Brazil’s Looming Energy Crisis – What Might Happen and What To Do

By Alexandre Schinazi

In our last post, we wrote about Brazil’s imminent energy crisis as a consequence of the gradual increase in thermoelectric power production over the past years, due to the shortage of hydroelectric power sources.

Three significant aspects will probably be affected by this evolving situation. Firstly, there is a short-term risk of power outages on a regional scale, due to the excess of power being used during peak hours, particularly in the summer when temperatures are soaring. If demand outweighs supply at a given moment, part of the interconnected national grid shuts down, causing nuisance to the population and economical damage all around. In order to reduce this possibility, measures must be taken to offset peak hour consumption, such as automated or manual load shedding in the industrial and high-rise commercial sectors, aided by third-party energy-use analysis. If not taken seriously, the blackout occurred a month ago on January 19 across eleven states might be just the first of many this year.

States affected by the January 19, 2015, power outage

Source: noticias.r7.com

However, schedule adjustments may not be enough to thwart the second threat, energy shortages. With reservoirs on the low and burdened thermal plants at near-maximum capacity, one unexpected breakdown might drive daily kilowatt-hour production down to under required levels. Major energy rationing like the one occurred in 2001 may turn out to be an inevitable palliative measure, but the long-overdue preventative steps that must be taken are large-scale energy efficiency and renewable energy onsite generation, backed by public policy and incentives. Homes, businesses and industries should work with specialists to understand their energy map and identify quick low- and mid-cost savings opportunities. While many consultancies focus on expensive equipment updates, not enough attention is given to operational improvements and optimization of energy usage procedures, which can result in surprisingly high savings at low costs.

Finally, besides increasing CO₂ emissions, this shift raises the cost of generating electricity, and, therefore, the financial pressure on the entire system, from utility companies down to the final consumer. Market analysts expect 2015 to produce rises in energy tariffs of as much as 50% in some regions, despite declarations by Brazil’s Energy Minister, Eduardo Braga, that elevations will “definitely” not reach 40%. Interestingly, though, the first approved price adjustments came into effect Feb. 3, averaging 33% increases, but attaining 46% for one utility company.

All in all, it is clear that for every reason — from preventing blackouts to saving money — reducing energy consumption has seldom been so important. Even the more so as of next month: growing dependence on thermal power is not the only factor causing rises in energy prices, and sharp increases are expected to happen in March for large and small consumers alike. Stay tuned to our next posts to find out exactly why, and how sharp they might be.

We at Mitsidi Projects are convinced that there is much to do to help lower energy costs despite rising tariffs, through energy efficiency measures and improved energy management and building operation.