The Looming Energy Crisis – What Could Happen and What Can Be Done

In our last post, we wrote about the imminent energy crisis in Brazil, caused by the increase in thermoelectric generation in recent years due to the lack of water in reservoirs. Let's analyze what this entails, in addition to the already known increase in CO2 emissions, dividing the probable consequences into three aspects: lack of power, lack of energy and increase in prices.

A lack of power occurs when the total amount of energy being used at a given time exceeds the total amount that the plants can generate at that moment. When demand at peak times exceeds the supply of the plants, which is already close to its limit, part of the national electrical grid is turned off to avoid overload, causing blackouts. This is a short-term risk that can be reduced through measures to improve the temporal distribution of consumption throughout the day. Solutions range from changing habits to automation systems in industries and corporate buildings, and can be carried out with the help of energy analyses to understand the consumption profile.

States affected by the blackout on January 19, 2015

Source: noticias.r7.com

However, changes in consumption schedules may not prevent the second risk, that of power outages. With low reservoirs and thermoelectric plants operating close to their maximum capacity, a failure in critical equipment may mean that the maximum production of all plants throughout the day is not enough to meet daily consumption. This could bring back rationing like that of 2001, which would be a palliative measure; however, what really needs to be done (and has been for a long time) are preventive energy efficiency actions reinforced by public policies, and government incentives for distributed generation of renewable energy on a large scale. In the private sector, industries, companies and homes should work with specialists to map their consumption and identify quick opportunities for low-cost savings. Although many companies focus their consulting services on replacing typically expensive equipment, there are countless cheaper, more practical and underexploited opportunities through operational improvements and optimization of energy use procedures.

The third consequence is the increase in the cost of energy production, which puts financial pressure on the entire system, from operations to the end consumer. Analysts estimate that tariff increases in 2015 could reach 50% in some regions, although the Ministry of Mines and Energy, Eduardo Braga, stated in January that they will “definitely” be below 40%. However, the first adjustments already approved, in effect since February 3, brought an average increase of 33%, reaching 46% for a specific request in São Paulo.

It is clear that a significant reduction in energy consumption is more necessary than ever, whether to avoid blackouts like the one on January 19, which occurred in eleven states, or to protect the pocketbook, since a new sharp increase in tariffs is expected in March, for large and small consumers. The growing use of thermal power plants is not the only reason for these increases. Read our next posts on why prices will rise further, and how much the increase could be.

We at Mitsidi believe that much can be done to reduce energy costs despite the increase in tariffs, through energy efficiency measures and improvements in building management and operations.