Oct 28, 2014

Brazil's Hydroelectric Reservoirs at Dangerous Low Water Levels

Author: Michael Cordonnier/Soybean & Corn Advisor, Inc.

The water levels of hydroelectric reservoirs in southeastern Brazil continue to drop to dangerously low levels. After a severe drought in December and January, which is normally the wettest time of the year, a prolonged dry season has made the situation even worse.

According to the National Operator of Electrical Systems (ONS), the water levels of the hydroelectric reservoirs in the southeast and center-west regions of Brazil, which is the largest in Brazil and responsible for 70% of Brazil's hydroelectric capacity, declined to 19.8% of capacity. This represents a decline of 5.5% just during the month of October. ONS reported last Friday that by the end of October they estimate that the water capacity of the reservoirs in southeastern and the center-west region of Brazil will decline to 18.4% of capacity, which is below their last estimate of 19%.

The reservoir system responsible for generating electricity to Brazil's largest cities is now in at a lower water capacity than it was in 2001 when electrical rationing was put in place across southeastern Brazil. The forecast is for wetter weather starting in November, which will be critical if the country is to avoid another episode of electrical rationing.

While southeastern Brazil has the largest population, the water levels of the hydroelectric reservoirs in northeastern Brazil are actually lower at just 16.6% of capacity. The water levels in the northeastern reservoirs declined 5.2% during October and the start of the rainy season has been delayed in northeastern Brazil as well. In the reservoirs in far northern Brazil, the water levels declined 8% during October to 34.6% of capacity.

The news is much better in southern Brazil where heavy rains over the last several months actually resulted in an increase of 14% in the water levels during October reaching 80.5% of capacity.