Venezuela dips toe into renewable energy

Venezuela is drafting renewable energy legislation that would enable the private sector to break free from the Opec country's accident-prone power grid.

The government-controlled National Assembly is currently fine-tuning an initial draft of the "alternative energy" bill that is circulating in the business community. Deputy Oscar Ronderos, second vice president of the energy and oil commission, says a more complete version will be presented to the legislature in January and approved in first half 2022.

"This law will free up oil for export . . . and provide a mechanism for self-generation, and in a second stage we could allow the possibility of private electricity sales," Ronderos told Argus.

Under the draft bill, the government would issue a national alternative energy plan within 90 days of the law's passage. In the meantime, the assembly has opened a registry for interested parties to participate in the legislative process.

Venezuela's state-owned utility Corpoelec has about 18GW of operational generating capacity, half of the installed level, according to Ronderos. He says the country needs 40GW to meet future economic growth. The Guri hydroelectric dam accounts for about 80pc of generation, with the rest coming from thermal plants that burn oil or natural gas. Transmitting Guri production from eastern Venezuela to western states is among the grid's chronic weaknesses. Drought is another recurring problem. Widespread blackouts are commonplace.

Blowing air

This is not Venezuela's first stab at renewable energy. A pair of wind farms in the west never got off the ground, a symptom of the country's wider economic woes.

Unstable power supply is already driving some Venezuelan companies such as Caracas-based Solsica to import and install solar panels for residential and commercial use. But large manufacturers and other companies want to see merchant projects with which they can sign power purchase agreements, following in the footsteps of most other Latin American countries — including neighboring Colombia — where solar and wind energy is gaining momentum.

"We're still in the very early stage, but a leap could come quickly," says Gas Energy Latin America consultant and IESA professor Antero Alvarado.

Among the many challenges facing Venezuela are US oil and financial sanctions. The assembly that is hammering out the new legislation is not recognized by the US-backed political opposition, which has its own parallel legislature that meets virtually.

The US government does not recognize President Nicolas Maduro, and is expected to maintain recognition of opposition leader Juan Guaido as the country's legitimate authority after his constitutional mandate lapses in early January. But much of the private sector on the ground has already moved on, signaling a willingness to work with the Maduro government where their interests overlap.

By Patricia Garip