Brazil drought threatens Argentine power generation

BUENOS AIRES, July 15, 2021 – As Brazil goes through its worst drought in a century, the Paraná River, crucial for the economy and power generation of Argentina, is at a record low level, threatening the normal functioning of hydro, thermal and nuclear facilities.

Brazil is undergoing a historic drought, with rainfall below the historic average since October 2019. Downstream, this is impacting the water level of the Paraná River on the Argentine side, which has seen a sharp drop of 60% from the average volume of the last 25 years, matching in 2021 the historic low records from 1934 and 1944.

The future volume will not only depend on rainfall but also on Brazil’s policies regarding its own dams upstream. Overall, the continued drop in volume of the Parana threatens 2.4 GW in Argentine power generation in the basin. The Argentine government has already been forced to increase its imports of fuels – at record prices.

The first immediate impact on Argentina’s power generation capabilities is the drop in 50% of the capacity of the Yacyretá Bi-National Dam. Yacyretá is currently providing 800 MW of electricity to Argentina, as well as 200 MW to Paraguay.

This week the dam registered a flow of 5,700 cubic metres per second, while its average is 13,000 cubic metres at this time of the year. The Yacyreta Binational Entity (EBY), the company managing the dam, expects the flow to continue to drop, stating that the next month is critical for the future of the national electricity system. If it drops 1,000 cubic metres, Argentina will lose 200 MW.

However, the low level of the Parana also threatens the operational capability of thermal and nuclear plants that rely on its water. The 250-MW Vuelta de Obligado thermal plant is the one most at risk of losing its generating power, depending on the river’s capacity in the next few days.

The 250-MW San Martín thermal plant is also at risk as well if the low levels continue in the following month. Other thermal plants at a lower risk are the 1,100-MW San Nicolás thermal power plant, the 300-MW San Nicolás 1 turbo steam plant and the 800-MW San Nicolás 1 thermal power plant.

Two of the three Argentine nuclear plants, Atucha 1 and 2, also depend on the Paraná’s water for their cooling systems. The plants have been forced to dredge their side of the river to ensure the continued flow of water, but if the drop continues, the 1 GW they provide to the system will be at stake.

Finally, the continued lack of water could impact the operations of the Escobar LNG terminal, which is fundamental for importing LNG for the gas power plants and industrial and residential consumption. Though the access to the terminal is currently not at risk, LNG vessels are now required to do different maneuvers than usual to access the terminal.