São Paulo, Brazil’s financial and economic centre, is facing widespread blackouts and disruption to services, with officials warning its grid is facing potential collapse after years of chronic underinvestment.
The city, also the biggest in the Americas and one of the most populated in the world, has suffered several large-scale power outages in recent months that have left hundreds of thousands of people without power for days on end.
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According to the Financial Times (FT), city officials and Brazil’s Federal Government have blamed Italian energy group Enel, which operates São Paulo’s grid, for the blackouts, although others warn that drawn-out underinvestment from the government has wrecked power infrastructure in the city.
“It is something very serious. It is very clear that Enel is unable to continue,” Ricardo Nunes, the centre-right mayor of São Paulo, told the FT. He added that he had been told by experts that the city’s grid was at risk of “collapse” within three years if investment was not significantly increased.
Last summer, Brazil suffered from widespread, drawn-out power cuts, disrupting services and economic activity across the country and hitting major cities including São Paulo and Salvador. The country lost 16GW of electricity during the blackouts.
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Days-long blackouts also hit São Paulo in November last year and as recently as last month, disproportionately affecting the region’s poorest areas and causing schools, hospitals and private businesses to close.
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By GlobalDataLast year, Brazil’s president Luiz Inácio Lula da Silva unveiled a massive $76bn (382.25bn reais) programme as part of his pledge to boost spending on infrastructure across the country. However, analysis and forecasts from consultancy Inter B suggest that total infrastructure spending in 2024 will account for less than 2% of gross domestic product, down from the last decade.
Most of the investment has been coming from the private sector. In the power sector alone, more than 90% of spending was predicted to come from private companies rather than public funds, according to Inter B.
Alexandre Silveira, Brazil’s energy minister, has requested disciplinary proceedings against Enel, citing a lack of investment from the company. Under the terms of its current contract with the government, Enel is responsible for investing and maintaining São Paulo’s grid.
Enel, one of the world’s biggest renewables developers, has said it was in “full compliance with all contractual and regulatory obligations” and that the “threat of revocation of the concession could raise concerns among foreign investors [in Brazil and] harm relations between Brazil and Italy”.
Brazil is set to host the UN COP30 climate summit in 2025. Enel said it “would not be in the country’s interest to jeopardise the good relations it has always had” with the company as the summit approaches.
As part of its national net-zero plans, in November Brazil’s government set a target to triple its global renewable energy capacity by 2030 and phase out coal. Currently, more than 80% of the country’s domestic energy supply is generated from renewable sources, including hydropower, solar and wind power.
