Power rationing seen as almost inevitable in Brazil

Compulsory power rationing in Brazil is now thought to be practically inevitable to avoid energy shortages in the country amid the current drought, according to local experts. 

So far, the federal government has only implemented voluntary power saving programs for free and regulated consumers, but they are unlikely to be sufficient to offset the shortage of power from water-starved hydro plants. 

“The current strategy of voluntary rationalization and emergency increases in production and imports will subject the country to a risk of blackouts that should not be tolerated without a broad debate,” Edmar de Almeida, a researcher at the energy institute of Pontifícia Universidade Católica do Rio de Janeiro, told BNamericas. 

In Almeida’s view, the pandemic and the political instability in the country have not allowed proper debate about the risks and consequences of the blackouts. 

“It's essential that there's greater mobilization of the sector's stakeholders and society in general regarding the appreciation of these risks,” he warned. 

In a recent report, national grid operator ONS said the country needs an additional 5.5GW to assure supply in October. However, the ONS itself admits it will not be easy to contract that load, which would come from Argentine and domestic thermoelectric plants. 

“With the end of winter [in September], temperatures will start to rise, increasing demand, so the risk of blackouts will be great if the government doesn't decree compulsory rationing, because ‘price rationing’ is already happening to some extent, but without the desired effect,” Adilson de Oliveira, a professor at Rio de Janeiro’s federal university UFRJ, told BNamericas. 

Diogo Lisbona, from the regulatory and infrastructure study center at Fundação Getúlio Vargas university, also considers it improbable that the voluntary program will produce the necessary reductions in consumption. 

“The government will need to be clear, emphatic, and set a reduction target,” he told BNamericas, suggesting that marginal consumption (above pre-established limits) should be subject to higher rates. 

Lisbona also does not believe the tariff flag system will be capable of inducing the required drops in consumption at this time of scarcity. 

“It will only make everyone's bills more expensive, anticipating income to pay for the use of thermal plants,” he said

On Monday, the mines and energy ministry (MME) confirmed that the situation was critical, but pointed out that, considering the gains from ongoing actions, such as the relaxation of the operation of hydroelectric plants in the São Francisco river basin, new projections indicate that energy load would be met in the scenarios evaluated.

The government also authorized the activation of the Termonorte I thermal plant beginning in September and the Uruguaiana and Cuiabá thermoelectric units between October and March 2022. 

It has also approved offers for additional thermoelectric power supply in September up to the ceiling price of 2,000 reais/MWh (US$387/MWh). 

This week, Brazil’s electric power watchdog Aneel is expected to announce a new price hike in the tariff flag system. According to local news reports, the increase will be lower than that originally planned due to political pressure.