Drought Hits Brazil’s Power Supply

Brazil’s ongoing drought is forcing power operators to turn to thermoelectric power to safeguard its dwindling hydroelectric power plant water storage levels.
Published: Wed 31 Oct 2012

What happened                                                                         

Brazil’s national power grid operator ONS is activating an additional 2,100MW from 20 oil and diesel-fired thermoelectric plants in response to the country’s critically low hydroelectric dam levels, reports BNAmericas. The aim is to prevent the water storage of local hydroelectric power plants (HPPs) from falling beyond set critical levels.

Background          

The ongoing drought, due to the El Niño phenomenon, is affecting the water storage at the country’s hydroelectric dams. The country’s northeast region is experiencing the worst effects with its dams currently at 37.4% of capacity. Well over 500 towns and cities in the area have been affected. Reservoirs in the southeast and central-west are at 41.8%. According to ONS Director General Hermes Chipp, the minimal acceptable levels are 33% in the northeast and 41% in the southeast.

Brazil's thermoelectric plants are now operating at 70% capacity after ONS ordered an extra 2.5GW from natural gas-fired generators in September. An additional 2.1GW of thermal energy has been ordered from 18 October.

Thermoelectric energy is more costly and more polluting but ONS says that is it necessary in the present situation. ONS says it has avoided making the move to thermoelectric plants for over a month now, thereby saving Brazilian electricity consumers USD690.6m (BRL 1.4 billion) in additional power charges.

The low rainfall level has resulted in the liquidation differences price (PLD) - the index used to measure the cost of generation - to rise above US$148MWh, almost triple its July level. The cost of thermoelectric energy generation in Brazil can vary between 400 reais/MWh and 500 reais/MWh compared to as low as 50 reais/MWh for hydroelectric power.

Brazil is home to the Western Hemisphere’s third-largest electricity sector. The country draws almost 90% of its power from hydropower. However, this rich resource has its advantages and disadvantages. On the upside, hydroelectric power reduces Brazil’s overall generation costs and is more sustainable for the environment when compared to thermal generation.

However, this reliance on water for power makes the country more vulnerable to supply shortages during periods of low precipitation, especially since the country’s consumer and industrial demand is always on the increase, explains Growing Blue. This isn’t the first time that Brazil has experienced a severe drought. During 2000 and 2001, the government was forced to reduce consumption by 10 to 35% in order to avoid blackouts. As a result, many of the country’s industries, especially in the southeastern region which accounts for almost 60% of the country’s GDP, were negatively impacted. The reductions had an impact on operational capacity, caused production delays and increased their production costs. It is estimated that this drought reduced the country’s GDP by 2%, or approximately US$20bn.

Last Word                                                                                                                            

Brazil’s lack of diversity in its energy mix is exposing the country to power supply shortages. In order to avoid this, the government needs to harness the country’s wealth of renewable energy sources. [Read Engerati articles: Brazil Expands for Wind Power; Brazil’s Wind Development Delayed; Brazil and Chile: Energy Sector Investigated]

Sources               

Aljazeera-Brazil droughts and floods

Business News Americas-ONS orders oil-fired thermo backup as dams reach alarming levels

Growing Blue-Brazil’s Reliance on Hydropower

SeeNews Energy-Brazil launches 2,100MW TPPs on low rainfall

World Bank-Closing the Electricity Supply-Demand Gap [pdf]