Government indifference is hindering the development of green energy in Venezuela

Government indifference is hindering the development of green energy in Venezuela

A wind turbine at the Andrés Bello Catholic University in the Antímano community of west Caracas in Venezuela.

(María de los Ángeles Graterol)

For years, Venezuela has depended on oil, gas and large hydropower plants to meet its energy needs. It used to be one of Latin America’s and the world’s oil-producing powers, but those golden years are over, not only because of the crisis in its oil sector linked in part to government mismanagement, but also because of the carbon footprint generated by fossil fuels, which is forcing many governments to start shifting towards renewable energies.

Thanks to the natural resources it has, the region has the capacity to cover 22 times its projected electricity demand by 2050 using alternative energy sources, according to the Inter-American Development Bank (IDB). As part of the UN 2030 Agenda for Sustainable Development, the continent is in fact expected to increase its installed green electricity generation capacity to 85 per cent by 2030, with solar and wind power being the most important sources of electricity by that year.

Venezuela, however, is not moving towards a green transition and is doing little to meet that regional goal, as it does not even produce 1 per cent of alternative energy, Luis Ángel Ramírez, a professor of renewable energy studies at the Andrés Bello Catholic University – the first in Venezuela to have a green roof with 30 solar panels and a wind turbine that together produce 8,000 watts – tells Equal Times. And yet 20 per cent of the Venezuelan territory, especially the Andean states that are closer to the tropics, has the ideal level of solar radiation to benefit from photovoltaic energy.

The Venezuelan electricity grid currently generates 24,000 megawatts (MW), according to figures provided by the Corporación Eléctrica Nacional, the state-owned company in charge of the electricity supply. Thirty per cent of this electricity could be covered by solar and wind energy, but the lack of investment in technology transfer and the absence of policies in this area have prevented this, Ramírez says.

The construction of wind farms in the country began in 2006 when Hugo Chávez was in government, with investments reaching US$725 million (€673 million). But the two main sites – one in Paraguaná and the other in La Guajira in the states of Falcón and Zulia respectively, and with the capacity to generate 125 MW and cover the electricity needs of 45,000 homes – have since been all but abandoned. Only five out of the 54 wind turbines are in operation at the Paraguaná site. In La Guajira, only 12 were installed out of the 36 planned, but none of them are now supplying energy.

In 2010, when these wind farms were flourishing, the Venezuelan Wind Energy Association estimated that Venezuela would generate 10,000 MW of wind power by 2025, covering 10 per cent of projected national electricity demand, with a year-on-year growth in installed wind power capacity of approximately 6 per cent.

“Venezuela could produce wind and solar electricity immediately, but there is a lack of devices to capture that energy. There are no solar farms. That’s why there is no electricity generation with these alternative sources at domestic level. There are some companies that have their own installations, but they have not been more widely adopted for various reasons. One of them, and the most significant, is the price of electricity, which makes the recovery on investment of such installations an uphill struggle,” explains Nelson Hernández, an expert in renewable energies and a member of the National Academy of Engineering and Habitat.

The price per kWh was around US$0.002 cents in 2020, according to data from the Global Petro Prices website, making it the country with the lowest electricity prices in the region, followed by Cuba, where the price per kWh was US$0.008.

That is why foreign companies do not see Venezuela as viable terrain for investments in clean energy. Nor is there financial benefit in it for Venezuelan households since they would have to wait between seven and ten years to see a return on their investment, in addition to the fact that there is no state funding to help develop these photovoltaic or wind energy systems, Hernández explains.

“In a recent project it was determined that a building with 20 apartments would need 60 kWh. In the case of Venezuela, [the installation of an alternative electricity system] would cost the equivalent of US$60,000 (€57,000). In other countries it is likely to cost less. The price varies according to the amount subsidised by the state because it’s not just about the US$0.002 per kWh, but also about the cost of importing and nationalising the equipment. In Colombia, a 60,000-kWh installation would probably cost US$45,000 (€43,000) and, in China US$25,000 (€24,000),” says Ramírez, who has conducted research into energy sustainability.

In Venezuela, where the minimum wage is around US$0.96 a day – as the Economic Commission for Latin America and the Caribbean (ECLAC) reports in its study Development of Energy Poverty Indicators in Latin America and the Caribbean – technological change towards high efficiency and quality energy services “is hampered by the cost it represents relative to the average earnings of the poorest households”.

The cost and use of fuels for electricity generation

According to the IDB, electricity consumption on the continent has increased by 300 per cent in the last 40 years, with electricity bills representing 3.3 per cent of the average income of Latin American households. Venezuela was the largest energy consumer per capita in Latin America in 2016, according to the country’s state electricity corporation, Corpoelec – much larger than nations such as Brazil. The regional trend in response to the need to decarbonise in the midst of growing energy consumption has been to diversify the energy mix.

In December 2021, the Venezuelan parliament – with a pro-Chavista majority – began preliminary discussions on a Non-Conventional Renewable Energies Bill that seeks to incorporate other energy sources into the national electricity grid, in addition to the most predominant ones: hydroelectric and thermoelectric power. But, half a year after it was presented, there has been no official report of any progress. Meanwhile, the country continues with its power cuts, which are increasingly regular. In the first two months of 2022, blackouts kept 58.5 per cent of Venezuelan households in the dark for periods of between two and six hours, and 30 per cent of the population was affected by power outages on a daily basis, according to the Venezuelan Public Services Observatory (OVSP).

Some Venezuelan cities decided not to wait for the bill to be passed and implemented their own tailormade solutions.

In Maracaibo, in the state of Zulia – one of the hardest hit by the power cuts – municipal authorities have debated an Alternative, Green and Clean Energy Ordinance, with which they plan to require housing development companies to make provision for the installation of solar energy systems in their housing designs. In the medium term, they also hope to supply electricity to schools and health centres by diversifying their energy mix and to reduce power cuts – which are linked to the economic crisis – by becoming self-sufficient. In mid-May, the same municipal councillors said that, if approved, the measure would come into force in June of this year and would be the first of its kind to be adopted in Venezuela. As this article went to press, however, no progress had as yet been announced.

In the same city and as part of the ‘Green Maracaibo’ plan, solar-powered streetlights were installed in the busiest squares and streets. Further north, in San Cristóbal, capital of the border state of Táchira, solar panels were installed on ten sports fields. But again, these are all isolated actions that are not part of a national strategy or plan.

“These initiatives have arisen as part of the search to meet the electricity needs in the country, but they have not been coordinated with all the relevant bodies, such as the ministries that grant the permits,” says Ramírez.

The lengthy power cuts, on the other hand, have led many Venezuelans to turn to self-generation using fossil fuels, which is more affordable at current prices, despite the occasional fuel shortages in the country.

A diesel-powered electricity generator requires eight litres of fuel a day to keep it running for eight hours, and costs US$24 a day to run, given that a litre can sell for US$3 on the black market. This is not a sustainable solution, as electrical engineer Mahley Márquez, general director of Araf Energy, which provides services in the field of solar and wind energy in western Venezuela, told the local news outlet Cinco8.

How to promote green energy for housing?

Nigeria – another oil-producing country and one where 43 per cent of households are off the grid and those that are connected experience constant power cuts – is faced with the same problem. The government is investing in a 200-megawatt per hour solar plant, and other decarbonisation projects are underway that should provide jobs for 30,000 people.

The authorities in Nigeria have responded to public pressure and are accelerating the process of diversifying the country’s energy sources. The difference between Nigeria and Venezuela, however, is that in the latter, the general public’s priority is solutions to the power cuts – regardless of how eco-friendly they may be. In Venezuela, citizen participation has been low in this area, mainly because there is little information about the direct benefits of clean energy use, including the creation of employment, which is three times greater than that generated by companies in the fossil fuel sector.

Also, to kickstart the energy transition, incentives have to be provided by the government.

In Chile for example, the energy ministry’s Casa Solar programme funds the purchase of solar power systems for members of the same neighbourhood, enabling households to save up to US$363 (€344) a year in electricity bills, as the energy not consumed is fed into the national electricity grid. Similarly, in Uruguay and Colombia, electricity companies offer transition subsidies and discounts to those who install solar systems in their homes for up to one year.

This is the path being taken by most countries in the region, where 52 per cent of the energy produced now comes from renewable sources. Whether Venezuela joins them depends on the political will of its government, which according to ECLAC recommendations should make legislative changes and regulate the use of these energies, stimulate public-private partnerships between companies operating in this sector, and provide direct financing and rebates for the development of green residential sites.

Finally, the invasion of Ukraine could impact positively on this transition, as the US has authorised European companies to ship Venezuelan oil to the EU to offset the embargo on Russian crude oil.

“Venezuela needs internal measures capable of reorganising its economy to make renewable energy business models work. There is no direct relationship between the implementation of domestic sustainable development policies and the development of the war in Ukraine, but Venezuela’s gross domestic product will undoubtedly be impacted by an economic opening with the sale of fuel to European states. If the oil revenues are invested in a mindful way, it is conceivable that (...) Venezuela might have greater financial capacity to invest in green energies,” says Venezuelan engineer Luis Ramírez.

This article has been translated from Spanish.