Water crisis will make electricity bills more expensive for Brazilians until the end of the year 

The hydroelectric reservoirs in the Southeast and Central-West regions ended the rainy season with the lowest level of capacity in the last six years. On Monday (10), the reservoirs that supply the two Brazilian regions reached the 33,7% energy storage capacity mark.

The last time the volume was below this was in May 2015, when the level reached 34,6%. During that period, the extra fee on the electricity bill was in effect for 14 consecutive months. Because of this, the expectation is that, once again, the Brazilian consumer will pay for the additional cost of thermal generation until the end of the year, according to information from Folha de S. Paulo.

Aiming to save water in hydroelectric reservoirs, the CMSE (Electricity Sector Monitoring Committee) authorized the ONS (National Electrical System Operator) to use all available resources, without limiting the amounts and associated prices. The trend is for reservoir capacity to reach 32,3% by the end of the month.

Earlier this week, in a conversation with supporters as he left the Palácio da Alvorada, President Jair Bolsonaro said that Brazil is experiencing the worst water crisis in its history and that the worst is yet to come. According to him, the rainfall forecast for March was below expectations, which made the situation even worse. “We have a serious problem ahead of us. We are experiencing the worst water crisis in history. Electricity. It’s going to be a headache. A shock, right? The worst crisis we’ve ever seen. We’ve had another bad luck,” he said.

Since mid-April, experts have been warning about the risk of shortages caused by the lack of rain. In the first quarter of 2021, the rainfall in the region that supplies the Cantareira System, in São Paulo, for example, was the lowest since the end of the last water crisis, in 2016.

Investments in renewables

According to Carlos Evangelista, president of ABGD (Brazilian Association of Distributed Generation), in addition to the lack of rain, the current scenario also reflects the lack of investment in renewable sources. “The use of renewable energy could help a lot. First, because if we used other energy sources we would keep the reservoir levels always higher. It is as if we were, in quotation marks, saving water. And, second, because by injecting clean and renewable energy into the grid, we could do away with thermal energy, which is polluting and much more expensive,” he explained.

Read also Solar energy proves to be a solution to the water crisis

The executive also reinforced that it is past time for the country to be inspired by the strategies that have been adopted around the world and start investing in renewables. “Brazil, which has a clean electrical matrix, is doing the opposite of the world. We have a clean matrix and we are getting dirtier. The whole world is migrating to renewables, the famous energy transition”, he highlighted.

tariff flags

At the beginning of the month, ANEEL (National Electric Energy Agency) activated the use of red flag 1 in the month of May, with a cost of R$ 4,16 for every 100 kWh consumed. The measure was taken due to the dry season and the lack of rain in some regions of the country.

“This situation signals an unfavorable level of production by hydroelectric plants and a high need to activate the thermoelectric park, putting pressure on costs related to hydrological risk (GSF) and the price of energy in the short-term market (PLD). The reconciliation of these indicators led to the activation of level 1 of the Red Flag”, informed the Agency.

Since 2015 the ANEEL advances part of the costs of thermal power plants by charging monthly tariff flags on the electricity bill. The objective is to inform consumers about the increase in costs and allow them to reduce energy use. Currently, there are three colors for the flag system: green, yellow and red.

The first is used when reservoir levels are high and there is no need to use thermal power plants. The others are activated, respectively, when reservoir levels are low than ideal and when thermal power plants are needed. It is worth remembering that the flags are not the only mechanism for passing on the high cost of thermal power plants. They advance this cost to signal to the consumer that the product is scarce. However, part of the extra cost is paid in the tariff review of energy distributors, which occurs during the year.