Risk of blackout and high energy cost threatens recovery, businessmen complain

The government’s latest statements on the water crisis confirm what was feared: if it does not rain enough for the country to return to its historical average rainfall, Brazil could face a serious lack of electricity generation this year, which will harm the expected economic growth for the post-Covid-19 pandemic period.

The assessment is made by representatives of the industry and the electricity sector heard by the metropolises. According to these professionals, there may be a lack of energy to sustain the country’s demand in 2022 as well, if the volume of reservoirs at hydroelectric plants does not increase in the coming months.

Although the risk of a blackout this year is small, the chances are not ruled out by experts. This is because the drought in the reservoirs in the South, Southeast and Midwest, which account for 70% of energy generation in Brazil, is increasingly severe. Since October 2020, this is the lowest volume recorded in the last 91 years, and the use of thermoelectric plants, more expensive and more polluting, has almost tripled.

“The probability of having a blackout, as in the previous energy crisis [a mais grave, de 2001], is small, but the blackout in each consumer’s pocket is inevitable, because the energy is expensive and will increase even more”, he told the metropolises the founding partner of Elev (a company specializing in energy efficiency), Rodrigo Aguiar.

The businessman’s forecast stems from the recent announcement by the National Electric Energy Agency (Aneel), which announced this week the creation of the “water scarcity flag”. The new value of the extra fee on the electricity bill will be of BRL 14.20/100 kWh, 50% increase, effective until April 30, 2022. For consumers, the average rate increase will be 6.78%.

Faced with this pressure, the Minister of Economy, Paulo Guedes, made a controversial statement in recent days, asking “what is the most expensive energy problem?”. “When we hear our minister Paulo Guedes say that he doesn’t care about the impact on the country’s economy and on people’s pockets, concern grows,” said the businessman.

“The reason for these crises is because the current government, like the previous ones, is not doing the right homework. If we want to solve the instability of meteorological dependence, we have to break feuds and unite agents, institutions and the market, so that, together, we can arrive at the best solutions and implement them”, completed Elev’s founding partner.

In addition to Aguiar, the risk consultancy Eurasia also assessed that the government’s stance is not contributing favorably to the scenario. A report produced by the company indicates that there is a possibility of a power shortage in the country this year, which should compromise economic growth and impact the popularity of President Jair Bolsonaro (no party).

energy reduction

Another point raised by specialists is that the measures announced by the government, so far, may be insufficient to reduce energy consumption and to attempt to relieve generation by November – the month for which the rains are expected to return.

For now, there is only one program to encourage energy rationing. The measure took effect only on August 23rd.

Called Voluntary Electricity Demand Reduction (RDV), the program is aimed at large consumers who are willing to voluntarily reduce energy consumption from four to seven hours a day by at least 80% of the average daily consumption .

If this happens, the government will grant financial compensation to the participants. According to Economy, the difference will be returned to the consumer via charges levied on the electricity bill.

The RDV was designed by the government in conjunction with the National Confederation of Industry (CNI), which is increasingly concerned about the consequences of the water crisis and has stated to the metropolises no longer “how to escape” from cost increases.

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“The situation has worsened, and this influences the sector’s recovery, because it brings an increase in costs and a decrease in the industry’s competitiveness. We still don’t have any idea of ​​the tariff impact of the resumption, but we will soon have this number”, pondered Roberto Wagner Pereira, specialist in infrastructure at CNI, to the report.

According to a CNI survey, nine out of 10 businessmen are concerned about the deterioration of the competitiveness of the national product and the risk of rationing.

small and medium companies

According to a survey carried out by the Brazilian Micro and Small Business Support Service (Sebrae), the energy bill represented, in 2019, 15% of the operating costs of micro and small businesses, but since 2020, this expense has become the main expense for 28% of small entrepreneurs.

In the diagnosis of the general director for Latin America at Fluke do Brasil, Luiz Ribeiro, the country needs to reinvent itself so that small and medium-sized companies are not forced to stop their operations due to lack of energy when situations like the current one occur.

“In case of energy rationing, eight out of 10 of these companies would have losses, and in 48% of them, the expenditure would be considered high. Only 20% would not be harmed, precisely because they used another source of energy in the production line, not depending on hydroelectric energy”, he explains.

For Ribeiro, there will only be greater peace of mind in relation to the country’s energy supply when the water representation in Brazil is less than 40%. Today, this share is 63.8%.