ALVARO KASSAB

mechanical engineer Secundino Soares Filho, one of the greatest experts in electrical energy in the country, has no doubts: the lack of investment and the government's mistakes were two of the main causes that fueled the crisis affecting the sector. Professor at the Faculty of Electrical and Computer Engineering (FEEC) at Unicamp, Secundino develops software with his team for optimizing and managing the production of hydroelectric plants. In the interview that follows, the engineer says that the system is designed for waste, exempts São Pedro by proving that the flows recorded in Itaipu were above average in recent years, and advocates the creation of interruptible loads for large consumers.

Q- Why did the country reach this stage of energy deficit?
Secundino Soares Filho - There is no doubt that it was due to the lack of investment in new plants and new production lines, especially in new plants. The reasons for this lack of investment need to be analyzed in more depth. I believe in a combination of factors. The government decided, simultaneously, to privatize the electricity sector and restructure it. He worked in one way and changed everything – he ended the National Department of Water and Electric Energy, created the National Electric Energy Agency (Aneel) and the ONS (National Electric System Operator). Ultimately, it remodeled the sector and privatized state-owned companies. Two things done at the same time and poorly implemented. There was a lot of delay. The privatization of the electricity sector was supposed to be finished and, however, it was only carried out at the level of distributors, those who first receive money from the user.

Q - What were the immediate effects of this policy?
R - When privatization was heading towards generation, which was the main objective of the restructuring, everyone in the State was accommodated. There was no incentive to seek greater efficiency. Privatization was intended to create a competitive environment in the area of ​​generation. And to do this, it was necessary to divide the companies, most of which were very large. Cesp, for example, was broken into three; Furnas should go through the same process, since no generation company could have more than 20% of the market. The restructuring stopped in the middle. Furnas was unable to be privatized, opposition in several sectors became very strong. The process was poorly executed; I wouldn't say that the model was wrong, even though it wasn't even tested.

Q - In the field of generation, is it possible to quantify the amount privatized?
R - About 20%. There are three companies: Gerasul (formerly Eletrosul), Cesp/Tietê and Cesp/Paranapanema. The remaining 80% remains in the hands of state-owned companies that are full of money in their coffers and do not invest because they were part of the privatization program.

Q - Has the process been stopped?
R - Exactly. State-owned generation companies stopped expanding because they were in the privatization queue, which did not move forward. The only one that actually privatized was Cesp, which has now also postponed the third installment of the Cesp/Paraná auction. In this case, I think the blame can be attributed to the authorities in the area – the Minister of Mines and Energy and representatives of Aneel. And, in the midst of this confusion, we were caught by the energy crisis. It is difficult to know where the process will go. Staying in the middle of the road, as we are now, is the worst situation.

Q - Critics of privatizations denounce that companies laid off a lot and invested little. Do you agree?
R - Generation companies were the only ones that invested. Duck, for example, which bought Paranapanema, is building three thermoelectric plants; Gerasul has already increased its generation capacity, and I believe that Cesp/Tietê is doing the same. The problem is not with privatized companies, but with state-owned companies, for which new works don't make much sense. Who will want to buy a company that is committing itself to long-term debt? Nobody invests in plants for sale. But it can't take six years to sell them.

Q - Could you have specified when the crisis arose?
R - She came slowly. In a hydraulic system like ours, what is done is to calculate the availability of a plant in the most critical rain situation. The period from May 1952 to November 1956 recorded the worst sequence of flows in history. So, at each new plant, it is calculated what it can produce in a period as dry as that. We call this ability 'firm energy'. The planning also predicted that the system's firm energy should meet the growth in demand. To achieve this, new plants would have to be built. Therefore, we always worked without depending on São Pedro. I'm not going to say without depending on forever, because a drought worse than the one in '52 could come. But this was the planning criterion: to withstand at least the most critical drought in history. It turns out that, gradually, when generation investments were delayed and postponed, demand exceeded the supply of firm energy. From that moment on, we were dependent on the rain. And it rained. It rained well in 97 and 98; in 99 and 2000 it also rained reasonably in the Southeast, above average. But as the lack of investment was greater than the rain that fell, there was no solution.

Q - Was a minimum investment necessary then?
R - With the necessary investments, to continue with the old criterion of increasing firm energy as demand grows, we would not have any problems. The system has survived well in this form, from 1960 until today. What happened was a waste of energy due to the lack of more balanced planning.

Q - How was this energy wasted?
R - As the system planning is done for this critical period, it always has surplus, as hydrological conditions are normally more favorable than in more critical situations. We have always denounced that there was not – and never has been – a concern about providing an economic use for this energy, which we call secondary. It is the one that comes above firm energy, when hydrological conditions are favorable. This secondary energy was poured into the Brazilian system. And we have always pointed out the contradiction of wasting it and not taking advantage of it.

Q - What would be the mechanism to be used in this case?
R - The most appropriate alternative would be to create interruptible loads. Large consumers would have a lower supply guarantee than usual consumers, but with a lower tariff. During the five-year lifespan of an enterprise – an aluminum producer, for example – energy would cost half the price, but with energy available for 70% or 80% of the period. In other words: for four years, cheaper energy would be provided; for a year nothing would be provided. With this, the country would form a secondary market. And, in a crisis like the current one, it would simply suspend supply to these large consumers, under contract support. There's no point in just cutting 20%.

Q - Would this procedure not worsen the unemployment situation?
R– Seventy percent of the price of aluminum corresponds to electrical energy. Therefore, the company can even retain staff, which is a lower cost, by compensating them with the cheaper electricity rate.

Q - Is this model adopted in other countries?
R– An example is Hidro Quebec, in Canada. It is interesting that aluminum companies in Maranhão have received tariff incentives, without the return of a guarantee. They pay less for energy and need to do like us: save 20%. Being cheaper electricity, it should be interruptible. At the time of the contract, this aspect did not deserve attention. Hydropower that would create a secondary market is nothing to sneeze at. We have more or less 45 thousand megawatts (MW) of firm energy in the Brazilian system and, on average, 10.000 MW of energy that is spilled.

Q - Could you explain the energy released better?
R– It is water that comes out through the thief, when it could pass through the turbine and produce electrical energy. If there is no market and the reservoir is very full, it passes through the spillway and continues downstream. The chance of producing electricity at that plant is lost. In the plant below, if it spills, a little more is lost. So, all the plants that are spilling at a given time and that had the capacity to turbine waste megawatts. This has been common in the Brazilian system. It is a system designed for waste.

Q - Even in times of drought?
R - In times of drought, the reservoirs are obviously so low that none of them spill. It may eventually spill, as it does now in Itaipu. But, due to the lack of a transmission line, energy cannot be brought to the needy region, which is the Southeast.

Q - Would this be another consequence of the lack of investment in the sector?
R - Yes. At least 60% of investments in electrical energy are in generation; around 20% to 25% in transmission; and the rest, in distribution. There was a lot missing in the generation and it was also missing in the transmission. So much so that we are pouring in the North, in Tucuruí, and in the South, in Itaipu, but we are unable to bring this energy to the region in crisis. Transmission lines would alleviate rationing, despite being insufficient to avoid it.

Q - The option for thermoelectric plants as an energy source is the subject of controversy. How do you see this?
R - Thermoelectric power plant is an alternative, but not ideal. The ideal would be to continue with hydroelectric expansion, so that, with steady energy from hydraulic plants, our demand could be met – with the however of forming a market for secondary energy. I see the creation of processes in the industrial sector that work with both electricity and another fuel as the most economical solution. A bakery, for example, may have an electric oven and a gas oven: with the hydraulic energy available, its wholesale price will be cheap; However, if the situation with the hydraulics is difficult, you can turn off the electric oven and turn on the gas-powered one. This should be done in all industrial processes where it is possible. Other countries adopt the model. In the 80s, when there was energy to spare, the government encouraged so-called electrothermia – replacing processes that used fuel oil and gas in the industrial sector, with electricity.

Q - And what happened afterwards?
R - The government was not smart. It stopped financing industries so that they could maintain old operational equipment. Now would be the time to take advantage of them. It is important that the country has this flexibility. The thermoelectric alternative also allows this complementation, but it also needs to be flexible. And, apparently, gas supply contracts do not provide for disconnection when necessary; her fuel will be paid for and the plant will operate anyway. If it is to build a thermoelectric plant with the aim of establishing secondary energy, it must be effectively flexible. But it is not the ideal solution because, when electricity is produced for a thermoelectric plant, only 30% of the primary energy that exists in the fuel is used.

Q - Why is it so expensive?
R - Due to the process of transforming heat into electricity, there is a very large loss, around 70%. In the transmission of this electricity, another 10% is lost. Then, we end up using electricity again to heat water, make an oven, that is, to produce heat. Therefore, I think it is preferable that the complementation be done in the industrial process, in the heat; at the source, directly, instead of producing electricity and then using the energy in the final process.

Q - Is this doable in today's scenario?
R - Perfectly doable, as long as the government creates incentives for industrialists to maintain equipment using both energy sources. The problem is that this doesn't happen overnight. It is necessary to define a plan now, so that in five years, perhaps, we can obtain results.

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