Feb 03, 2015

Electrical System in Southeastern Brazil in "Intensive Care"

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

At the end of each month, the Brazilian National Electrical System Operator (ONS) estimates what the rainfall will be for the following month in all the regions of Brazil as an aid for the operators of the nation's hydroelectric dams in planning their electrical generation. This information is critically important in Brazil where two thirds of the electricity is generated by hydroelectric power plants.

Last Friday, ONS estimated that the rainfall in southeastern Brazil during the month of February will be 52% of normal. That certainly was not good news for electrical companies that saw January rainfall at approximately 45% of normal. The water levels in hydroelectric reservoirs in southeastern Brazil were already at critical low levels at the start of the summer rainy season and the disappointing rains this summer have not been heavy enough to recharge the water levels. Blackouts have already started to occur and electrical rationing is a very real possibility for some of Brazil's largest cities.

The summer rainy season will go until April when the dry season set in. After that, the next significant chance of rain will be next October or November. The ONS does not have a very good track record with their recent predictions. At the end of December, they estimated that January rainfall in southeastern Brazil would be 90% of normal, but it ended up at 45% of normal.

The news for northeastern Brazil is even worse. ONS estimates that February rainfall in northeastern Brazil will be just 18% of normal. They estimated that northern Brazil would receive 76% of normal. Only southern Brazil received good news from ONS with an estimate that they will receive 126% of the normal rainfall in February and this is on the heels of heavy rains during January.

Going beyond February, unfortunately the longer range forecast for much of central and eastern Brazil is calling for below normal rainfall for February-March-April-May. Concerned officials are urging local and state governments to take immediate conservation measures in an attempt to avoid what could be crippling electrical shortages in the months ahead.