Insight Focus
The month of May was characterized by heavy rainfall in the southern region of the country and drought in other regions. Reservoirs remain at comfortable levels for the system, although they have begun to decline in the central parts of Brazil. The price of electricity remains at the floor level of BRL 61.07/MWh.
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During the month of May, alarming rainfall was observed in the southern region of Brazil, resulting in catastrophic effects in the state of Rio Grande do Sul, with daily precipitation exceeding 700 mm, while other regions experienced drought due to the presence of high pressure in the central portion. In the Southeast/Central-West regions, we observed high temperatures in the first half of the month and milder temperatures in the latter days.
In the South subsystem, the ENA (Measure of the amount of energy that can be generated by the water flowing into the reservoirs of hydroelectric plants) reached record values for the last 5 years in May. Particularly in the state of Rio Grande do Sul, we witnessed heavy and constant rainfall, with floods reaching over 5 meters in height. In the Northeast and North, we had light and scattered showers, with more occurrences in the far northern part.
Despite being below the levels of the previous year, reservoirs remain at a high and comfortable level for operation. May ended with the %EAR max (Maximum Energy Storage) at -0.11 percentage points (p.p) for the Southeast, +0.09 p.p for the South, -0.38 p.p for the Northeast, and +0.11 p.p for the North. By the end of June, the %EAR max is forecasted to be -3.30 p.p for the Southeast, -16.50 p.p for the South, -5.50 p.p for the Northeast, and -4.40 p.p for the North.
There were no events causing a decoupling of the PLD (Settlement Price for Differences), thus closing at the floor of BRL 61.07/MWh. The catastrophes in the South and some effects of hot days caused the CMO (Marginal Cost of Operation) to deviate from zero, but it was insufficient to cause a decoupling of the PLD.
With the drought scenario observed on the map, prices have risen again, reaching levels seen in the first quarter of 2024, where the Q4-2024 product is currently the most expensive traded product.
Rainfall Forecast
For the next 15 days, considerable precipitation is expected only in the southern portion, starting on June 13, while the other regions are expected to remain dry. It is worth noting that the El Niño phenomenon is no longer present.
