assessments

Venezuela: A Deeper Look at the Electricity Crisis

6 MINS READMar 23, 2010 | 13:07 GMT
Summary
An El Nino-spawned drought, rising demand and years of neglect have brought Venezuela's electrical grid to the brink of collapse. The most telling sign is the reservoir level at the Guri dam, which, along with two other nearby dams, provides around 70 percent of the nation's electricity. As of March 18, the reservoir level stood at approximately 252 meters above sea level, placing it dangerously close to the dam's "collapse level." If this level were to be reached, 80 percent of the dam's power generation turbines would have to be shut down, resulting in rolling blackouts throughout much of the country. If that happened, Venezuela's electricity crisis would become a political crisis for President Hugo Chavez.
Venezuela is in the midst of a severe electricity crisis, with its national electrical grid so stressed that it could, according to the Venezuelan National Electric Corporation (CORPOELEC), be headed for a nationwide system failure within the next two months. Venezuela found itself in this predicament because of years of neglect in maintaining its electrical infrastructure, coupled with rising electricity demand and drought conditions caused by El Nino. The margin between current electricity generation and demand varies widely week to week, casting doubt on the reliability of government figures. About two months ago, Opsis, the national electricity grid operator, reported that Venezuela's electrical system faced a deficit of approximately 500 megawatts. However, according to March 17 figures from Opsis, electricity generation stood at 15,070 megawatts and demand at 15,074 megawatts, creating a 4-megawatt deficit. In 2009, heavy subsidies for electricity use and frequent service theft also caused demand to skyrocket, to more than 700 megawatts above the available system capacity of 16,600 megawatts. (click here to enlarge image) The center of gravity of Venezuela's electricity crisis is the Guri dam, which, along with the nearby Francisco Miranda and Antonio Jose de Sucre dams, provides about 70 percent of the nation's electricity. As of March 18, the reservoir level stood at approximately 252 meters above sea level, placing it dangerously close to what CORPOELEC says is the dam's "collapse level," at approximately 240 meters above sea level. If the collapse level were to be reached, 80 percent of the dam's power generation turbines would have to be shut down, resulting in widespread electricity rationing and outages. At its current rate of depletion, the reservoir is expected to reach this level by May 23, if the country fails to receive significant rainfall by then. Venezuela is still in its annual dry season, and under El Nino conditions there is no guarantee the country will receive significant rainfall by May. (click here to view interactive graphic) As the interactive map with this analysis shows, Venezuela's power plants have proved inadequate in dealing with the electricity crisis, as mechanical failures and obsolete systems have left most plants operating well below their installed capacity. Moreover, Venezuela's government (including the administration preceding current President Hugo Chavez) has prioritized hydroelectric power over thermoelectric power. As a result, Venezuela is ill-equipped to deal with the kind of drastic drought conditions that the country is now experiencing. (click here to enlarge image) The government has claimed that new electricity generating plants that will be built in 2010 could add 4,000 megawatts to the national grid, but these projects take considerable time to complete, and estimates show that only about 1,964 megawatts are likely to be added to the grid in 2010. Without significant and timely improvements to its electricity-generation sector, Venezuela will continue to suffer electricity shortages. (click here to enlarge image) Venezuela doesn't have many good options in the near term. The country is putting most of its resources toward trying to buy generators (many from the United States) for short-term fixes. Meanwhile, Venezuela's rival neighbor, Colombia, has offered to sell Venezuela 70 megawatts through an existing transmission line in Tachira state. The Colombian offer is too meager to make a significant difference in the situation, but it could alleviate some of the stress in the electricity grid in western Venezuela. However, Bogota's offer comes with several political strings attached, making it an unpalatable option for the Venezuelan government for now. Ecuador also has offered to sell spare electricity to Venezuela, but it, too, would have to go through Colombia to reach the Venezuelan electrical grid and would require a political understanding between Bogota and Caracas. The Venezuelan government has tried to reduce demand by imposing fines and threatening major electricity consuming businesses with arrests and power cutoffs. These rationing plans have thus far proved ineffective despite warnings of 24-hour power cuts for heavy users. Only 37 percent of electricity users have been following rationing plans, according to a recent CORPOELEC study. Questionable government estimates place the reduction of public-sector use at 23 percent and private sector use at 5 percent since 2009. In an attempt to enforce these rations, power cutoffs to dozens of companies are set to begin March 22, according to Chavez. The 96 targeted firms are accused of failing to reduce their energy consumption by 20 percent amidst the country's ongoing power crisis. Vice President Elias Jaua said the companies will have their power supply cut for 24 hours; if the firms continue their noncompliance, the next penalty is a 72 hour cutoff. Jaua has even warned that the state is prepared to cut off supplies completely to these major industrial and power-hungry companies until the national power grid is up to full power. (click here to enlarge image) The Venezuelan government has been issuing daily statements reassuring its citizens that a crisis will be avoided and major metropolitan areas like Caracas will be spared from rolling blackouts. However, without rain, such assurances will carry little weight. Indeed, the director of one state-owned electricity subsidiary has resorted to company-wide prayer vigils to end the crisis. Should Venezuela reach its electricity break point, implications would be immense for the Chavez government. Many Venezuelan citizens have grown accustomed to daily blackouts and don't think twice about including candles on their grocery lists. However, extended blackouts could result in the paralysis of major cities and industries, a suspension of water, communications and transportation services and major spikes in already skyrocketing crime levels. At that point, the electricity crisis would become a political crisis for the Venezuelan government. Venezuela is not at that break point, but the red line is clearly in sight. Isolated protests across the country have broken out over the blackouts and could spread as the situation deteriorates. Meanwhile, political challengers to Chavez, such as Lara state Gov. Henri Falcon, appear to be sensing an opportunity and are positioning themselves for a potential break from within the regime. The stakes are high in this electricity crisis, and without a clear short-term resolution in sight, the proven resilience of the Chavez government will undergo a serious test in the coming weeks.

Connected Content

Article Search

Copyright © Stratfor Enterprises, LLC. All rights reserved.

Stratfor Worldview

OUR COMMITMENT

To empower members to confidently understand and navigate a continuously changing and complex global environment.

GET THE MOBILE APPGoogle Play