El Niño to push Brazil thermal output into 2027
El Niño could prolong drought conditions in Brazil, increasing the need for thermal power generation and LNG imports to support electricity demand.
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TLDR - El Niño conditions could extend Brazil's dry season into 2027, increasing reliance on thermoelectric generation, mainly natural gas-fired plants, to meet rising power demand. Despite healthy reservoir levels, delayed rains, heatwaves, and irregular rainfall in key hydropower regions may accelerate reservoir depletion. This could boost gas demand and LNG imports while putting additional pressure on Brazil's gas and power infrastructure as the country seeks to reduce dependence on fossil-fuel-based generation.
Sao Paulo, 19 June (Argus) — The El Nino climate pattern could extend Brazil's 2026 dry season and force it to need more thermoelectric output to support peak demand into 2027.
Brazil's dry-weather season usually lasts from April through October, often straining its power grid since around 55pc of Brazil's power comes from hydroelectric plants, according to energy research bureau Epe.
US meteorological agency NOAA declared El Nino conditions on 11 June and expects the pattern to be stronger than usual by the end of 2026, when most regions in Brazil re-enter their rainy period. Stronger El Nino conditions do not translate into stronger impacts, but rather "significantly tilt the odds in favor of expected regional outcomes", it said.
El Nino conditions in Brazil historically bring severe droughts in the northeast and north, while the south tends to face extreme rainfall and flood risks. Meanwhile, the southeast and center-west — which account for about 70pc of Brazil's total hydroelectric storage and generation capacity, according to climate firm Climatempo — usually experience irregular rainfall, increased temperatures and longer dry-weather seasons. Thermoelectric generation increases during dry seasons to support peak demand, with mostly natural gas-fired plants providing power. LNG imports also tend to increase, reflecting demand fluctuations as well as Brazil's gas production and infrastructure bottlenecks.
Power grid operator ONS estimates total hydropower reservoir levels to reach 81-125pc of the long-term average by November, when the El Nino is set to intensify. Despite that being 5.9-14.5 percentage points higher than levels in the same period a year before, the El Nino could delay the rainy summer pattern into 2027, large power consumers association Abrace's power director Victor Iocca said.
With expected heatwaves driving power consumption, reservoirs could deplete faster than usual, requiring more thermal dispatches from November-March. But anticipated thermoelectric output to protect water levels seems "premature" to forecast in the early days of El Nino, Iocca said.
The current criteria for preventive thermal output would only add 0.4pc of water levels back into reservoirs, according to power trading firm Grupo Delta Energia's vice-president of institutional and regulatory affairs.
Brazil is aiming for a less inflexible gas-to-power grid to reduce its dependency on fossil fuels and more expensive sources, but the El Nino could stress the gas pipeline grid with larger on-spot generation requests, specially following the latest power reserve capacity auction results.
TLDR - El Niño conditions could extend Brazil's dry season into 2027, increasing reliance on thermoelectric generation, mainly natural gas-fired plants, to meet rising power demand. Despite healthy reservoir levels, delayed rains, heatwaves, and irregular rainfall in key hydropower regions may accelerate reservoir depletion. This could boost gas demand and LNG imports while putting additional pressure on Brazil's gas and power infrastructure as the country seeks to reduce dependence on fossil-fuel-based generation.
