During the first months of last year the trend was different. The market operator reported a 36% drop in coal use, despite the presidential commitment to increase the use of CFE plants.
The federal administration has maintained the discourse of increasing the generation of the company’s plants -regardless of the type of fuel they use-, with the aim of increasing the participation of the state company in the generation market, but until now it has not has achieved this task legally.
The Constitutional reform that was rejected last April and the reform to the Electricity Industry Lawwhich remains suspended due to a series of injunctions, changed the way in which the energy of the plants is used, to put those of the state company first.
The use of coal has been widespread internationally, due to the high prices of natural gas that have derived from the armed confrontation between Russia and Ukraine, and inertia due to the cut in supply due to the pandemic. In the country, the lack of new plants – due to regulatory changes and the suspension of auctions – have triggered the use of coal along with a record increase in demand.
The operator’s data indicates that during April the country registered a new historical record for electricity demand. And the absence of a new offer gives a second wind to some plants of the state-owned CFE that were about to leave the market or that were no longer used as much due to their high costs.
Industry analysts agree that there is another factor that could be generating a greater use of coal in the country: although the way in which electricity is taken from power plants has not been changed in a regulatory manner to put in the foreground those that have lower variable costs, the state-owned CFE would be reducing the price of electricity that is offered in the wholesale electricity market so that its plants are used.
In 2020, the Redd Intelligence agency reported, Cenace allowed the state-owned CFE to inject energy from its plants without respecting the principles of economic dispatch. This trend, analysts say, could continue.
The recovery of electricity demand after the pandemic has brought a second life to coal. The International Energy Agency had already foreseen a boost in its use after years of continual drops in use. From 2018 to 2020, the use of coal as an energy source has fallen 7% globally.