Business

Looming energy crisis could slow down Brazilian recovery

Hydroelectric reservoirs are at dangerously low levels, meaning Brazil will have to switch on its more expensive thermal power plants. The country's consumers will foot the bill, as inflation continues to rise

energy Remanso, Bahia: Amid a lack of rains, the Brazil's Sobradinho reservoir is down to its lowest levels ever.
Remanso, Bahia: Amid a lack of rains, the Brazil’s Sobradinho reservoir is down to its lowest levels ever. Photo: Marcello Casal Jr./ABr

Brazil is facing its worst drought in almost a century as the September-April wet season recorded its lowest rainfall for 91 years. And, with an energy mix that relies so heavily on hydroelectric power, any water crisis in Brazil becomes an electricity crisis. While there are widespread fears of blackouts or the need for energy rationing, experts also warn of the potential knock-on effect for inflation and the broader economy, alerting that water shortages may stunt Brazil’s post-pandemic recovery.

Back in April, low levels in the country’s reservoirs gave a warning of what was to come. By the start...

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