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Brazil’s energy consumption drops as states go in quarantine

. Mar 26, 2020
Brazil energy consumption drops as states go in quarantine Unused production line. Photo: Freepik

Energy consumption has steadily dropped in Brazil since state administrations started enforcing isolation measures to contain the spread of Covid-19. The data is from Brazil’s Electricity Trading Chamber (CCEE). 

On March 17, consumption dropped 0.7 percent from the previous week, with an average electricity output of 67,731 MW. On March 23 — the most recent data point available — consumption plunged 18.8 percent during peak time to an average of 67,164 MW, said CCEE, in a statement to the press.

According

to Rui Altieri, head of CCEE’s board of directors, it is too soon to measure the impacts of quarantines and isolation around the country. However, as restrictions become tougher, consumption is expected to drop even further in the next few days.&nbsp;</p> <p>“We must keep track of this behavior to measure its impact on the electricity industry and the economic sectors that rely on it in a more effective way,” said Mr. Altieri.&nbsp;</p> <p>The performance follows a similar <a href="https://brazilian.report/business/2019/08/02/petrobras-privatizations-brazil-changing-energy-landscape/">pattern</a> to that experienced by other quarantined regions. In Northern Italy — one of the most affected areas by the pandemic — energy consumption dropped 25 percent in comparison to levels of previous years, while the whole country experienced a 15 percent drop. In France, demand has also shrunk by 15 percent, according to <a href="https://economia.uol.com.br/noticias/reuters/2020/03/19/italia-e-franca-tem-forte-queda-no-consumo-de-energia-por-epidemia-de-coronavirus.htm"><em>Reuters</em></a>.&nbsp;&nbsp;&nbsp;&nbsp;</p> <h2>Environment impacts</h2> <p>As hydroelectric plants are Brazil’s main source of electric energy, reduced consumption has a direct impact on reservoirs. Data from the National Electric System Operator (ONS) pointed out that a 9-percent reduction in energy consumption on March 22 has “contributed to a recovery of storage levels at reservoirs in the Southeast and Center-West, as well as maintaining levels in the South”. </p> <p>The latter, <a href="http://www.ons.org.br/Paginas/Noticias/20200323_ONS-verifica-redu%C3%A7%C3%A3o-da-carga-m%C3%A9dia-de-energia-nos-%C3%BAltimos-dias.aspx">according to the note</a>, is running at only 18 percent capacity.&nbsp;</p> <p>Similar positive environmental impacts have been registered in Asia and Europe, where satellite images obtained in the past six weeks show that levels of nitrogen dioxide (NO<sub>2</sub>) over cities and industrial clusters were way below than in the same period last year, according to British newspaper <a href="https://www.theguardian.com/environment/2020/mar/23/coronavirus-pandemic-leading-to-huge-drop-in-air-pollution"><em>The Guardian</em></a>.&nbsp;</p> <p>In São Paulo — Brazil’s biggest city — similar impacts are also expected, as the local transport authority has reduced its bus fleet by 45 percent, after the number of passengers <a href="https://agora.folha.uol.com.br/sao-paulo/2020/03/cai-numero-de-passageiros-de-onibus-municipais-de-sao-paulo.shtml">decreased by 70 percent</a>. The city, as well as the state, has been under quarantine since March 24.&nbsp;</p> <h2>Legal battles to come?</h2> <p>The reduction in consumption due to stoppages all over the country may trigger a wave of contract reviews and legal battles in the free energy market, as some companies are already claiming force majeure clauses to renegotiate their energy purchases.&nbsp;</p> <p>The problem is that this happens at a moment of lower prices due to the rainy period, which could oppose buyers and energy generators, who wouldn’t be keen on selling energy at cheaper prices in the spot market.

 
Natália Scalzaretto

Natália Scalzaretto has worked for companies such as Santander Brasil and Reuters, where she covered news ranging from commodities to technology. Most recently, she worked as an Editor for Trading News, the information division from the TradersClub investor community.

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