
In August, hydraulic generation fell 15% compared to the same month in 2022 due to lower production at the Mantaro, Cerro del Águila and Restitución plants.
Today the main lagoons used for electricity generation are located on average 30% of its maximum capacitya, according to COES data.
The word
Jaime Luyo Kuong, Vice Minister of Electricity
“From Camisea, the gas and electricity markets are coupled. We are fine-tuning the standard, there is excessive concern when prioritization will not be permanent. Nobody conditions us.”
Source: Larepublica
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