Drought squeezes Brazil’s electricity supply

Brazil's worst drought in almost a century is threatening electricity supply and critical crops, pushing up energy and food prices at a time the country was hoping to start recovering from the economic fallout of the coronavirus pandemic.

The country of 213 million people relies on hydropower for two-thirds of its electricity, but crucial dams are at near-record lows of less than a quarter full.

Last week, President Jair Bolsonaro urged Brazilians to  "turn off a light at home" to conserve power, and on Tuesday the government hiked electricity prices by an average of seven per cent, partly to cover new power plants and energy imports.

"We are the limit of the limit," said Bolsonaro, who is gearing up to seek reelection in 2022 amid record low popularity ratings, widespread disapproval of his handling of the Covid-19 crisis, and now also confronting extreme climate conditions that show little sign of abating.

Brazil's water levels will likely continue to deteriorate in September, according to electric grid operator ONS.

And the National Water and Sanitation Agency (ANA) has declared a  "critical shortage of water resources," effective until November, for the Parana river basin at the heart of Brazil's hydroelectric capacity.

In a bid to stay ahead of demand and avoid outages, Brazil this week added one new biomass power station, three photovoltaic generators, and four wind farms to its power grid.But much of the cost has fallen on consumers already contending with high unemployment and surging inflation in the country with the world's second-highest pandemic death toll.