Strategic reservoirs gained little volume over the month, and the use of thermal plants continues to rise with load pressure, impacting the spot market electricity price (PLD)
Por Chico Santos
On the eve of the decision on which tariff flag will apply in February, the numbers do not seem to support maintaining the green flag, which would lower electricity bills during Carnival month. It rained little this month in the areas of greatest interest to the National Interconnected System; reservoir recovery was limited, the use of thermal plants is accelerating, and the price of energy in the spot market (PLD) keeps rising.
A dive into the data from the National System Operator (ONS) shows that the increase in useful volume of the main reservoirs feeding hydroelectric cascades in the Southeast/Center-West (SE/CO) and Northeast was very low compared with last January, which was not among the best, and much worse compared to a good January in 2023.
The storage level at Furnas, the main reservoir in the SE/CO, rose from 31.08% on December 31 to 36.81% on January 28, a gain of 5.73 percentage points. On December 31, 2024, the reservoir level was 39.09%, rising to 53.07% on January 28, a gain of 13.98 points. If the comparison is made between December 31, 2022 and January 28, 2023, the increase was 27.94%, from 65.79% to 93.73%.
Looking at other major reservoirs in both subsystems shows similar figures. Nova Ponte on the Araguari River, a tributary of the Paranaíba River, had an increase of just over one percentage point, from 30.52% on December 31 to 31.58% on January 28.
In Sobradinho, the main reservoir in the Northeast subsystem, the gain was only two percentage points, from 43.21% to 45.21% from December 31 to January 28. On January 28 last year, Sobradinho had 66.04% useful volume and had gained nearly 20 points compared to 48.48% on December 31, 2024.
With hydroelectric generation under pressure and electricity demand tightening—as is normal in summer—the solution is to resort to thermal plants. On January 28, for a load of 91,190 MWmed, thermal plants contributed 9,848 MWmed, or 10.73%. With more thermal generation, prices rise. At 7 p.m. on January 28, the PLD hit R$ 519.66 (US$ 96) per MWh, compared with the current floor of R$ 57.31 (US$ 10.60) per MWh.
Fitch Ratings
Meanwhile Fitch Ratings reported that Brazilian hydropower reservoir levels still do not indicate supply restrictions nationwide, but below-average rainfall warrants close monitoring in the coming months. Rainfall and reservoir performance throughout the rainy season, which runs through the end of April, will be decisive for the trajectory of electricity prices, thermal dispatch and the risk of a worsening Generation Scaling Factor (GSF), with different effects for generators and distributors. At the end of 2025, storage levels in the reservoirs of the four subsystems of the National Interconnected System were above the 10-year average and, except in the Northeast, above the five-year average. These levels suggest an adequate transition into the dry season, which begins in May, reducing the likelihood of system stress associated with water availability