Latin America

Duke Energy watching Brazil as droughts continue to affect hydroelectric power

United States-based Duke Energy is keeping a close eye on its Brazilian hydroelectric power assets in anticipation of potential energy rationing, CEO Lynn Good said earlier this week.
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United States-based Duke Energy is keeping a close eye on its Brazilian hydroelectric power assets in anticipation of potential energy rationing, CEO Lynn Good said earlier this week.

The South American country’s ongoing drought and an anticipated surge in demand caused by the upcoming FIFA World Cup have many concerned about Brazil’s power supply — 70% of which is generated by hydroelectric sources.

Duke’s 10 Brazilian projects account for about 2.3% of Brazil’s overall supply, combining for 2,274 MW of capacity. The company (NYSE: DUK) said its reservoirs have fallen to about 39% capacity, down from 62% around this same time in 2013.

Still, profits from Duke’s international interests increased from US$97 million in the first quarter of 2013 to $130 million in the first quarter this year, according to its latest earnings report, driven largely by Brazilian hedge contracts that allow the company to sell power on the country’s high-priced spot market.

The deals give Duke “flexibility in our contracting position, which gives us some protection if the regulator or government were to move into a rationing or voluntary rationing situation,” Good said.

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