Venezuela: Energy Resources

Extend network

Although approximately 98% of the national territory receives electricity service, transmission also requires intensive capital investments. The majority of the network is 230 kV, with 115 kV distribution feeders. The main power stations are connected with the grid via a 765 kV line.

Energy procedure

In April 2011, Venezuela’s energy authorities and the Venezuelan Association of Wind Energy announced their intention to install 10,000 MW of wind generation for the next 15 years, representing 10% of the projected demand for 2025. The Venezuelan Ministry of Science and Technology is also currently analyzing two projects - one to identify all coastal areas where wind farms may be installed, and the other to assess the current potential for wind energy in Venezuela.

Finally, President Hugo Chavez announced in April 2011 the creation of a new development fund using windfall revenues from soaring global oil prices. He said that “the decree is aimed to increase the fiscal contribution and the contribution of petroleum resources to development.”

Energy debates

Currently, there are mixed opinions with respect to the Venezuelan energy crisis. On one hand, the Venezuelan Government has stated that there was a significant reduction in energy consumption between 2009 and 2010. According to Minister Alí Rodríguez Araque, in 2010 the energy consumption was 30% below 2009 consumption levels.  However in January 2011, there was a blackout in six states on the west side of Venezuela (Portuguesa, Zulia, Apure, Barinas, Táchira and Trujillo) and according to certain political opponents to the Government, 70% of the electric energy currently produced in Venezuela is produced through the hydroelectric plants, while the investment of the Venezuelan Government in thermoelectric plants has not solved these problems.

Energy sources

Total installed electricity capacity (2011): 23,708 MW

   Hydropower: 62% (14,621 MW)
   Thermal: 38% (9,087 MW)

Total primary energy supply (2008): Oil and products: 44% Natural gas: 29% Hydro-electricity: 27%

According to Oil and Gas Journal (OGJ), Venezuela had 211 billion barrels of proven oil reserves in 2011, the second largest the world. This number constitutes a major upward revision – last year the same publication listed the country’s reserves at 99.4 billion barrels. The update results from the inclusion of massive reserves of extra-heavy oil in Venezuela’s Orinoco belt. Venezuela is a significant supplier of crude oil to the world market: in 2009 the country had net oil exports of 1.75 million barrels per day (bbl/d), eleventh-largest in the world and the largest in the Western Hemisphere. In recent years, crude oil production in the country has fallen, while domestic consumption has risen, causing a decline in net oil exports. EIA estimates the Venezuelan net exports fell again in 2010 to 1.59 million bbl/d.  

Regulatory roles

The Electricity Service Law of 2007 established FUNDELEC's regulatory powers:

   supervision and enforcement of the Electric Service Law among public and private electric utility companies,
   promotion of the development of competition in the areas of generation and retail of electricity, and
   establishment of standards with respect to the sale of electricity to the public and tariffs that may be charged by distribution companies.

MENPET sets the tariffs for all electric utilities.  Top tariffs are determined by FUNDELEC according to the cost structure and quantity of load provided by every utility.

Competition

The electricity market is not liberalised in Venezuela, and reforms introduced in 1999 have been paralysed since then. There is a high degree of vertical integration within the electricity sector, with the largest generating companies also acting as the largest distributors, including both CORPOELEC and EDELCA.

Energy efficiency

Venezuela has been characterized by the poor practices of energy consumption in the population, because of the low cost and availability of energy resources (oil, gas and hydroelectric power). 

However, the Venezuelan Government is also plagued by inefficiency and several of its thermoelectric plants — which heat water until it turns to steam, then use the steam to power a turbine — are only partly operating or still under construction. In mid-January, Planta Centro, the largest thermoelectric plant in the country, only had one of its five generators in operation.

Industry contributes most to primary energy consumption, mainly due to the active petroleum, steel, aluminium and fertiliser industries.

Capacity concerns

Venezuela is currently facing a severe energy crisis. With an energy matrix based on hydropower and fossil fuels, the country has little experience in implementing projects of renewable alternatives.   The actual crisis of the Venezuelan electric sector responds to a multiple simultaneous contingency situation that has at present a tremendous impact on its power service quality:

   Current electric sector authorities do not have the appropriate expertise and knowledge to develop and operate the national hydrothermal system;
   Due to lack of maintenance, there is 40% unavailability of thermal generation;
   64% of thermal generation has completed over 25 years of daily life operation, i.e., it is technologically and operationally obsolete;
   Therefore, thermal generation efficiency is less than 30%;
   Additionally, availability of hydro-generation is only 72%;
   In 12 years, no expansion projects of the 765 kV transmission system have been undertaken -- not even one kilometre;
   Therefore, the 765 kV is operating for more than 12 hours/day exceeding the transmission limits.

The Government’s main actions to promote renewable energy alternatives focus on wind power and solar generation (for rural electrification). However, the promotion of renewable energy in the country seems far from tangible with the current stakeholders' shortage in the country.

Government agencies

A non-governmental institution, the Centre for Experimental Research of Renewable Energies of the Institute of Energy of the University Simon Bolivar plays a key role in the field of renewables in Venezuela.

Energy regulation role

Ministry for the Power of the People for the Electric Energy This Ministry was recently created by Decree No. 6991 dated October 28, 2009. Its competences are the formulation and following up of energy policies; the planning, realization, and auditing of the activities related to electricity; the pricing, and the control and use of the power industry. All the companies, entities and organisations related to the electricity sector will be affiliated to this Ministry.

Ownership

Large, state-owned companies dominate the electricity sector in the country. The largest company is Electrificación del Caroni (EDELCA, www.edelca.com.ve), a subsidiary of the state-owned mining company Corporación Venezolana de Guayana (CVG, www.cvg.com).  EDELCA supplies around three-quarters of Venezuela’s total electricity supply.

During 2007, the Government dictated the Decree N° 5,330 of the “Organic Law for the Reorganization of the Electric Sector”, by which the corporation Corporación Eléctrica Nacional S.A. (CORPOELEC, www.corpoelec.gob.ve) was created, as an state-owned operating company, in charge of carrying out the activities of generation, transmission, distribution, and commercialization of power and electric energy.

Petróleos de Venezuela S.A. (PdVSA, www.pdvsa.com) is the country's state-run oil and natural gas company.

Degree of independence

FUNDELEC is a wholly governmental agency.

Energy debates

Massabie, German. 2008. Venezuela: A Petro-State Using Renewable Energies. Available at http://books.google.co.uk/books?id=DCm3ea_Yj3AC&printsec=frontcover&source=gbs_navlinks_s#v=onepage&q=&f=false

Energy framework

Development Plan for Renewable Energy Sources (“Plan de Desarrollo de las Fuentes Renovables de Energia”) The Development Plan for Renewable Energy Sources is a part of the Plan for Economic and Social Development of the Nation 2007-2013 (PDESON).  Among the policies and strategies defined in the PDESON, incentives are include for alternative, renewable and environmentally sustainable energy sources, besides the target of turning the country into worldwide energy potency.  Paradoxically, it is also part of the PDESON policies and strategies "to increase the generation of electricity with fossil energy".  The Development Plan for Renewable  Energy  Sources considers the following renewable sources of energy: solar (PV and thermal), wind, biomass, mini-micro hydropower and geothermal.

Pilot Plan for Wind Power Generation (PPGE) It is part of the plan to diversify Venezuela's energy matrix, which shall provide in its first installation phase 100.32 MW in the Community of Los Taques, in the State of Falcón, and 72 MW in three wind farms: Chacopata, in the Sucre State, with 24 MW, Isla de Margarita and Isla de Coche, in the State of Nueva Esparta with, respectively, 20 MW and 4 MW, and the Peninsula de la Guajira, in the State of Zulia, 24 MW.

Reliance

Currently suffering from a serious electricity shortfall, the Government is considering Brazilian and Colombian offers that would transform the once electricity-exporting country into a net importer of power for the first time in its history.

Venezuela is one of the world’s largest exporters of crude oil and the largest in the Western Hemisphere. In 2008, the country was the eighth-largest net oil exporter in the world.

Net electricity imports in 2007 were 96 ktoe.

Role of the government

The Main Directorate of Alternative Energies (and within it the Direction of Renewable Energies), depending on the Ministry of the Popular Power for Energy and Petroleum (MENPET, www.menpet.gob.ve), is in charge of formulating and implementing policy proposal and strategies for the sector of RE.  Also, it is the body in charge of the National Registry of Renewable Energies. This Registry is a database, for the use of the Government, with the aims of controlling and providing information on activities related to solar, biomass, hydraulic, geothermal and other RES within this scope, any RE project will have to register in the term of 30 days following their date of starting. Also, any energy strategy developed by the MENPET must be coordinated with the Ministry of the Popular Power for the Environment.

Regulatory framework

In Venezuela no RES support mechanism has been implemented to date. In 2007 the Government created the National Registry of Renewable Energy. This registry is nothing but the first bureaucratic condition to supposedly be able to opt to join any potential (yet to come) program on RES promoted by the Ministry. In 2008 a National Pilot Plan on Wind Generation was announced, involving the construction of four wind parks, but the project appears to be delayed. However, the new law passed at the end of 2010 establishes the “socialist management model”, declares of public utility all the goods related to the electric power service and centralizes all the electricity activities in a fully State-owned vertical utility. The law announces a Development Plan of the National Electric Power System, which, among other objectives, will eventually contain ‘actions aimed at promoting the use of alternative sources of energy, renewable and environmentally sustainable’.

Regulatory barriers

The country is in need of a new legal and institutional framework for the sector as well as administrative and organizational improvements for state-owned electricity companies.

The establishment of a non-governmental regulatory body would protect the electricity sector from unnecessary political involvement.

Despite the formulation of national renewable energy plans, progress in the sector has been slow. Improved market penetration would create the need for improved regulation.

Energy regulator

FUNDELEC (Fundación para el Desarrollo del Servicio Eléctrico, www.fundelec.org.ve/) was created in 1992 to conduct studies for the drafting of laws and regulations applicable to the electricity industry, and became the regulatory body of the sector in 2007.

Renewable energy

Solar energy Venezuela has good potential for the utilisation of solar energy. The majority of the country experiences an average horizontal irradiance of 5.5 kWh/m2/day, rising in some regions to 6.7 kWh/m2/day.  Venezuela has so far installed 806 PV systems that benefited 107,590 people and provided access to electricity for 551 communities, being 235 indigenous and 316 isolated locations. However, no plans were found of PV system installations to be connected to the country´s electricity network.

Wind energy By the year 2013, 172 MW of wind power shall be installed in Venezuela according to the Pilot Plan for Wind Power Generation (PPGE).

Hydropower In Venezuela, more than 70% of power generation is derived from hydropower, with most of it coming from three plants on the Caroni River.  EDELCA, a state-owned utility, operates the 8,900 MW Guri plant -the second largest hydroelectric plant in the world.

In 2009, the smallest hydro plant had a 25 MW capacity and the second smallest had an 80 MW installed capacity. Therefore, according to the Venezuelan legislation that characterizes plants of installed capacity up to 20 MW as SHP power, there is no SHP development in the country.

Biomass energy Biomass is utilised mainly in the form of charcoal. However, in general biomass use is essentially negligible.  There is big potential for using timber from plantations of native pine species in Eastern Venezuela.

Geothermal energy Whilst no formal study has been conducted into the country's geothermal potential, several small springs have been identified in the centre of the country, with a potential capacity of 0.7 MWt, and 14 TJ/year.