Energy nerds like me relish in the Energy Trilemma. What, you haven’t heard? It’s a trendy framework coined by the  the World Energy Council linking the three elements of energy sustainability: Energy Security, Energy Equity and Environmental Sustainability.

Source: World Energy Council
Source: World Energy Council

It’s a trilemma because normally progress towards meeting any two of these goals creates problems in terms of meeting the third. Reliable, universal access is easy enough to achieve…if you don’t mind cranking out heavier greenhouse emissions. If you reduce the environmental impact of energy consumption as much as possible, you can end up loading on costs, weakening economic growth.

Eventually, improved technology in renewable sources and energy efficiency might vanquish the trilemma. For now, trade-offs have to be made. Of course, leave it to Venezuela to think outside the box: here, we’re batting zero for three.

The Trilemma in Paris

The Trilemma became a popular framing device during the COP21 negotiations last year which led to the landmark Paris Agreement: a treaty based on a long term commitment to keep global temperature from rising more than 2°C by 2050. In order to do so, countries made a pledge to curb down carbon emissions and make major investments in greener technologies.

The beauty of the Paris Agreement, as UNFCCC Executive Secretary Christiana Figueres says, is that “it is built on the enlightened national interest of each country…on a very detailed analysis of what is possible”. Implementation will be based upon Intended Nationally Determined Contributions (INDCs), meaning there is no one-size-fits-all solution. 

Each country will evaluate which strategy makes more sense for themselves and work on it. If they have abundant solar radiation, they may encourage the development of solar plants, or if they have a lot of cheap clean electricity, they might electrify mass transportation. In general, all countries must find a way to decarbonize their energy mix (the combination of primary sources used to generate electricity and fuels) and reduce their energy intensity (how much energy they use to generate one unit of GDP).

Now, I know some of this may sound too foreign for a country like Venezuela, struggling to make ends meet in such deep debt that even oil service giant Schlumberger announced it will reduce its activities because PDVSA is years behind on its bills.

Why would Venezuelans worry about such complex issues like energy sustainability in the middle of all this turmoil? Maybe we should just concentrate on the Revocatorio and wait for the best, right?

NO! That is precisely the kind of blinkered thinking that has put us in this electric crisis, and will continue to erode our living conditions as months go by. A crisis, to me, is the best moment to rethink the long term.

The time to have this discussion is now, so I’m gonna go ahead and put some ideas out in the open and hope for some feedback.

Venezuela’s Energy Trilemma

Energy Security

All you have to do to realize how bad Energy Security has gotten in Venezuela is flick a light switch. We are talking about an electric system so weak that the government has declared a two-day working week for public employees amid electric shortages and at least 4-hour-long daily rationing episodes in some parts of the country. The authorities’ narrative has been that El Niño has hit hard Venezuelan hydropower plants, making it impossible for the system to stay afloat.

Now, it is true that we’ve gone through an unusually long dry season for three years, but climate models have been predicting longer droughts for over two decades. As the world becomes warmer, the weather becomes more extreme. And that includes recurrent phenomena like El Niño and La Niña, which will continue to intensify as global temperature rises.

That’s why everyone needs to adapt their energy systems, so that predictable droughts and floods don’t catch us unprepared. Planning ahead for widely foreseen contingencies is sort of governing-101, isn’t it?

Take Colombia’s reliability fee policy. Utilities charge electricity consumers an extra fee destined to invest in backup thermal generation capacity for drought periods. Although it hasn’t been managed in the most pristine way, it has helped Colombia throughout this El Niño episode with no rationing so far.

The Venezuelan equivalent of this process has been an increase in the ownership of small electric generators in private buildings. In this way, the government has allowed the rich to protect themselves from CORPOELEC’s incompetence, while leaving the bulk of people uncovered, not to mention the inefficiencies in both investment and fuel consumption this has encouraged.

And let’s make this clear, backup capacity is not the same thing as capacity expansion. Some people have blamed Derwick’s corruption scandal for the electric shortages, but it’s more complex than that.

The largest additions to the grid were supposed to come from Guri’s refurbishment and Tocoma’s entry to operations. Both projects are years behind schedule, neither is online yet. For this reason, new thermoelectric generation had to be quickly incorporated in Zulia, Carabobo and Los Valles del Tuy in order to cover the growing demand, while still neglecting the maintenance needs of the older thermoelectric plants like Tacoa and Planta Centro. Those plants were never intended as back up capacity for the hydroelectric plants.

In other words, supply has been unable to keep up with demand, which is why ever since 2009’s electric crisis CORPOELEC has had to ration electricity consumption everywhere but the capital, and most importantly, cut off electricity provision to Guayana’s heavy industries.

Furthermore, grid upgrading has also been delayed, because why invest in preventive maintenance and grid expansion when your house is on fire? CORPOELEC is always two steps behind the curve.

So today we have an outdated, under-maintained, undersized electric grid, entirely dependent on a variable we cannot control: rain. This is not the way to Energy Security.

Universal Access

At first sight, universal access to energy services doesn’t seem like a problem. Most Venezuelans are connected to the electric grid, have modern cooking facilities and access to cheap transportation fuels. But we are far from saying that either of them are of good quality or financially sustainable.

For one thing, a lot of homes are not formally connected to the grid. They rather rely on informal hookups that draw electricity from the public lighting system. Their demand is inelastic: they pay nothing.

Secondly, in most of the country service is constantly interrupted. If there are two words many consumers en el interior will never attach to CORPOELEC’s service it’s “reliable and convenient”.

Third, home appliances as well as our ridiculously cheap electricity and fuel tariffs are subsidized with oil rents. So, if we accept the lower for longer market sentiment about oil prices and see the declining demand trend, we realize the financing model has become unsustainable, too.

In the end, a system that can’t produce enough electricity for everyone offers the polar opposite of Universal Access. Go ask the people who work at the Sambil de Maracaibo how Universal Access is. Or the managers at SIDOR. Without a financing model that works, Universal Access is a chimera.

Environmental Sustainability

Venezuela needs to revise its energy mix planning for the domestic market. Most of new generation additions in recent years have been thermoelectric plants, making our energy mix more carbon intensive. In other words, we have increased our carbon emissions per unit of GDP.

Moreover, such thermoelectric plants were designed to run on natural gas, but constrains in gas production and transportation delayed its entry, which forced CORPOELEC to run them on diesel – a premium fuel. Diesel is much more expensive than natural gas, and it also has a higher carbon content, but was available, at least at the beginning. After the accident in the Complejo Refinador de Paraguaná –Amuay and Cardon– in 2012, workers and locals have reported interruptions the in the refining process, and more recently, some full stops in refining.

Besides, the technology of the thermoelectric plants installed after the 2009/2010 electric crisis is apparently designed to serve as backup units, not as main generators. Constant use shortens their lifespan. That’s no way to invest.

Then there are the gasoline and diesel subsidies. They’ve destroyed incentives to use other sources of energy for transportation, making Venezuela dependent almost 100% on fossil fuels for transport. Time was when PDVSA ran its own Natural Gas for Vehicles program. No more.

And let’s not leave out the perverse incentives set out by our draconian energy subsidies; with energy being virtually free, people overconsume…massively. The International Energy Agency has pointed out that for countries like Venezuela, simply reforming fossil fuels subsidies could probably be the most effective measure to reduce carbon emissions.

The Bolivarian government has shown little to no intention to help reduce global CO2 emissions, arguing that developing countries have no historical responsibility on the climate issue. This can be verified in the Kafkaesque INDC document delivered by the Venezuelan delegation at the COP21.

Additionally, the few non-conventional renewable investments made in the country, namely La Guajira and Paraguana’s wind farms quedaron pa’ la foto. Neither of them are working or even connected to the grid. Yet, the Electric Energy Ministry and CORPOELEC keep announcing that this time they sure will be incorporated to the national system.

It is a shame these plants have not been incorporated and developed further. Studies in Brazil and Colombia have shown the complementarity of the wind and hydro regimes, meaning that when droughts become more intense, the wind blows harder. This finding makes wind generation a great complementary source of energy in countries with a high contribution of hydropower generation, particularly those affected by El Niño.

But whether it is with wind technology or any other energy source, Venezuela has to bring its mitigation and adaptation to climate change strategy up to date, or else, it will continue to suffer chronic energy shortages that will hinder the country’s growth.

On Balance

As you can see, Venezuela does badly on all three corners of the Trilemma. Having abandoned long term planning and investment in the energy sector for several years, Venezuelan authorities have made the system more vulnerable altogether.

They’ve put the Venezuelan people in at risk. Electric shortages are affecting hospitals, schools, businesses, the already damaged food chain and so forth, progressively degrading our quality of live.

They’ve put a cap on economic growth. Energy services are a sine qua non condition for development, so as long as the energy crisis continues, the country will not overcome depression.

Bottom line: you can’t abandon the energy sector for over a decade and expect no consequences. Like anything else, if you don’t invest in it, time will rust its foundations and the whole system will start to crumble before you can do anything to stop it.

What could we do?

This is no time for despair. It’s a time to realize urgent action is needed, and to start on it right now. For instance:

  • We could reevaluate the operational model for energy service provision. By this, I mean that a super centralized CORPOELEC has failed to provide any improvements to end users, and the regulator should consider some form of subregional independence or – preferably – privatization to encourage efficiency in the decision making process of running the business. The same thing applies to PDVSA Gas and PDVSA Gas Comunal, clearly overwhelmed by the public’s needs. In order to do this, both corresponding laws (electric service and gaseous hydrocarbons) should be revised.
  • We could put economic rationality back into energy bills. Energy prices should at least cover service cost in order to be sustainable. This would help make consumption more rational.
  • We could at least start running serious feasibility studies to determine which types of alternative energy sources can be incorporated to the system.
  • We could update Venezuela’s energy mix plan, taking into account demand expansion, as well as mitigation and adaptation strategies to climate change and El Niño/La Niña.
  • We could revise the financing and transparency mechanisms for the electric and oil and gas sectors. Currently, the secrecy about both is absolute.
  • We could develop a plan to increase energy efficiency within the energy sector, since most of the equipment and infrastructure is aging, causing major inefficiencies.
  • We could close the cycles in all of the recently built thermoelectric plants.
  • We could fully substitute diesel consumption for electricity generation with natural gas.
  • We could bring forward transportation projects that either reduce or substitute the use of fossil fuels.

That’s just a start. In fact, there’s tons more we could do.

Venezuela’s energy sector has been just as aggressively mismanaged as the rest of its economy. For people who profess to believe in Central Planning, the folks who govern us seem curiously averse to any form of planning at all. And if there’s one thing the Energy Sector cannot abide it’s that: lack of planning. But we can plan. We must plan. And we better start planning, right now.

27 COMMENTS

  1. Amanda,

    Planning is something you do when have a future, or can at least imagine one. Right now… Well, you get my point.

    By all means, keep developing your ideas. But, don’t expect any implementation until after the political and economic situation is stabilized.

    • Nothing wrong with planning now. In fact, we may never have a future if we don’t have plans to face the situations that we’ll have to handle.

  2. Thanks Amanda, great piece that helps people understand the crisis beyond the drought issue.
    Also good that you went the extra mile and also offer solutions.

    It is my impression thought that under the current Chavista regime even if you come with great plans you can’t execute.
    You can’t execute because people are incompetent and corrupt, working under a difficult environment of inefficiency, scarcity, inflation, insecurity, etc . Nothing gets done, if it is done it takes too long and the cost soars.
    So it seems that the problem is systemic, bigger than Corpoelec.
    I imagine that many people don’t show up for work, or go late, given that you can’t get fired! :-/

    What I know though is that most consumers no matter where from, tend to waste electricity when the cost is extremely low, which put an additional burden on the grid and the environment.
    Here in the USA my electric bill has two prices, the standard price is relatively affordable and the premium price kicks in if I pass a certain threshold on consumption during the month. This makes affordable electricity accessible to lower income people but also penalize wasteful over consumption which the higher income people have no problem paying providing enough earnings to the electric company.
    Many Electric companies here are private and regional, however they operate under some oversight from the government.
    .

  3. How do you propose to *really* deal with people stealing power right from the post?

    If it’s above ground, they’ll climb and hook themselves up to the post, just like they do now to get power.
    If it’s below ground, they’ll dig until they find the power line and hook themselves to it, just like they do now to get water.
    If the above methods fail, you can always pay some technician of the power company that happens to step by, or is an acquaintance of someone, and he/she’ll hook you up.

    That issue is very important, because you can increase the rates to whatever value (production cost is not enough! it has to actually hurt you to stop consuming, value consumption and be more efficient/conscious!) and people that are hooked up illegally will enjoy the benefits of free service and will consume even more! Now we will have in place all the elements for electricity bachaqueo!

    I’m pro install-a-deadly-device-to-zap-crispy-fry-meddlers, but a more realistic/practical approach is welcomed.

    • It is expected of electric companies to perform regular line inspections as part of maintenance.
      Any illegal connections have to be cut and make them pay a fine, punity labor or face jail.

      There is no country if there is no rule of law.

      • “There is no country if there is no rule of law.”

        Precisely! My fear exactly

        “Any illegal connections have to be cut and make them pay a fine, punity labor or face jail.”

        Sure, the power company can go there, cut a bunch of cables and be done with it. They wont pay any fines and when the only option is jail, then what, is the police going there to bring them, maybe a whole neighborhood, to overcrowded jails? (thats why I like the deadly device thing, if youre warned and you still do it, its entirely your fault, no need to go thru all the problematic stages of the justice system).

        I just keep thinking that relying on security forces to stop “electric bachaqueo” will be just as effective as to stop “food bachaqueo”. I just cant stop seeing a whole marana de bachaqueo electrico…

        Just in front where I live, EVERY single house and building has broken the sidewalk to hook themselves to the waterline with extra pumps in order to get more water. And I mean its being done in at least 600m worth of sidewalk in both sides. They have been doing that for months, but with the water crisis, now theres even more people doing it. They do it, right in the street, in plain sight, in the middle of the day… Has the police or anyone done anything? Nope, and why would they?

  4. Amanda,

    You are a blessing. Yes, we should discuss these topics even if the country is right now falling apart. We should discuss these topics and perhaps say in advance here we discuss what we will do after the regime change. Let’s people get used to this: a regime change needs to take place soon.

    As for one of the measures:
    it should be possible to keep a record of electricity consumption per parroquia, even less than that, per hour for all of Venezuela. We should be able to plug this into a computer model. We should be able to determine as soon as possible where how much electricity is going. And we should be able to have electricity companies that go to those areas and react accordingly.

    It’s part of the Big Data game used by in a country where there is need for rule of law.

    There is one big thing I see missing in your post: housing and electricity use for controlling temperature.
    I happen to know several people who built modern houses in Venezuela following traditional “colonial” methods..and those houses even in Valencia upon Cabriales are fresh even when others are ovens and they do not need to have air conditioning. Most houses in Venezuela are constructed in the worst possible manner following some principle that might be OK in Georgia but not in the Caribbean.
    The same way in the North there is more investment on isolation to reduce energy costs in winter, we should have the same in the Caribbean for high temperature. Instead most houses both from poor and – ever fewer – better off sectors are ovens.

  5. The crucial element is that no govt will force people who steal the electricity to pay for it nor for commercial rates to be charged or collected from anyone else because that would have a adverse effect on their political popularity . Electrical generation from gas projects have been proposed by private companies in the past but as there was no willingness from the govt to ensure collection of the applicable rates from the public forcing the projects to be abandoned .

    So by way of planning a better future one must consider:

    1. Charging and collecting a decent rate for ALL the electricity being consumed , this would lower demand and make its use more rational , it might also help privatize at least part of the industry .Maybe some special rates might be considered for electricity used to power priority industries ( specially those that bring in export revenues)

    2. There is plenty of gas offshore the Paraguana Peninsula (Repsol/Eni’s inmense gas field) and in Offshore eastern Venezuela ( e.g. Dragon gas fields close to the coast) which could be used to power plants in both western and eastern Venezuela liberating the need for using more exportable refined products to increase the countrys oil revenues ……!! Understand that there is work in progress proceeding very slowly in part because of Pdvsa’s lack of funds. Once these projects are completed and linked to the grid they would contribute substantially to Venezuelas electricity demand . Gas as everyone knows is the least polluting of all fossil fuels and also comparatively cheap and easy to handle . Speeding up these projects might help a lot.

    3. Refurbishing guris installation and completing other hydroelectric projects should also contribute to improve the situation.

    Other ideas might be pursued perhaps with less priority .

      • If it were the regime would have the news splattered all over the media , as is normal for all govt proyects its probably indefinitely behind schedule , last I heard it should have been completed sometime early in the year and should be completely operational by june , thats not likely the case . Of course the regime will keep mum on the real situation to avoid the embarrassment of being caught in one more failure …..!!

    • Thanks, Amieres! It is indeed a good article. I hope many in the former B, C++ areas read it.
      It would help us see ways to join forces to get rid of this government

  6. Yes indeed, enjoyed reading your article. Regarding –> “We could at least start running serious feasibility studies to determine which types of alternative energy sources can be incorporated to the system.” Interesting. Any thought to promoting solar power, seems like a reasonable alternative, given the abundance? Not sure kw/hr. costs are still competitive, given the drop in oil, not to mention the state subsidies, but perhaps other incentives such as selling excess power back to the grid might work or is this too much pie in the sky? I think the Chinese would be interested in creating another market for their PV excess capacity, or has that too evaporated?

  7. Amanda, Wow!, excellent stuff, you’re certainly a candidate for a CC PHD! Unfortunately, as Ing. Poleo so succinctly recently stated on Globo, nothing can be done, until Regime change, to correct Corpoelec’s: centralization; poor/unprepared/largely political top management, the worst being military/former military; bloated largely political payroll, from 20m to 50m; deficient/non-maintained generation/distribution facilities, with now insufficient funds for repair; massive corruption; and non-payment/stolen electricity by 40% residential/commercial, and perhaps 30% Govt./Sidor, were they working full-time

  8. Very similar to the healthcare Trilemma.

    Low cost?
    Universal coverage?
    Comprehensive care?

    You can pick two….

  9. Excellent article. this discussion should be resumed when Venezuela comes back from the middle age. I don’t see that happening with the current government.

  10. A good plan gives something to hope for, and work towards. And Amanda’s data and analysis looks pretty solid. There’s an awful lot of ground there, that she covers, and a lot of moving parts, a lot of independent variables. Impressive,

    When sanity is restored, it will not be OK to then ask about what to do. A realistic analysis of the situation, not just in energy but in food supply, the capital structure, and goodness knows what else – all of this so massive that probably only an engineer can handle the math – has to be in place, at least in framework, in a database or model ready for tweaking and implementation as the final inputs (money, people, supply sources) become apparent.

    This has nothing to do with engineering, but if you have a plan, you can “sell” it to voters, explain things, and give them hope, too. A problem is only difficult until it is solved.

  11. “We could put economic rationality back into energy bills. Energy prices should at least cover service cost in order to be sustainable. This would help make consumption more rational.”

    I understand that this also imples that people who flat out steal electricity must be forced to pay for that power they eat away.

    The energy prices on bills have been increased year after year since before they began with the absurdity of the fines against people who “overconsumed”

    As long as more than 50% of the country doesn’t pay a cent for plugging three industrial-caliber freezers, 4 ACs and three 72-inch TVs with a dozen lightbulbs 24/7 in a rancho (be the rancho metaphorical or a literal one) the demand would continue skyrocketing, putting more pressure and straining more a system that’s in shambles now.

  12. There’s a way to make almost free energy and help take a great leap forward in develpment as a nation:

    Get some gringos over here and make some nuclear power plants. Smart people are already close to achieving commercially viable fusion.

  13. Great article, but you have a root Trileptal. Plan, people and need/desire

    Plan is there, people =government, you have to start at the top, which a few people have pointed to.

    What happens after, the brain drain from Venezuela over almost 20 years is very difficult to overcome without a primary plan to get people back.

    Let’s not talk about people in the country the education system as a whole was destroyed when the government showed that know how was not important

    Need we have, but desire after so long with over 60% of the population expecting to be given everything, the inertia built up within the country is a huge problem on its own.

    In order to think about Venezuela you have to think on a “rebuild” concept like after a war

  14. One problem not mentioned here is that Venezuela has one of the highest rates of power transmission losses of latin america , If I remember correctly , some 23% , (stats I read where from some time ago dont know what they updated figures are now) , suspect that part of this loss was the result of people just stealing the electricity direct from the transmission lines.

    There was a method for doing this in Zulia , you d take a wire , tied a stone to one of its ends and throw it to a transmision line so it would become wrapped around the live line , often the person throwing the line would not drop it the instant he throwed it and would get fried ……., sure there are other methods. The practice was very common.!!

    • Water also has high “line losses” due to the poor condition of the pipes under the streets. I was told (privately) by an engineer working for the water utility that the line losses exceed 50%. If they pressurized the lines to “normal” pressure the losses would be even worse.

    • I read where from some time ago dont know what they updated figures are now) , suspect that part of this loss was the result of people just stealing the electricity direct from the transmission lines.
      Which correlates with my memory of some study or blog posting estimating that 25% of electrical consumption in Venezuela was pirated.

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