en.Wedoany.com Reported - A simulation study by Ampere Consultoria and TR Soluções predicts that a super El Niño in 2026/2027 will impact electricity prices in Brazil. Modeling that incorporates this climate effect shows that the average volatility range for low-voltage consumer electricity prices in 2027 will widen by 2.1 percentage points; taking a hypothetical distribution company as an example, if its electricity prices would have risen by 5% without El Niño, the increase could reach 7.1% under its influence. When including tariff flags (bandeiras tarifárias), the percentage change in electricity bills increases by an average of 4.5 percentage points.
The study notes that a super El Niño will disrupt rainfall patterns in Brazil, potentially reducing precipitation in the north-central region starting from the next rainy season, and will transmit effects to end-user electricity prices through variables such as the PLD (short-term market electricity price), hydrological risk, sectoral charges, tariff flags, and costs related to distribution companies' contract portfolios.
The forecast is based on two hydrological trajectories developed by Ampere Consultoria: one incorporating the expected impacts of the 2026/2027 super El Niño, and another that does not consider the phenomenon. These trajectories were used in TR Soluções' simulations to estimate impacts on low-voltage residential electricity prices (B1 subgroup). In the scenario incorporating the super El Niño, the National Interconnected System (SIN) reservoir levels at the end of the 2026/2027 rainy season are expected to be near 70% in April; in the baseline scenario, they are estimated at approximately 80% for the same period.
By region, the South is most affected in terms of electricity prices, with an average difference of 3.3 percentage points between the two scenarios, due to the higher share of contracts in the region's distribution companies' portfolios that are sensitive to hydrological risk and costs from plants contracted on an availability basis; the North is estimated to see a difference of 0.9 percentage points.
Regarding tariff flags, the scenario incorporating the super El Niño projects red tariff flags (patamar 1 or 2) from July to October 2027; the remaining months are similar to the baseline scenario, with green flags prevailing in the first half of the year and yellow flags triggered during the dry season. The additional charges collected through tariff flags are used to cover part of the costs related to hydrological risk, dispatch of thermal power plants beyond the dispatch order, and variable costs associated with CCEAR-D. Green flags dominate in the first half of the year because the index considered (levelized physical guarantee) does not account for the seasonality of hydroelectric plants, resulting in a lower levelized GSF during that period.
Guilherme Ramalho de Oliveira, a partner at Ampere Consultoria, cautions that long-term forecasts are sensitive, and the impacts of El Niño may be altered over time by other climatic precursors. Helder Sousa, regulatory director at TR Soluções, adds that impacts may vary among distribution companies in the same region depending on each concessionaire's electricity contract portfolio and its exposure to variables such as PLD, hydrological risk, and CCEAR-D.
