Water crisis: risk of power outages in Brazil far greater than rationing this year

RIO DE JANEIRO, BRAZIL – The consulting firm PSR, which specializes in the power and gas sector, estimates that the risk of power outages can be up to five times higher than rationing. The data was given by its CEO, Luiz Augusto Barroso, to analysts João Pimentel and Gisele Gushiken of BTG Pactual.

In the report they signed on the conversation with Barroso, the analysts inform that PSR outlined three scenarios for 2021, based on projections of 3%, 6%, and 9% for energy demand growth compared to last year.

In the best-case scenario, in which the government implements all necessary measures to mitigate the water crisis, the probability that electricity rationing will occur varies from 1% if demand for electricity increases by 3% to 2.9% if consumption increases by 9%.

RISK IN GOVERNMENT HANDS

However, in the same optimal scenario, the probability of power rationing varies from 5.1% to 8% when consumption increases by 3% and 9%, respectively. Thus, the largest difference occurs when demand increases by 3%, and the risk of power outages is 5.1 times greater than that of rationing.

“This risk [of blackouts] can be mitigated by a voluntary program that would be implemented by the government to encourage industrial customers to shift production off-peak [of energy consumption],” BTG analysts say.

The hope of the bank and the PSR is that the Chamber for Hydropower Management Exemptions (Creg), created by Provisional Measure 1055/21 and composed of representatives from various ministries, will adopt effective measures to mitigate the impact of hydropower shortages on electricity generation.

According to the PSR study published by BTG, if the chamber fails, the likelihood of rationing shoots into the 13.7% to 28.5% range. “Creg is a key element in addressing the water crisis,” the bank said.