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CFE produces 50% more electricity with coal in the midst of energy crisis


CE Noticias Financieras  

 

    In the midst of a generalized call to reduce the use of fossil fuels, the state-owned CFE has drastically increased the use of coal. According to the latest data from the National Energy Control Center (Cenace), electricity generation in the coal-fired power plants owned by the national company has increased by 51% so far this year. The country has three coal-fired power plants, all owned by the state-owned CFE. Data from Cenace, the electricity market operator, reveals that in the first four months of the year these three plants produced 1,757 megawatt hours, in the same period of 2021 the figure was 1,160 megawatt hours. Along with the increase in coal-fired generation, wind and solar generation has decreased, according to public information.

    During the first months of last year, the trend was different. The market operator reported a 36% drop in the use of coal, despite the President's commitment to increase the use of CFE power plants. The federal administration has kept on talking about increasing the generation of the company's power plants -regardless of the type of fuel they use-, in order to increase the state-owned company's participation in the generation market, but so far it has not achieved this goal in a legal manner. The constitutional reform that was rejected last April and the reform to the Electricity Industry Law, which 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-owned company in first place. The use of coal has been widespread internationally, due to the high prices of natural gas that have resulted from the armed confrontation between Russia and Ukraine, and from an inertia due to the cut in supply caused by the pandemic. In the country, the lack of new power plants - due to regulatory changes and the suspension of auctions - has boosted the use of coal at the same time as a record increase in demand. The operator's data indicate that during April the country registered a new all-time record for electricity demand. And the lack of new supply has given a second wind to some of the state-owned CFE's power plants that were close to being taken off the market or were no longer used 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 those with lower variable costs at the forefront, the state-owned CFE would be reducing the price of electricity offered in the wholesale electricity market so that its power plants are used. In 2020, reported Redd Intelligence, Cenace allowed the state-owned CFE to inject energy from its power 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 forecast a boost in its use after years of steady declines in its use. From 2018 to 2020, coal use as an energy source has fallen 7% globally.

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