Ads
What will be the impact of high temperatures on the electrical sector? According to a report by Ita BBA, companies such as Eletrobras, Copel, and Eneva are expected to benefit from the ongoing heat waves and the effects of El Nio on energy demand.
The recent heat waves have caused significant impacts on energy prices and operating costs, highlighting the vulnerability of the electrical sector to high temperatures. Ita BBA predicts that even in the absence of unusual events like heat waves, higher temperatures will continue to affect energy demand.
In particular, the report emphasizes the importance of certain hydroelectric heating elements (UHEs) in meeting energy demand in Brazil. The water heating element in the northern region of the country has played a critical role in the first half of the year. However, Ita BBA warns that the shorter heating period and lower water flows may lead to a substantial decrease in production from these UHEs.
Unusual events, such as extreme weather conditions caused by El Nio, may further increase energy price volatility and result in a surplus of thermal energy. Ita BBA therefore recommends investing in companies that stand to benefit from this scenario, including Eletrobras, Copel, and Eneva. Eneva, in particular, operates a thermal power plant complex that can be activated as needed to ensure the reliability of Brazil’s electrical grid.
The report also highlights the potential positive impact on distributors with concessions in regions where higher temperatures are predicted, such as Equatorial and Energisa. These distributors are likely to experience a higher load effect due to increased energy consumption during hot weather.
Looking ahead to the future, Columbia University climate researchers have predicted the likelihood of an El Nio event in 2024. El Nio is characterized by the warming of Pacific Ocean waters and occurs at irregular intervals. The last major El Nio event occurred between 2014 and 2016.
According to the researchers, there is a 55% chance of a “strong” El Nio between January and March of 2024, with a 35% chance of reaching “historically strong” levels between November and December. While a historically strong El Nio may not have a significant influence, it may lead to climate anomalies associated with the time period.
The study also indicates a 58% chance of a neutral scenario for June, July, and August, with La Nia scenarios gaining strength towards the end of 2024. This could result in below-average rainfall in most of Northern and Northeastern Brazil. Additionally, below-average precipitation is expected in parts of Minas Gerais during the first quarter of 2024, the hottest month of the year in Brazil.
On the other hand, the Sul region of Brazil has a moderate probability of above-average precipitation until at least the second quarter of 2024.
Forecasts from Columbia University show a high likelihood of above-average temperatures throughout most of Brazil from December 2023 to May 2024. This is attributed to a combination of factors, and the only area where temperatures are expected to be significantly different from average is the far northeast of Brazil.
In conclusion, the high temperatures associated with El Nio events and heat waves have significant impacts on the electrical sector. Companies like Eletrobras, Copel, and Eneva are expected to benefit from these conditions. The future outlook for El Nio events in 2024 indicates the potential for climate anomalies and below-average rainfall in certain regions of Brazil. However, above-average temperatures are predicted for most of the country during this period.
