Brazil’s hydropower faces risk from drying river basins

Brazil’s hydropower faces risk from drying river basins

Sub: Geo

Sec: Mapping

Context:

• Soil moisture in Brazil’s main hydropower river basins has hit nearly two-decade lows.
• This drought threatens long-term impacts on Brazil’s energy sector, even after the rains return.

Details:

• Hydropower typically generates about two-thirds of Brazil’s electricity.
• Years of weak rainfall have hurt the sector, leading to higher energy costs and inflation.
• Key Affected Areas:
  • The Paranaiba, Grande and Tocantins hydroelectric basins, stretching across the southeast, centre-west and north Brazil, make up a large part of the sector’s capacity, and they are experiencing the lowest September soil moisture levels since 2005.
  • A decade of below-average rainfall, with only one year above the long-term average.
  • Run-of-river generators are the worst hit, including the partial shutdown of the Santo Antonio plant.
• Mitigating Factors:
  • Growing wind and solar capacity offers some relief, but transmission bottlenecks limit their use.
  • Current reservoir levels (53% capacity) are better than during the 2021 water crisis (16%).
• Economic Impact:
  • Electricity prices are expected to remain high until abundant rains arrive.
  • Power rates are likely to stay at top ‘red flag’ levels through year-end.
  • This could add 14 to 32 basis points to 2024 inflation forecasts.

About Brazil:

Source: Reuters