Growing electricity demand in Paraguay could put upward pressure on power prices in Brazil by reducing the amount of electricity available from the Itaipu hydroelectric plant during the evening peak, according to an Itaú BBA report. The bank said the change may become more pronounced from 2027, when Brazil’s grid operator, ONS, is due to adopt a new method for forecasting demand from Paraguay’s state utility, Ande.
Under the Itaipu treaty, Brazil and Paraguay are each entitled to half of the output from the 14-gigawatt binational plant. Either country can acquire the other’s unused share. Brazil has traditionally used its full allocation and purchased Paraguay’s surplus, but rising electricity demand in Paraguay has reduced the amount available for Brazil. The report links that growth to activities including cryptocurrency mining and data centers.
Paraguay’s power demand grew by 12% to 18% a year from 2023 to 2025, reaching an average load of 3.3 GW last year, Itaú BBA said. Itaipu supplies almost all of that demand, although its share can vary depending on Ande’s commercial and operational decisions.
The timing of demand is also significant: Paraguay’s peak occurs at 6 p.m., coinciding with Brazil’s peak in net load. Between April and September, Ande’s demand at that hour is projected to rise from 4.0 GW in 2026 to 4.7 GW in 2029, leaving less Itaipu electricity for Brazil when its system needs it most, the bank’s analysts wrote.
Itaú BBA estimates that the reduced hydropower supply could increase thermal generation by about 11% a year over 2027–29. It projects the average marginal price of electricity rising from R$40 to R$59 per megawatt-hour over the period. The bank said the current forecasting method has not kept pace with the recent acceleration in Paraguayan demand.
The shift could also affect Brazilian distribution companies that hold shares in Itaipu and buy power from the plant for their customers. If Ande continues to consume more electricity than is deducted from Brazil’s allocations, those companies could be left with insufficient contracted supply in 2027 and need to buy power on the short-term market.
The Brazilian Association of Electricity Distributors (Abradee) raised the issue in a letter to energy regulator Aneel last week. It asked the regulator and government to determine in a timely manner how much of Ande’s demand will be deducted from Itaipu allocations for 2027. If that amount differs significantly from 2026, Abradee said distributors should be allowed to revise their projected power needs before a procurement auction scheduled for November 13.
Sources: Folha Mercado.