Brazil needs stronger power grids to withstand extreme weather, ONS says

It is now clear that climate change is no longer an issue confined to the environmental sector and has become a priority for governments and companies. The effects of extreme weather on Brazil’s power sector have also received more attention in recent years. With a potential strong El Niño approaching—a more intense version of the climate pattern characterized by warming waters in the equatorial Pacific Ocean—energy companies have begun preparing for its effects and want to discuss ways to make their operations more resilient.

• Energy market opening takes another step
• Petrobras confirms oil discovery at mouth of Amazon River in Amapá

El Niño causes severe droughts in the North and Northeast, flooding in the South, and higher temperatures in the Southeast and Central-West. Meteorological institutes expect El Niño conditions to emerge this month, with more noticeable effects in the spring and summer. That means, according to forecasts, the climate pattern could last through the end of the first quarter of 2027, extending into the rainy season, as occurred in 2001, 2014, 2015, and 2021.

Those years are significant. In 2001, Brazil experienced the last and largest electricity rationing program in its history. In 2014 and 2015, a water shortage drove up electricity tariffs, caused financial imbalances for hydroelectric generators and led to heavy reliance on thermal plants with high fuel costs. In 2021, the government contracted emergency thermal generation that cost electricity consumers tens of billions of reais.

El Niño has several effects on the power industry. Higher temperatures increase electricity consumption, exposing power grids to overloads and, in extreme cases, outages. Wildfires under transmission lines also pose a risk of outages, particularly during dry weather.

Droughts also affect hydroelectric plants in the North and Northeast, particularly run-of-river facilities whose reservoirs cannot store water for long periods, such as Belo Monte in Pará state and Santo Antônio and Jirau in Rondônia. Operating conditions must also be managed to preserve water levels at reservoirs such as Paulo Afonso and Sobradinho in Bahia state, operated by former state-controlled utility Chesf, now owned by Axia Energia.

In the South, the risk is that flooding could force hydroelectric plants to open their spillways to prevent damage to dams. Areas experiencing heavy rainfall can also see strong winds, which have increasingly reached speeds above 120 kilometers per hour, bringing down transmission towers and leaving thousands of people without power.

Valter Cardeal, operations director at the National Electric System Operator (ONS), said Brazil is experiencing conditions that were not seen in the past, including an increasing frequency of tornadoes and extratropical cyclones characterized by high wind speeds. In his view, the country needs to develop knowledge at record speed to improve transmission and distribution systems so they can withstand extreme weather.

ONS Planning Director Alexandre Zucarato said that during the latest El Niño, between 2023 and 2024, hydroelectric plants on the Madeira River—Santo Antônio and Jirau—were forced to halt operations because of drought in northern Brazil. In his view, the country needs to consider ways to invest in grid resilience against extreme weather, including new technical requirements for equipment and facilities and operational measures.

Maurício Botelho, Energisa’s chief financial and investor relations officer, recently said investments to improve the company’s grid resilience in preparation for the climate pattern should not be limited to the second quarter.

El Niño could also affect biomass-based thermal power generation, as drought can reduce the quality of sugar cane, the raw material used to produce ethanol, and consequently affect bagasse production—both through changes in the amount of cane crushed because of rainfall or drought and through changes in the bagasse’s energy potential.