By Felipe Lobo

ENERGY EFFICIENCY SPECIAL

Adopted in several parts of the world, the Energy Efficiency Auction is close to arriving in Brazil – as a pilot project – supported by iCS. It will take place in Roraima as soon as ANEEL defines the regulations and bases. On May 31, there was the 1st Auction of the Isolated System – Boa Vista , which was the first one to be held during the government of President Jair Bolsonaro. The obtained result was the procurement of 48.6 average MW of inflexible energy, at an average price of R$ 833/MWh.

Ricardo Lima, a consultant from the Institute for Climate and Society on the subject of Roraima and energy efficiency, explains the importance of the mechanism and the opportunities for Brazil.

iCS: What exactly is an energy efficiency auction?

Ricardo Lima: In many places in the world, energy efficiency competes directly with energy generation projects, because it is very important to diversify the energy matrix – and, of course, efficiency is essential in the reduction of greenhouse gas emissions. This is what iCS is trying to achieve alongside the Energy Research Company (EPE), to allow energy efficiency to compete in auctions on equal conditions with other energy generation sources.

iCS: The first pilot auction of energy efficiency is planned for Boa Vista (Roraima). What can be expected of this and what is lacking for it to happen?

Ricardo Lima: The mechanism of auction of efficiency is adopted in various parts of the world and is a very successful mechanism, competing “efficiently” with the expansion of the energy generation. The auction planned for Roraima is still a test and small scale (only 4 MW), as well as being stand-alone (i.e., it is not competing with other energy generation, such as new thermoelectric plants, hydroelectric plants, or wind or solar energy). However, it signals a significant advance by enabling energy efficiency to occupy the necessary space in the national energy matrix. It only remains for ANEEL to define the regulations and the bases for its realization.

iCS: What has to occur in terms of regulations for the auctions to become more frequent? Are there any barriers?

Ricardo Lima: The barriers existing today reside basically in the lack of regulations. The resources collected from consumers, via tariffs for application by the utility companies in efficiency programs and that have not been applied, exceed R$ 1.8 billion. In other words, they are not being used “efficiently.” The auction planned for Roraima is a method of testing the mechanism that could, with the necessary adjustments, be adopted all over Brazil, optimizing the energy resources and the efficiency in the use of energy.

iCS: What consequences/business can be expected from this type of mechanism, with respect to the generation of employment, reduction in energy consumption, reduction in GHG (greenhouse gas) emissions, and even the participation of new actors from the sector?

Ricardo Lima: The energy saved is the one that has the lowest index of GHG emissions. Regarding the generation of employment, business, and new actors, its potential is immense. There is an enormous potential, which is still somewhat undeveloped, despite efforts made since the 1970s for energy efficiency to occupy the leading role it deserves, and which the country needs so much. For example, the auctions can give a more specific impetus to the ESCO (Energy Service Company) market, which has not yet fully developed in Brazil to date. And the more active participation of the final consumer as a source of effective energy is fundamental.

iCS: What other mechanisms and sectors of the market are favored when there are energy efficiency auctions?

Ricardo Lima: Every competitive mechanism brings effectiveness and efficiency in the use of resources, as long as it is well managed and conducted in a clear and transparent manner. Viewing energy efficiency as a source of energy resources is a necessary advance, a step that we need to take and that we must take. This benefits the consumer with lower costs, benefits the equipment industry, and benefits the generation of employment, and so on.

This is because, when you build a thermal plant, or use wind or solar power, for example, there is a limited number of equipment and jobs, which are restricted to a geographical area. Energy efficiency offers a much wider range of engineering, systems, equipment diversification, and the decentralized generation of jobs in the country. However, it is always important to remember that energy efficiency does not replace but only diversifies the matrix.

iCS: How do you perceive the debate about the subject in the country, and what do you hope for the future?

Ricardo Lima: The debate about energy efficiency has advanced significantly in recent years, and iCS has played a very important role in this, promoting debates at the EPE and the ministry. I hope that the mechanism is considered and adopted in the medium term, at least, within the planning of the country. There is no impediment to this, only a lack of political will.

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