The drought that has Brazil on the brink of energy collapse is deepening and accelerating government measures, focused on avoiding blackouts by appealing to more expensive energy sources financed with increases in electricity rates.
The worst drought in 91 years The reserves of the hydroelectric power plants in the center-west and south, the source of 70% of hydroelectric energy in the country, fell to critical levels when the economy recovers after the collapse caused by the pandemic.
The crisis became palpable for consumers in the electricity bill, which it became more expensive on Tuesday by almost 7% to cover production costs from other more expensive alternative energy sources and imports.
The Minister of Mines and Energy, Bento Albuquerque, called for an “urgent effort” in the public and private sectors to mitigate the risk of lack of energy.
Jair Bolsonaro’s government is looking for ways to deal with the crisis. AFP photo
“We are on the edge of the limit”President Jair Bolsonaro said days ago, asking consumers to “turn off a light at home.”
The president ran into an unexpected enemy product of an increasingly extreme climate, just as he tries to strengthen himself to seek re-election in 2022.
“The country is using all its sources of production to satisfy demand and therefore generation costs increased. As they are recovered through tariffs, (energy prices) increase in the short term, “explains Luis Barroso, CEO of PSR Consultoria.
Tuesday they added three photovoltaic plants, one biomass and four wind power to the generation network.
Nivalde de Castro, professor of the Gesel study group of the Institute of Economics of the Federal University of Rio de Janeiro, details the basic problem: “The reservoirs of the center-west and southeast are at levels of around 23%, one of the lowest the country faced. “
In 2001 Brazil suffered severe energy rationing. AP Photo
The situation of these reservoirs, support during the dry period of the southern winter, got worse than expected in August and it will continue to deteriorate in September, estimated the National Electric System Operator (ONS).
“If it continues to rain below the historical average in the coming months, in October there will be an imbalance between supply and demand during peak hours, warns de Castro.
This forecast triggered official measures: an electricity saving program of 10-20% in the federal public administration until April and voluntary rationing plans with benefits for companies and households.
According to the minister, an average savings of 12% at homes is equivalent to supplying 8.6 million homes.
The remembered antecedent is from 2001, when a similar situation forced the administration of President Fernando Henrique Cardoso to compulsory rationing.
The Bolsonaro government rules it out, but run against time. “It is essential to have more results in the short term, because each day of delay (in having energy savings available) decreases its effect to mitigate supply risks,” says Barroso.
In some small cities, such as Itu, in the interior of São Paulo, already planned water outages apply.
Drought puts pressure on inflation: the price increase in July, of 8.99%, it was the most pronounced in 12 months, driven by electricity and other items such as gasoline and food.
“The weight of energy in inflation is relatively high, because the cost is in the productive chain of all goods and services, and impacts on family income” and therefore on economic growth, says de Castro.
The forecast indicates that the crisis will last until April 2022.
“The level of the dams cannot be rebuilt with the average rainfall verified in recent years in the wet period,” says the expert from the Gesel study group.
Lack of water particularly hits agriculture, the main export sector, with reduced estimates in volume and quality of crops such as corn, sugar cane, oranges, beans – a reference in Brazilian food – or coffee, a traditional product for which the harvest forecast fell by 25%.
On the contrary, the world’s largest soybean producer expects another record cycle in 2021/2022, according to the National Supply Company. But even that forecast it will need water to be fulfilled.