Weeks 3 and 4 were busy, and we learned a lot about the specifics of the electricity sector in Brazil. With readings about both the money and the megawatt hours surrounding the country’s hydro-based electricity market, these weeks helped us to better understand the complexities that go into every decision at Itaipu and power plants all over.
In week 3, our particular focus was on electricity markets. All around the world, the challenge with electricity is the need to balance supply with demand at all times — once water potential, fossil fuels, or solar energy are turned into flowing electrons, they can’t really be stored. Because batteries can only store small amounts of electricity, most of it has to be used at the same time that it’s produced.
In our readings, we learned about the various ways that big consumers (like factories or distribution companies) buy electricity on a centralized market. They estimate how much they’ll need, signing contracts ahead of time, and then make up the difference from their estimations on the last-minute “spot market”, which is more expensive than planning ahead.
What makes things even tougher in Brazil compared with the United States is that the vast majority of Brazil’s energy comes from renewable resources, which depend on things like rainfall and sunlight. Because fossil fuels can easily be stored and used when people want energy, they help balance out supply and demand. Yet Brazil still largely manages to avoid energy crises, even as climate change causes droughts and unpredictable weather. My big takeaway from this is that the United States will have no trouble managing its energy supply even as it transitions to more renewables, despite arguments to the contrary by climate skeptics.
Our fourth week was spent looking at historical trends of Itaipu energy generation and consumption, as well as trends for Brazil as a whole. One interesting pattern we found is that although Itaipu continues to average around 95,000 GWh of generation a year, Paraguay is using more and more of its share. Therefore, Brazil increasingly needs to use different sources of energy, including wind, solar, and thermal power, in which it has been heavily investing.
We also found it very interesting that energy usage has dropped dramatically in 2020 due to the pandemic. Although Brazilian President Bolsonaro has tried to ignore the virus and keep the country open, many factories and businesses have temporarily shut down, reducing the need for electricity. Until a vaccine becomes widely available or herd immunity cuts the spread of COVID-19, energy usage in Brazil probably won’t return to normal trends. It will definitely be interesting to see the impact of the pandemic on the country in the next few years.
