Here comes 2021, just when you thought that 2020 was bad enough already. This year saw droughts, wildfires, hurricanes, and flooding, whereas Brazil is also facing a “drought of the century”. The country relies on hydroelectricity for 2/3 of its power supply, though the severe drought is exacerbating the supply of power and the agricultural sector, and has pushed up the prices of electricity and produce.
Brazil has a population of roughly 213 million, and hydroelectricity is able to fulfill 2/3 of the power consumption of the country, though the drought that started from three months ago in June has resulted in a historically low reservoir water level at less than 1/4. Brazil President Jair Bolsonaro even urges citizens to turn off their lights at home to preserve energy, and has increased the average electricity price by 7% in order to develop new power source and fulfil imported energy.
What is worse is that there seems to be no end to this draught. Power operator ONS pointed out that the water level may continue to aggravate in September, while the National Water and Sanitation Agency (ANA) also indicated that the severe water shortage at the strategic location for Brazil’s hydroelectricity, Parana River, may be mitigated in November at the earliest.
The power grid in Brazil has been added with a biomass power plant, three solar power plants, and four wind farms, in order to maintain power supply and avoid power outages, though the additional power plants have been reflected on the cost of electricity, and the government also wishes to reduce public power consumption by 10-20% before April 2022.
Brazilian citizens are worried that the power restriction in 2001 will repeat itself, where the country had implemented an emergency energy allocation plan amidst the energy crisis. The Brazilian government has yet to execute power restrictions, though they remain as a possible solution.
Brazil has also been struggling with the COVID-19 pandemic. The country now has the second highest casualties in the world with over 500K deaths. Apart from fighting the pandemic, citizens have to also deal with the succeeding unemployment rate and inflation, as well as the impact from power supply and agriculture. Among them, the inflation aggravated by a surge in prices had led to a YoY increment of 8.99% in CPI during July for Brazil.
The quarterly coffee production is expected to reduce by 25%, while the supply of main foods, such as corn, sugar cane, tangerine, and black beans, will also sustain the impact, due to the drought. Experts commented that the La Nina phenomenon has lowered the sea surface temperature of the Pacific Ocean, which resulted in the drought in the southern part of Brazil, and blamed the drought in the central and west regions of the country on the deforestation of the Amazon rainforest. The double impact of the pandemic and drought is seriously impeding the far-right Brazil President Bolsonaro from being re-elected in 2022.