Venezuela has between 2 and 3 GW of hydroelectric capacity that it cannot fully utilize from the Lower Caroní River due to limitations in its transmission system. Faced with this situation, industrial Bitcoin mining emerges as an alternative to generate electricity directly at the point of generation and convert some of that electricity into revenue.
The proposal envisions private operators located near hydroelectric plants, supplied through long-term power purchase agreements. The plan aims to leverage existing capacity without initially relying on new transmission lines to major consumption centers.
This was explained by Alessandro Cecere, Senior Business Development Associate at Luxor Technology , who placed the operational hydroelectric capacity between Gurí, Caruachi, Tocoma and Macagua at approximately 9980 MW .
“ We have practically 10 GW operating right now ,” Cecere highlighted in a dialogue with this media outlet.
The limit appears in the evacuation. According to the technical data provided by the executive, the 765 kV high-voltage trunk lines have a design limit of 7 GW , so there is a gap of between 2 and 3 GW with respect to the available capacity in the Caroní.
When production exceeds the volume that can be transported, the operator must restrict actual generation or manage landfills under certain hydrological conditions. Therefore, part of the available renewable resource is not converted into consumption or generate economic value for the system .
When addressing the causes of that limitation, Cecere warned: “ It is a combination of four factors .”
One of the main issues is related to the original configuration of the Venezuelan electrical system. The 765 kV lines were designed to operate in conjunction with a thermoelectric power plant fleet distributed across the central and western parts of the country , capable of reducing the need to transport large blocks of power from the south.
Planta Centro, Tacoa, and Termozulia fulfilled part of that function. However, according to information provided by Cecere, more than 87% of the installed thermoelectric capacity is unavailable .
The loss of that backup power increased the pressure on the Caroní power plants and their transmission infrastructure. In that context, the Luxor Technology representative pointed out that CORPOELEC operates the corridor between 10% and 15% above its design capacity , transporting up to 8 GW.
Adding to this requirement is the condition of the receiving substations. The lack of sufficient reactive power compensation in the central and western regions hinders the stable reception of large power blocks from the south.
This creates voltage instability at certain nodes and can restrict dispatch even before the conductors reach their thermal limit.
From curtailment to a new lawsuit in Bolívar
The situation can be technically defined as a generation restriction associated with network congestion.
“ Technically, one can indeed speak of curtailment ,” Cecere clarified.
In hydroelectric power, the phenomenon can also manifest itself through spills. When the reservoir receives more water than the system can generate and release, some of the resource must be released without that potential energy being harnessed to meet demand.
In Venezuela, two simultaneous dimensions exist. When generation from the Caroní River exceeds the transmission system's capacity, dispatch is limited to around 7 or 8 GW . Furthermore, during periods of high water, physical spillage can occur regardless of consumption levels.
For Cecere, this restriction has a direct economic consequence. “ The opportunity cost is straightforward: hundreds of millions of dollars annually in renewable energy with virtually zero marginal cost, produced with already amortized capital-intensive infrastructure, which generates no economic value for the system ,” he stated.
The short-term alternative is to shift consumption to where electricity is available , instead of waiting for an expansion of the grid to allow all that power to be moved to other regions.
This scheme already had a precedent within the Venezuelan system itself. During the period of greatest activity of the aluminum and steel complexes of the Venezuelan Guayana Corporation (CVG), these industries absorbed between 3 and 4 GW locally .
The existence of large consumers in Guayana allowed a significant portion of the Lower Caroní generation to be used in the area and reduced the amount of electricity that had to circulate through the main system towards the center and west.
The collapse of that industrial activity eliminated a significant portion of that demand. Reactivating the metallurgical complexes represents an alternative for recovering local consumption , although the process would require years and a large amount of capital.
Bitcoin mining, on the other hand, would allow that logic to be replicated with shorter deployment times.
Continue reading
“ Industrial-scale Bitcoin mining is the only alternative that executes that same scheme in months instead of years ,” the executive stated.
The model assumes that a private operator installs equipment near the generation node, consumes the available electricity there, and pays for the supply through a power purchase agreement , without initially requiring an expansion of the lines to other regions of the country.
Paraguay as a reference for the model
Cecere pointed to Paraguay as a precedent for this strategy , based on the use of surpluses linked to Itaipu and Yacyreta and the incorporation of private mining operators through long-term agreements with the National Electricity Administration (ANDE).
According to figures provided by the executive, 1 GW allocated to Bitcoin mining represents 60% of ANDE's total revenue .
The comparison is based on three elements: high hydroelectric capacity concentrated geographically, restrictions on transporting all available generation, and the possibility of creating new demand next to the power plants .
Under that logic, a private contract with CORPOELEC would allow converting part of the electricity limited by transmission capacity into a flow of foreign currency income .
This approach also differentiates this alternative from battery storage. BESS systems can provide flexibility and operational stability, but they do not eliminate structural congestion caused by insufficient evacuation capacity.
“ BESS storage does not solve the curtailment due to transmission congestion: the bottleneck is not storage but evacuation ,” Cecere explained.
These solutions could help stabilize arrival nodes and improve dispatch efficiency , thus complementing investments in the electrical system.
Distributed solar and wind power generation would also play a role in the strategy. Their installation near consumption centers in the north and west would reduce pressure on the main transmission line from the demand side and decrease dependence on electricity from the Lower Caroní region.
A three-stage strategy
The proposed roadmap combines short, medium and long-term measures, with different priorities depending on the execution times and the capital required.
“ The priority cannot be a single line of action: the system needs answers across multiple time horizons simultaneously ,” Cecere argued.
In the short term, between one and two years , the priority would be to incorporate new demand directly at the point of generation.
According to the proposal, this intervention does not require new transmission infrastructure or government debt to begin operating and can be deployed within months . The commercial instrument would be a private power purchase agreement with CORPOELEC in Bolívar.
The revenue generated through this scheme could produce foreign currency to support the next stages of the system's recovery.
In the medium term, between three and five years , the proposal aims to improve reactive compensation and stabilize the receiving nodes in the center and west.
Before expanding transmission corridors, the goal would be to ensure that the existing infrastructure reliably receives the electricity already flowing through it .
To achieve this, Cecere proposed incorporating SVC or STATCOM in strategic substations and recovering between 3000 and 5000 MW of distributed thermoelectric generation , rebuilding part of the backup for which the network had been designed.
In the long term, the strategy envisions expanding transmission infrastructure and developing greater distributed solar and wind capacity in consumption centers .
According to the executive's view, these investments would require both cash flow and regulatory conditions capable of attracting private capital on a larger scale.
“ The sequence is: new demand today, stabilization in the medium term, structural expansion afterwards ,” summarized the Luxor Technology representative.
The plan thus prioritizes monetizing an existing hydroelectric capacity while the necessary interventions to restore the system's balance and expand its transport capacity are underway .
For Venezuela, the opportunity identified by Cecere involves finding consumers capable of settling in the same territory where there are between 2 and 3 GW that currently face restrictions on being transferred to the rest of the country .