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Venezuela Power Report Q4 2011
Business Monitor International, Oct 2011, Pages: 43
BMI View: It is going to be a struggle for Venezuela to avoid the need for rising power imports, unless plans to reduce consumption prove effective. The state-controlled electricity industry alone is unlikely to deliver sufficient investment in hydropower and wind energy. Nuclear is not an option over the near- to medium-term and oil is set to carry much of the load.
During the period 2011-2015, Venezuela’s overall power generation is expected to increase by an annual average of 2.94%, reaching 135.3TWh. Driving this growth is an annual 3.3% gain in hydropower use, accompanied by annual increases in excess of 2.9% for oil-fired generation. Considering the uncertain outlook for hydropower supply resulting from drought and low water levels, overall and hydro-specific generation estimates are vulnerable to downgrades. Similarly, the effects of power cuts and government initiatives to cap demand provide downside risk to consumption estimates.
In February 2011 Electricity Minister Ali Rodriguez Araque promised that Venezuela will increase its installed generating capacity by15.5GW by 2015, based on thermal, hydro-electric and wind power. In the past, the minister has said that an additional 2GW would be needed each year to meet surging demand. Rodriguez said that the ministry was working on 17 different generation projects to meet this year's goal. Around 1.6GW will come from national power supplier Corpoelec, while state-controlled oil and gas group PdVSA will add around 800MW, Rodriguez said.
Following an increase in 2011 real GDP of an estimated 1.9%, BMI forecasts average annual growth of 2.4% between 2011 and 2020. The population is expected to rise from the current level of 29.3mn to 31.0mn during the period 2011-2020, and net power consumption looks set to increase from 91.8TWh to 102.1TWh by 2015, rising further to 114.3TWh by 2020. During the period 2011-2015, the average annual growth rate for electricity demand is forecast at 2.75%, but slowing somewhat later in the decade to an average 2.28% in 2016-2020.
Venezuela is evaluating plans to conserve energy consumption, measures similar to those adopted in the capital city more than a year ago during a national power crisis, the country's electricity minister said in late May 2011, according to Dow Jones. During an interview broadcast on state TV, Ali Rodriguez Araque blasted what he called electricity waste and said that his ministry was evaluating measures to cut down on unnecessary consumption.
Owing partly to the forecast rise in net generation, growth of which may fall short of the underlying demand trend, Venezuela’s power supply shortfall is likely to increase steadily and leave the country increasingly dependent on imports from its neighbours. A gradual rise in the percentage of transmission and distribution losses from around 29% will help create further market imbalance. The theoretical net import requirement by 2015 is put at 6.9TWh, which could be as much as 9.5TWh by 2020.
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