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Uncertainty About Energy Storage Brings Concern to the Sector; Constant Pressure for Thermoelectric Plants Goes Against Published Guidelines and Global Decarbonization.
The uncertainty regarding the implementation of energy storage solutions connected to renewable sources has raised concerns in the electric sector. Investors and companies in the energy sector have requested the adoption of new technologies to ensure a capacity reserve that allows for more affordable rates and a reduction in greenhouse gas emissions. This scenario reflects the need to adapt the energy market to new environmental and technological guidelines.
With the uncertainty surrounding energy storage policies, the pressure to construct thermoelectric plants conflicts with the objectives of storage systems. The introduction of innovative energy storage solutions is seen as essential to achieve a more sustainable energy matrix. The effective implementation of these technologies could ensure both the stability of the electric system and compliance with established environmental targets.
Public Consultation and Energy Storage
The Ministry of Mines and Energy (MME) published a text in the Public Consultation regarding the Capacity Reserve Auction. There is a constant pressure for only thermoelectric plants to be contracted for this auction, which contrasts with global trends of global decarbonization. This implies that Brazil would add more than 5 gigawatts of fossil plants, operating until 2043, which is a controversial choice considering the country’s commitment to reduce emissions by up to 53% by 2030 and achieve net zero emissions by 2050, according to Markus Vlasits, chairman of Absae.
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Economic and Environmental Impacts
The sector is concerned about the impact on tariffs, as the operation of thermoelectric plants already costs Brazilian consumers an annual fixed amount of R$ 3.56 billion. When these plants are activated, in addition to the fixed remuneration, they receive compensation for their CVU (unit variable cost), which can range from R$ 600.00/MWh for natural gas thermoelectric plants contracted in 2021 to R$ 3,225.00/MWh, depending on the dispatch modality and the fuel used, according to the Brazilian Association of Thermoelectric Generation (ABRAGET).
Cost and Emissions of Thermoelectric Plants
According to data from Rege Consultoria, the cost of minimum dispatch of 1GW for 8 hours ranges from R$ 3.6 million (gas generation, simple cycle) to R$ 10 million (diesel oil), generating between 3,000 to 6,500 tons of CO2, contrasting with the almost zero CVU of the energy storage systems (BESS), which can be charged with 100% renewable sources. The Energy Research Company (EPE) warns that the electric system will need more than 30 GW of power between 2027 and 2031 to avoid risks in peak supply.
Planning and Future Investments
Without the publication of the definitive ordinance, investors and companies in the electric sector are questioning the best strategy for capacity reserves, focusing on long-term planning and not just on immediate demands. Vlasits clarifies that, while they are reliable and adapt to the electric system in scenarios of water scarcity, thermoelectric plants are inadequate to meet peak demands, which are of short duration and occur more frequently.
Importance of Energy Storage Systems
In the last Public Consultation No. 160, 38% of the received responses referred to energy storage systems, with 98% favoring their inclusion in the Capacity Reserve Auction. Currently, generation expansion is led by renewable sources such as solar photovoltaic and wind, whose participation is expected to reach 40% of installed capacity by 2031. Although these sources offer many advantages, such as competitiveness and contribution to tariff moderation, their variability is an issue, as generation peaks do not match consumption, which occurs mainly at night.
Challenges and Solutions with Storage
The predictability of these renewable sources is not guaranteed, making them non-dispatchable. One solution is to use energy storage systems, such as batteries for four-hour dispatch, as suggested by ONS and EPE. With falling prices, today turn-key batteries are sold for less than USD 200/kWh and are economically viable for capacity reserve, additionally offering flexibility, as they do not rely on pipelines or other fuels, are modular, and can be installed quickly.
Advantages of Batteries and Market Impacts
Batteries charged with excess energy at times of peak generation and low demand have a CVU close to zero. If they are excluded in favor of thermoelectric plants, both the market and consumers will suffer losses, paying more for something that could be replaced by energy storage systems, enabling effective decarbonization at lower prices. In Brazil, there are already real cases, such as the project in Registro, São Paulo, where large storage systems can be implemented in less than two years.
Urgency in Sector Decisions
Vlasits concludes by emphasizing the need for swift decisions, given the risk of not holding the auction this year. He argues that, as a society, it is vital to continue demanding decisions aligned with the objectives of national energy policy. This includes protecting consumer interests regarding price and quality, finding more suitable supply solutions, utilizing alternative sources, and mitigating greenhouse gas emissions, as stipulated by Law 9.478/97.
Source: Manuela Ravioli
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