Venezuela’s Thermoelectric Power Plants and the Ruin of the National Energy Sector

Alejandro Lopez-Gonzalez from the Venezuelan Observatory of Political Economy argues in favour of a sustainable electrical generation model based on wind power.

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A diesel-guzzling thermoelectric power plant in Venezuela. (Alejandro Lopez-Gonzalez)
A diesel-guzzling thermoelectric power plant in Venezuela. (Alejandro Lopez-Gonzalez)
By Alejandro López-González - Venezuelan Observatory of Political Ecology
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The thermoelectric myth in Venezuela has ended up ruining the national economy, under our noses, in front of everyone, yet it seems that no one in the government or in the opposition is willing to admit it.

The huge business and corruption involved in the purchase of thermoelectric power plants for [the State-run electrical corporation] CORPOELEC has already been talked about a lot. In that regard it is clear that the embezzlement of public coffers has been massive, but it is not only that.

Thermoelectric plants in Venezuela have meant theft and corruption in their construction and the ruin of national refineries in their destruction.

In the midst of it all, there are millions of Venezuelans suffering from criminal blackouts and rationing and the product of this awful national electricity development strategy.

This strategy is only understandable if its intention is to break up the industry with the final objective of privatization and handing it over to large transnational corporations. The auctioning off [of this industry] which is to come in Venezuela began with the plan of dismantling the electricity and oil sectors. These sectors had been run into the ground through intensive development strategies for diesel-powered thermoelectric plants throughout the country.

Venezuelans are sold the idea that the intensive development of thermoelectric plants is revolutionary, and that the use and dependence of hydroelectric plants on the Caroní River [in Bolivar State, where the Guri hydroelectric complex is located and produces around 80% of the country’s electricity] was part of a cross-party strategy of handing the sector over to private capital during the Fourth Republic.

From 2005, the so-called "Energy Revolution Mission" began, in which the country acquired 1146 megawatts of diesel thermoelectric generation units that consumed about 750 million liters of diesel per year.

The diesel used was produced by domestic refineries, implying an opportunity cost loss to the nation of about US $1 billion annually, without even taking into account the inflated price with which the plants were acquired for.

On the other hand, hydroelectric generation has no cost for primary energy sources (i.e. fuel) since the generation is based on the use of the potential energy of the reservoirs in the Caroní river. Although the initial cost of hydroelectric plants is high, the cost for power generation is much lower than that of thermoelectric plants. It could be argued [at the time] that the hydroelectric potential of the Caroní was close to being exhausted and that it could only rise to about 14,000 or 16,000 megawatts (today it produces between 5,000 and 10,000 megawatts). However, Venezuela has many other alternatives.

The potential for wind power generation in La Guajira (Zulia State) and Paraguaná (Falcón State) together represent the third most important wind harvest potential in Latin America, and would be sufficient to generate up to 12,000 megawatts, using another free primary source of energy: wind.

Having reaching maximum hydroelectric potential in the Caroní and considering the high opportunity costs that the country must pay to use domestic fuel for electricity generation rather than exporting crude to obtain foreign currency needed for development, the technology that was technically and economically more convenient for the country was wind energy.

However, this was not what was done.

The two initial projects of wind power in Venezuela were abandoned and vandalized in Paraguaná and La Guajira, respectively. Big business and the electrical emergency [of 2010] allowed corrupt bureaucrats to award contracts for the purchase of thermoelectric plants with large commissions and inflated prices. It is much easier to do business with the acquisition of cheap and fast thermoelectric plants than with a national strategic plan of sustainable development for the electricity industry, through wind and hydropower, with a thermoelectric back up.

The electrical emergency saw around US $38 billion spent in the purchase of thermoelectric plants that use 50,000 barrels of diesel a day on average. This amount reduced diesel exports to the United States, causing a fall in national income of about US $12 million per day, or about US $4.38 billion per year, which should be added to the other US $1 billion [of losses] for this policy.

This strategy involved losses to the country of more than $5 billion per year, due to the fall in fuel exports that were now be burnt to generate electricity in “cheap” thermoelectric plants (albeit paid for at high costs) and of poor performance.

At the same time, [State-run oil company] PDVSA began to lose money from the lack of oil exports and a failure to perform subsequent maintenance on the national refineries, which was now impossible. In other words, the use of thermoelectric plants with diesel not only caused export losses, but at the same time destroyed refineries that were left without foreign currency to carry out the corresponding maintenance. This is what I call "the self-destructive cycle of thermoelectrics in Venezuela," something that has not happened anywhere else in the world. It is such a bad strategy that it is only understood if its purpose is precisely that, to destroy a national industry with all intentionality.

At present, not only has it not been rectified, but the development of more thermoelectric plants -- now even with coal in the case of the Zulia State -- is being insisted on. This would involve an investment of US $5 billion and the destruction of the entire Socuy river basin that is the main tributary river of the Manuelote reservoir that provides fresh water to the city of Maracaibo [in Zulia State].

In addition, new diesel-powered thermoelectric plants are planned for Zulia and other states of the country. The self-destructive policy is moving to the level of delirium, as the country is not able to bear such a burden. We do not have diesel supplies for this, and the amount available is not even enough to cover the current operating system [of thermoelectric plants].

The way out of this problem is to migrate all the operational turbines to the use of natural gas, of which Venezuela has the fourth largest reserves in the world, and which have not been used for thermoelectric generation or anything else. Just in the Gulf of Venezuela and Lake Maracaibo there is more natural gas than in Colombia and Peru combined.

But Zulia's thermoelectric plants, the few still operating, continue to burn diesel. It is not enough to migrate to gas, we must advance in efforts to use wind generation so as to maximize exports of Venezuelan diesel and gas and increase national revenues, avoiding the burning of fuels for domestic purposes when they can be used for revenue that will have a national benefit and help shift the energy matrix to a much more sustainable one.

The measures are urgent and the time is now, we have to break this vicious circle of buying cheap thermoelectric scrap to burn diesel that then leaves us with no income to repair refineries or power generation plants. Enough!

Let us advance in the development of large wind farms in La Guajira and Paraguaná to save the national refining industry from absolute bankruptcy and have a robust and reliable electrical system, as well as one which is environmentally friendly and respectful of the 2015 United Nations agreements.

Alejandro López-González is an electrical engineer with a PhD in Sustainability and other postgraduate degrees in electricity generation from renewable energy sources and energy engineering. He has participated in numerous research and development cooperation projects in Venezuela and is the author or co-author of numerous articles published in international scientific journals. He is a visiting professor at the Zulia University.

The views expressed in this article are the author's own and do not necessarily reflect those of the Venezuelanalysis editorial staff.

Translation by Paul Dobson for Venezuelanalysis.

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