The Looming Energy Crisis – Overview of a Drought Scenario

Much has been said about the serious water crisis affecting several regions of Brazil, particularly the financial capital and largest city in the country, São Paulo. However, the public has been little warned about the significant impacts that this will have on the energy sector – already this year.

It is no secret that Brazil's energy matrix is composed mainly of hydroelectric power. However, the prolonged drought that the country has faced in recent years, with rainfall well below average, has drastically reduced the level of many of the reservoirs that hydroelectric plants use to generate energy.

The consequences are already beginning to appear. The country is increasingly dependent on its thermoelectric plants, which mainly use diesel and natural gas as fuel, which are polluting and expensive. According to official data from the National Electric System Operator (ONS), in 2009, 93% of Brazil's electricity was generated by hydroelectric sources. By 2013, this number had already fallen to 79%; and in December 2014, to only 69%. This figure can still be considered high when compared to most countries, but the Brazilian power grid was not designed to operate with such a high percentage of thermal sources, currently close to 30%. Thermal power plants have been operating at full steam, compromising maintenance routines and putting at risk their machinery, which was designed to operate only a few days a year. On November 21, 2014, a record was broken: 17.1 GW of power was being generated by thermal power plants, which represents 98.7% of the country's thermal capacity available on that day, an astonishing number. Despite the rhetoric of politicians, Brazil is dangerously close to its electrical limit.

Increase in thermal power generation in Brazil from 2009 to 2014.

Source: http://www.ons.org.br/historico/geracao_energia.aspx

Contrary to the government's insistence, it is clear that the lack of rain is not the only reason that has led the country to the delicate situation it finds itself in. The same can be said about the water crisis. Factors such as lack of planning by public managers, policies geared towards electoral ends, and the choice of energy concessionaires to distribute their profits from previous years to shareholders instead of investing the necessary amounts in improvements to the network infrastructure, paved the way for the imminent energy crisis, as was to be expected.

The Minister of Mines and Energy, Eduardo Braga, summarized his view on the (lack of) responsibility of the government in the face of the crisis by saying last month simply that “the electricity sector is being a victim of the hydrological rhythm”, and that it will be up to the population to reduce its consumption, “in the same way that … the consumer is having to reduce water consumption”, in order to avoid drastic problems. It’s that simple. It’s ironic that this statement came right after a meeting with the Minister of Planning. At least the minister is right about one thing: regardless of the actions that may or may not come from Brasília, consumers need to take control of their own destiny and do their part by reducing energy consumption as quickly as possible through energy efficiency actions.

At Mitsidi, we believe that there is enormous untapped potential for energy efficiency. More on this subject in our next posts!