Bolsonaro distorts data, and hydroelectric plants should not stop even in the worst crisis – 02/09/2021 – Market

Brazil is facing one of the most severe water crises, but it is far from the scenario foreseen by President Jair Bolsonaro (no party). He urged the population to save energy to avoid the collapse of hydroelectric dams.

“Most of these dams are already around 10%, 15% storage. We are at the limit of the limit. Some will cease to function if this hydrological crisis continues to exist,” he said live last week.

Sector technicians, consultants, analysts and even advisors from Bolsonaro consulted by sheet they claim that, even in the face of the worst projections by the ONS (National System Operator), no plant runs the risk of stopping.

“There may be, as is already the case, restrictions on generation [diante da falta de água], but the stoppage is practically impossible,” said Gustavo Carvalho, manager of Prices and Market Studies at Thymos Energia.

Carvalho highlighted that not even in the worst crises —1999, 2014 and 2015—, with water conditions as serious as the current one, there was no interruption of activities at the plants.

Two decades ago, the Furnas hydroelectric plant, in the Rio Grande basin, recorded the lowest historical level in its reservoir — 6% of the usable volume of water. “Even so, it continued to operate,” said the analyst.

When contacted, the Palácio do Planalto had not responded until the publication of this report.

Advisers to Bolsonaro privately state that the president exaggerated when he spoke of the water crisis as a way of appealing to Brazilians for a voluntary reduction in consumption, a measure considered urgent given the worsening of the water crisis — the worst in the last nine decades.

After much discussion with Planalto, the Ministry of Mines and Energy launched the guidelines for the bonus program for consumers in the regulated environment who choose to ration their consumption, especially during peak hours.

The criticism is that the savings generated will be meager because the reduction in consumption will not be mandatory.

Even assuming the worsening of the crisis on the national chain, Minister Bento Albuquerque (Mines and Energy) at no time signaled for rationing or the risk of shutting down plants.

For Carvalho, in past and current crises, political issues prevailed in the strategies. “Former President Dilma Rousseff was trying for re-election [em 2014]. I believe Bolsonaro also weighs the impact of a decision like this [para sua campanha em 2022]”, he said.

In this scenario, the ONS performed supply simulations until the end of this year.

In the worst case, without adding new energy, most of the reservoirs in the Rio Grande, Parnaíba and São Francisco basins would be at 3% of storage, well below the historical minimum level.

This can occur in Furnas and Mascarenhas de Moraes (on the Grande River) and in all the plants on the Parnaíba River (Nova Ponte, Emborcção, Itumbiara and São Simão).

At the Ilha Solteira plant, which has a waterway, the water level could drop from the current 325.4 meters to 319 meters, compromising navigation — not energy generation.

In Três Marias and Sobradinho, in the São Francisco river basin, the forecast is to impose more severe restrictions than the current ones—something that occurs when the reservoirs are at 30% and 20% of their useful volume, respectively.

In ONS projections, the two will arrive in November with 21% and 17.9%, in the worst-case scenario.

The ONS also drew a less pessimistic projection, counting on an injection of 16.5 average GW (average gigawatts) into the system between September and November through energy imports or the activation of thermoelectric plants.

Today, the average cost of MWh (megawatt-hour) of these two options is around R$2,000, almost three times more than the reference price for energy in the free market.

According to this ONS projection, the reservoirs would be saved, but not that much. The vast majority would keep 5% of their usable volume—only two percentage points higher than in the pessimistic scenario.

Furnas, Mascarenhas de Moraes and Emborcção would have 10% storage (double the previous scenario) and Sobradinho would have 23%.

Technicians from the Ministry of Mines and Energy who spoke with the sheet anonymously, they monitor the monitoring on a daily basis and claim that, even so, they do not plan any shutdown of hydroelectric plants.

They guarantee that Bolsonaro is receiving detailed reports with accurate information on the country’s energy situation, but that he abused his “freer” style by calling on the population to save money.

Bolsonaro tries to avoid further damage to popularity. According to advisors, the order was transmitted to Bento and Paulo Guedes (Economy) is that they avoid bad news.

Both try to alleviate two of the main crises: the deterioration of the economy (with high unemployment, inflation and rising interest rates) and the energy crisis, which not only compromises consumption but also causes an increase in prices.

In the last 12 months up to August, the IPCA-15 reached 9.3% — and one of the biggest impacts was that of electricity, which rose 5% in the month, according to the IBGE (Brazilian Institute of Geography and Statistics).

Much of this increase is explained by the readjustment of the level 2 red flag which, at the end of June, went to R$ 9.49 per 100 kWh (kilowatt-hour), an increase of 52%.

The flags appear on the electricity bill, reflect an additional cost in energy generation, and serve to indicate the need to reduce consumption. Otherwise, the customer pays more.

The June readjustment, however, was not completely passed on. Aneel (National Electric Energy Agency) left a part (about R$ 3 billion) for later and, since then, this deficit has increased from R$ 5 billion with the increase in generation costs due to the activation of thermal plants.

Instead of announcing the readjustment of the flag in force, Aneel — pressured by the government — decided to create a new flag, called “water scarcity”, whose value, of R$ 14.20 per 100 kWh, is precisely that of the red flag 2 readjusted by almost 50%.