State depends 100% on thermoelectric plants, extra cost shared by all Brazilians; Lula authorizes the work this Friday
The president Luiz Inacio Lula da Silva (PT) signs this Friday (3.Aug.2023) in the city of Parintins (AM) the service order for the start of works on the Tucuruí Line, which will connect the State of Roraima to the national electricity grid. The transmission line will connect Manaus (AM) to Boa Vista (RR), with a length of 715 kilometers. Construction has been promised for more than a decade and should have an impact on Brazilians’ electricity bills.
Roraima is the only federation unit that still does not have connection with the SIN (National Interconnected System). Because of this, the State depends 100% on energy from thermoelectric plants, which have a more expensive production cost. The extra amounts to pay for the isolated system are funded by all consumers in the country through the CCC (Fuel Consumption Account), a subsidy that integrates the CDE (Energy Development Account), paid by all Brazilians in the electricity bill. .
According to a study by TR Solutions, the expense with the CCC represents up to 4% of consumers’ electricity bills, totaling R$ 12 billion in 2023. This is the largest subsidy related to the electricity sector supported by the CDE. Today, the cost of the isolated system in Roraima represents R$ 2.2 billion of that budget (19%), with more than half of the expense being spent on fuel consumption (diesel oil and gas) to move the thermal power plants.
Here is the division of costs with the electrical system of Roraima borne by the CCC:
- 55.9% are fuel expenses;
- 29.4% are expenses with power and energy contracts;
- 14.6% are expenses with own generation and leasing;
- 0.1% are freight costs.
The cost of fuel alone currently exceeds R$ 1 billion, a value that should fall to less than R$ 50 million by 2027, with the inauguration of the line, according to the study. TR’s estimate is that with this there will be a small reduction in the subsidy paid by consumers, allowing the weight of the CCC to drop to up to 2% on the electricity bill. Here’s the full of the study (275 KB).
Considering the example of a consumer who currently pays BRL 200 for energy, the change would allow a reduction of BRL 8 monthly paid to the CCC to around BRL 4. The projection is that the reduction will start in 2026, as indicated by the planning of EPE (Energy Research Company). It depends, of course, that the work on the flax is ready by then.
“With interconnection to the Boa Vista SIN and other nearby locations, such as Alto Alegre, Bonfim, Caracaraí, Mucajaí, Normandia and Rorainópolis, which are municipalities supplied today with thermal generation, the isolated load in the State should decrease from 1,664 GWh per year to 69 GWh per year, which should provide a reduction in fuel costs from BRL 1.04 billion in 2025 to BRL 44 million in the following year”claims Helder Sousa, director of Regulation at TR Soluções.
The connection to Boa Vista and the other locations indicated above should enable a reduction of around 96% in fuel expenses when the interconnection takes place. There will still remain the consumption of isolated systems in other smaller regions in the State. According to TR, the 2nd largest source of expenses, power and energy contracts, follow their own rhythm of reduction according to the validity of the signed agreements.
The study points out that the CCC budget should rise from the current R$ 12 billion per year, reach R$ 13 billion in 2024 and 2025, and fall to R$ 11 billion in 2027. Although the energy load of isolated systems should fall by 55% until 2027, mainly because of the Roraima connection, the expense with generation in the State is not the only one on the account and other items will become more relevant in the total cost.
helder explains that the CCC includes the following expenses for power generation in isolated SIN systems:
- cost of fuel and natural gas;
- freight;
- own generation cost;
- leasing of generator sets;
- operating and maintenance costs of the SIGFI (Individual Electric Power Generation System with Intermittent Source) and
- costs of contracting power and electricity.
“This reduction in the CCC budget should be offset mainly by an increase in disbursements related to the costs of operating and maintaining the photovoltaic systems installed in the region, which should go from R$ 485 million forecast for 2024 to R$ 1.1 billion in 2027 ”says Helder.
DISPUTE WITH INDIGENOUS STRUGGLED WORK
The project was auctioned by Aneel (National Electric Energy Agency) in 2011, during the management Dilma Rousseff (PT), but it never left the drawing board due to difficulties in clearing the stretch that will cut through the Waimiri Atroari indigenous reserve, in the Amazon. Around 122 km of lines will be installed at the site.
The work ended up in court, with the indigenous people demanding socio-environmental compensation because of the impact that the line would have on the forest. The dispute dragged on over the last decade, ending in 2022, during the management of Jair Bolsonaro (PL), with the signing of a judicial agreement between the federal government and the indigenous people.
The concessionaire that won the bid will have to disburse R$90.3 million to, among other measures, compensate for the irreversible impacts of the loss of assets, restrictions on the right to use the indigenous land and the creation of impact mitigation programs.
On the other hand, the Waimiri Atroari people must commit themselves to efforts so that the implementation of the enterprise is carried out minimizing deadlines and resources and agreeing to a partnership in actions. The Union must reimburse Transnorte Energia in R$ 88.5 million with resources from the Pró-Amazônia Legal program as compensation to the company for the programs that will have to be executed.
Until 2019, most of the energy consumed in Roraima was imported from Venezuela. That year, the government of Nicolás Maduro broke the supply contract because of a serious energy crisis faced by the country, which increased the cases of blackouts in the State and the need for thermoelectric generation.
The construction of the line to take the energy produced in the rest of the country to Roraima, especially at the Tucuruí Hydroelectric Plant (PA), became even more fundamental, with the Bolsonaro government declaring the work as important for national sovereignty and integrity.
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