Brazil power demand recovery stokes supply concern

Brazilian power consumption is beginning to surpass levels reached prior to the Covid-19 pandemic, stoking concerns amid the country's severe drought and steep drop in hydropower generation.

Power consumption in the first 15 days of July was 1.5pc higher than the same period in July 2020, averaging 59,706MW, according to preliminary data from the Brazilian Power Trading Chamber (CCEE). It was also 1.2pc higher than the same time period in 2019.

Brazilian authorities are trying to increase thermal power generation capacity in order to meet growing demand. Power generation on 1-15 July grew by 2pc in comparison to the same period last year. Hydropower still has the biggest share in the Brazilian power matrix, but fell by 24.2pc over that period, providing an average of 34,144MW. Deeply dependent on hydropower, the power system operator foresees a risk of power shortage by November, that must be covered by imports from Argentina and Uruguay.

Meanwhile, thermal power generation increased steeply, up by 107.6pc, offering an average of 18,049MW that was mostly generated by natural gas and biomass. Wind power accounted for an average of 9,552MW, with a 38.2pc increase on the year, and solar power provided an average of 796MW, a 12.4pc increase.

The CCEE considers July consumption to be close to the historical level for this month and its outlook for this year shows "gradual increases" in power consumption for the months to come.

The increase in total power consumption is driven by customers on the country's open power market, where larger consumers such as industrial operations an other businesses that purchase power directly from generators. The open market saw a 13.3pc increase in consumption at the beginning of this month over the same days in 2020. This reflects a partial recovery in economic activity with the loosening of social distancing measures and the migration of larger consumers from the captive market to the free market, CCEE said.

Among captive market consumers — such as residential consumers that buy power from local distributors and cannot freely negotiate their power supplier — consumption fell by 4.1pc.

By Flávia Pierry