Brazil’s reservoir levels forecast to close 2023 at recent high
Brazil’s hydroelectric reservoir water storage levels are projected to close 2023 at between 60% and 76%, according to grid operator ONS.
Even in the least optimistic scenario, the stored energy (EAR) in the reservoirs in the national interconnected system (SIN) at the end of the year should be the fourth best on record at 59.7%. In the most optimistic projection, the EAR will be 76.8%, ONS said in a statement.
The EAR indications for the southeast/central-west regions - which account for 70% of the country’s largest reservoirs - are put at between 56.6% and 78%.
Consultancy firm Thymos Energia estimates that the SIN should have an average water storage level of 65% in hydroelectric reservoirs at the end of November, when the dry period ends.
Thymos said ending the dry season with more than 50% average levels is positive for supply.
The reservoir levels will avoid the need for ONS to call on fossil fuel-fired plants to meet demand.
"These supply levels should also keep energy prices in the short-term market, the price of settlement of differences (PLD), at the minimum level established by [regulator] Aneel throughout the year," Mayra Guimarães, head of prices and market studies at Thymos, said in a release.
Reflecting on the positive outlook, the free market price benchmark PLD remains on the floor, at approximately 69 reais (US$14.6) per MWh, according to electric power commercialization chamber CCEE.
Also, as a consequence of the water reservoir levels, Aneel has kept in force the so-called green flag since April last year.
The green flag indicates that there will be no supplementary charge on electricity bills for all consumers connected to the SIN.
In 2021, Brazil experienced its worst drought in 91 years.
Due to the then poor hydrologic conditions, Aneel decided to create the ‘water scarcity flag’. The most serious situation is red flag level 2.
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