Venezuela: Building a Sustainable Electricity System

Venezuela is using public investment, foreign direct investment, public education, and the law in order to craft a sustainable solution to the rapidly growing demand for electricity that has resulted from economic growth and poverty reduction.

Through a campaign to promote energy conservation, the oil-producing South American nation has kept electricity consumption in check amidst economic growth in 2011, according Minister for Electricity Ali Rodriguez, who appeared last week on the Sunday talk show hosted by former Vice President Jose Vicente Rangel.

Normally, for a 2% increase in the GDP, electricity consumption is expected to increase by as much as 2,000 megawatts, Rodriguez explained. Venezuela’s GDP grew by 3.8% in the first nine months of this year, so the government was preparing for electricity consumption to reach 18,400 megawatts.

“We were expecting increases in consumption, but 17,000 megawatts at peak hour has been the upper limit until now”, Rodriguez said. “The campaign for the efficient use of electricity has been very successful”, said Rodriguez.

The government’s measures to reduce wasteful energy consumption began two years ago during a drought that reduced the water level at the Guri hydroelectric complex and nearly caused the collapse of the national electric system.

The state-owned electricity company, CORPOELEC, increased rates for high-consumption households and restricted imports of energy-intensive appliances. Meanwhile, the government  replaced  millions  of incandescent light bulbs with energy-saving fluorescent bulbs, and implemented temporary energy rationing that included programmed reductions in the heavy industries. Private companies that invested in electricity infrastructure were given tax breaks.

The energy-saving measures helped avert a deeper and prolonged crisis. Nonetheless, the temporary electricity shortage aggravated Venezuela’s recession amidst the global economic downturn that began in 2009. It also came at a time of high electricity consumption following five-years of sustained economic growth and a 50% reduction in poverty.


As Venezuela now emerges from recession, propelled by increased social investments by the government, the country has begun a multi-billion dollar plan to expand its electricity infrastructure and prevent future crises.

On Sunday, Rodriguez said the wave of economic growth that is expected in the coming years could increase Venezuela’s electricity consumption from 17,000 megawatts to 40,000 megawatts.

The country cannot continue to rely on the Guri dam for the majority of its electricity, the minister asserted.

Specifically, the government’s latest plan to build more than two million homes and equip them with electric household appliances such as refrigerators, washers and dryers, ovens and stoves, televisions, and air conditioners will contribute to the increased energy consumption, Rodriguez contended.

The appliances are imported from China and distributed through the state-subsidized Bicentenario markets. They are sold at a discount of up to 50%, and consumers are offered low-interest financing from the state-owned Bank of Venezuela, Women’s Bank, People’s Bank.

To provide for the citizenry’s energy needs, CORPOELEC has invested 21.4 billion bolivars ($5 billion) in electricity production and transmission in 2011.

A large part of the funding went toward the construction of a decentralized system of local thermo-electric plants that generate between 45 and 450 megawatts each and are dispersed in cities and towns across the country.

The government also received a $700 million loan from the InterAmerican Development Bank, which was matched with $609 million of state funds, to renovate and improve the efficiency of six generators in the Guri dam.

To improve the electricity transmission system, Venezuela is building power lines connecting the eastern Bolivar state, where the Guri dam is located, with the Uribante hydroelectric complex in the western region.

Minister Rodriguez affirmed that 122 out of a planned 187 high-powered transformers have been installed.

“We have to advance in the construction of new transmission lines so that we do not depend on the three-line radial system that we have, which in the case of any incident could leave the country without energy”, Rodriguez said on Sunday.

The investments for this project came out of a bi-national investment accord signed by Venezuela and China. In the accord, China pledged to invest $28 billion over several years to increase Venezuela’s electricity production by 2,750 megawatts.

In the first six months of this year, the government added 1,300 megawatts to the national electric system. The company projects that it will add 3,618 megawatts to the system by the end of 2012. As of April 2011, Venezuela reported to have the capacity to produce 17,922 megawatts.


During the decade before Venezuelan President Hugo Chavez was elected, 1989-1998, the national electric system’s production capacity was expanded by only 33 megawatts. In contrast, during the first ten years of the Chavez government, 3,229 megawatts were added to the system, according to Rodriguez.


While the government has focused primarily on the construction of thermo-electric generators  so  far,  it  has  also increased its investments in renewable energies, in particular wind and solar power.

The state-run Foundation for the Development of Electricity Services has installed approximately 2,000 solar panels nationwide, mostly in poor rural communities where connecting to the electricity grid would incur serious environmental and economic costs.

The foundation’s wind energy projects in the Guajira region of Zulia state currently produce 24 megawatts. Windmills on the Paraguana Peninsula produce 100 megawatts. Experts from the Central University of Venezuela estimate that the region could potentially produce as many as 10,000 megawatts – approximately the output of the Guri dam.

In an April 2011 interview, Electricity Minister Rodriguez stated: “Another factor that propels demand is the sensation among the population that all of the problems in the electricity sector have been solved, so  people  return  to  their previous practices of excessive consumption”.

A far-reaching and consistent effort toward public education and publicity oriented toward the formation of energy-saving habits will be essential as Venezuela continues to grow in the coming years, Rodriguez added.

“It’s not about people having to give up electricity, it’s about the rational use of electricity, which is part of a worldwide campaign to contribute to better environmental conditions”, said the minister.


To provide a legal instrument for the fulfillment of these objectives, the National Assembly passed the new Law for the Rational and Efficient Use of Energy last week. The law grants the Ministry for Electrical Energy six months to produce national guidelines for saving energy, conserving natural resources, minimizing the environmental impact of development, and promoting social equity. The ministry must also maintain a database of potential sources of renewable energy in the country.

The law also grants the Education Ministry one year to launch a national program for education about energy efficiency, to be carried out in primary schools, secondary schools, and universities. And, it sets the foundation for energy efficient building regulations to guide city planners and architects.