Floods stress Brazil energy sector vulnerability

Record flooding in Brazil's Rio Grande do Sul state over the past week underscores vulnerabilities in the country's energy system to extreme weather, which could also slow its pace of transition to cleaner energies.

Nearly one week after record rainfall began flooding the state, power outages continue to plague it, with nearly 400,000 residents still in the dark.

The flooding forced companies to suspend operations of critical infrastructure for the power sector, including three substations, 25 transmission lines, six hydroelectric plants and 11 power transformers. This led grid operator ONS to import power from Uruguay to meet domestic demand.

With forecasts pointing to more rain, it is increasingly clear that it will take weeks if not months for the state to start returning to normal. The Rio Grande do Sul government estimates that the floods will cost the state R19bn ($3.6bn).

The tragedy in southern Brazil comes less than a year after a record drought struck the Amazon basin, which pushed water levels of the Amazon River and its tributaries to their lowest in 120 years. The drought reduced hydroelectric output from the region's plants and interrupted transport of fuel along key river corridors, leaving many households without power, because of the lack of diesel to operate generators used in off-grid communities.

These crises highlight the country's failure to prepare for extreme weather and underscore the lack of investment in critical infrastructure, including in the energy sector. A study by the World Bank from 2023warned of the need to upgrade the country's aging infrastructure and of future power supply risks.

Brazil's large hydroelectric plants have been operating for an average of 55 years, according to the study, and need investments to boost efficiency and to limit the impact of extreme weather. A total of 11 hydroelectric plants in Rio Grande do Sul are being monitored, including six that present an elevated risk of rupture, such as the 28MW 14 de Julho plant that experienced a partial rupture last week because of the heavy rains.

Authorities will now need to change their focus, which has been largely on limiting the impact of dry weather on the electricity sector, especially following the 2021 droughts, that resulted in expansion of thermoelectric generation.

More recently, electricity regulator Aneel has been focusing on making power distribution and transmission networks more resilient to extreme weather, especially after downed power lines resulted in extended blackouts for some 4mn consumers in the city of Sao Paulo and over 1.3mn consumers in Rio de Janeiro. The sector is working to make transmission towers more resilient to high winds.

Several cities and states in Brazil have launched plans to prepare for climate change, but the bulk of these plans focus on increasing investments in renewable energy and emissions reduction. Increasingly, these plans will also need to focus on mitigating risk from floods, heat waves and landslides.

Brazilian energy companies are also behind the curve in their preparations for climate change. Only 13pc of executives in the energy sector that participated in a recent survey conducted by consulting firm PwC Brasil said they have assessed the impact of climate change on their financial planning.

State of climate

Brazil faced 12 extreme climate events in 2023, according to the World Meteorological Association (WMO). This included a tropical cyclone that hit Rio Grande do Sul last year and affected more than 340,000 people and left nearly 50 dead.

The WMO blamed the extreme climate events in Brazil on the "double-whammy of El Niño and longer-term climate change." Last year, eight Brazilian states recorded their lowest July-to-September rainfall in over 40 years, it said.