OSINERGMIN: energy crisis and “tarifazo” in the coming months

It is no surprise to blog readers (see posts 01-02-03); However, if it is that the energy regulator itself, OSINERGMIN, through its president Daniel Schmerler, recognizes that in a few months the electricity demand will exceed the supply. According to the interview with Gestión (21.1.20), Schmerler confirms several facts already announced by the blog:

         I. Already in 2022, electricity demand will increase above supply, due to excess demand for both new mining projects, increased industrial and urban demand, and this would push the price increase, due to increased use of diesel oil to generate electricity, said Schmerler, "more expensive and polluting" energy. "Diesel increases the cost of electricity five times," Schmerler said.

      II. That the offer has been contracted, while the electric transmission projects (even less, of hydroelectric plants) have not been carried out, nor the electrical interconnection with Ecuador, for example, surplus in energy thanks to the hydroelectric plants financed by China. Likewise, gas pipeline projects to use the abundant natural gas in electricity generation have stopped completely, with the practical abandonment of the Peruvian Southern Gas Pipeline.

    III. The intricate electric tariff system is favoring the thermoelectric deficiencies (which burn diesel oil, especially) against the more efficient hydroelectric generation companies.

    IV. The tariffs are including taxpayer subsidies for especially non-conventional renewable energy projects, the so called RER premium, although they do not compete with traditional energy, that is, wind and solar, discarding hydroelectric power plants from public investment.

Incoherently, the official reaffirms the policy of promoting not very efficient hydroelectric plants, and whether wind, geothermal and solar energy (RER), intermittent and low energy flow density.

Fortunately, private hydroelectric projects (such as those of China Three Gorges in Peru) are so efficient that even without subsidies they are profitable. Even if it is not known if they will be executed in a timely manner.

01/23/20