Brazil’s Worst Water Crisis in 91 Years Threatens Power Supplies

May 29, 2021
Bloomberg |

Brazil’s water supplies are running so low that government authorities are sounding the alarm on a looming crisis that could shock Latin America’s largest economy just as it begins to recover from the pandemic.

“Brazil is going through the biggest water crisis of the past 91 years,” Energy Minister Bento Albuquerque said in a Thursday interview.

The country of 212 million is hugely water dependent because as much as 70% of its energy mix depends on hydroelectricity, Albuquerque estimates.

“This is very bad for a country that relies” so heavily on water for power, he said.

Brazil is also a global agricultural powerhouse. Drought has now turned so severe that farmers are worried they’ll run out of the water reserves that help keep crops alive. That could mean could mean fewer global exports of everything from coffee and sugar to orange juice and soybeans

The dire situation threatens to raise energy bills and food costs in a country where inflation is already running at almost double the central bank’s target. And it comes at a time when volatility in Brazilian markets is proving to be a major barrier to crucial funds from foreign investors and political tensions are running high after the nation dealt with one of the worst Covid outbreaks in the world.

Albuquerque said that the government will deploy more natural gas-based power apacity through auctions this year. Thermoelectric generation will likely increase the price of electricity this year.

Brazil suffered one its worst hydro crises in 2001, when a severe drought caused key water reservoirs to drop to critical levels. That forced the government to implement a power-rationing plan that affected individuals as well as industries, particularly the most energy-intensive ones. Since then, the country has invested in transmission lines to interconnect its electric system and expanded its thermoelectric generation capacity.

In an emergency meeting on Thursday, power sector authorities discussed measures to safeguard the water level of key hydroelectric dams during the dry season that stretches through the end of August, according to a statement.

Based on current and projected rain levels, they issued a water-shortage warning for five Brazilian states served by the Parana river basin, which covers the most populated areas of the country.