The El Nino weather phenomenon should not cause another power generation crisis in Brazil, but four Turkish-owned floating power plants brought in under the 2021 emergency power tender will still dispatch.
There is an 84pc chance that at least a moderate El Nino will occur from November-January, according to data from the US National Oceanic and Atmospheric Association (NOAA). NOAA also predicts a 56pc chance of a strong El Nino, and a greater than 90pc chance of the phenomenon persisting from December-February, during winter in the northern hemisphere.
El Nino typically leads to less rains in key regions for hydropower generation in Brazil. The expectation for June-August is that there will be average or above-average rainfall in the southern region, while the mid-central region will enter its dry season and decrease rain volumes, according to Brazilian science and technology ministry's space institute (Inpe) and meteorological institute Inmet.
Still, Brazil enters this dry season from a much different position than in 2020, when the historical drought that put the country at risk of a blackout started. Brazil has record levels in water reservoirs that feed hydropower generation, which would offset any impacts from an El Nino drought until the beginning or middle of next year, according to University of Sao Paulo Polytechnic School professor Dorel Soares Ramos.
Through the end of this year, there is nothing grid operator ONS needs to do to address the possibility of a drought, as Brazil is releasing water from its reservoirs and exporting power generation to neighboring countries, Ramos said. If hydroelectric generation decreases this year, it can be offset by increased solar and wind power generation, he said.
PCS tender resolutions
Despite the favorable scenario, the four Karpowership natural gas plants from the 2021 emergency power tender, dubbed PCS, will continue their contracts until the end of this year even as El Nino effects are limited.
Brazil's federal audit court (TCU) approved last week the amicable resolution for the Turkish company's contracts, which add up to 560MW in total generation capacity. Under the agreement there will be an 85pc reduction in contractual inflexibility, unbinding the government from dispatching that percentage of power from the plants. The new contracts will only be valid between July and December.
In return for the flexibility, Karpowership will not have to pay fines for its delay coming on line. Its processes within electricity regulator Aneel will be suspended and the money that was being judicially withheld from the company will be released.
