Brazil asks industry to save electricity as drought undermines hydropower

An aerial view shows a cow standing in the middle of a dry patch on a ranch in the Pantanal, the world’s largest wetland, in Pocone, Mato Grosso state, Brazil, August 28, 2020. REUTERS / Amanda Perobelli

Brazil’s Ministry of Mines and Energy met with industry representatives on Friday to discuss how heavy electricity consumers can reduce demand to ease pressure on the grid resulting from the worst drought in the world. Brazil for 92 years.

Drought threatens power generation, which relies heavily on hydropower plants, and could hamper broader economic growth this year.

A senior Economy Ministry official said on Friday that the energy crisis had also been exacerbated by “structural” problems, making the planned privatization of electricity giant Eletrobras (ELET6.SA) all the more urgent.

In a statement, the Ministry of Mines and Energy said it would lead efforts aimed at “emergency and structural solutions” for what experts say are “demand response” measures.

According to the ministry, the Brazilian Association of Infrastructures and Basic Industries (Abdib) has proposed “a plan that will help the industry to react and increase its energy efficiency actions”, according to the ministry.

Abrace, a group representing large industrial sectors that consume electricity, “stressed the importance of seeking voluntary mechanisms” to reduce demand “without affecting competitiveness,” the ministry said.

Separately on Friday, Economy Ministry Special Secretary Adolfo Sachsida said the worst drought in nearly a century poses a growing threat to growth this year.

At an online event hosted by the Northern Ceara State Planning Secretariat, Sachsida said energy issues were also exacerbated by “structural” issues.

The privatization of Eletrobras, Latin America’s largest electricity company, will attract private sector investment and reduce these structural risks, he said.

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Kristina McManus

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