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Power prices: opportunity (Brazil)

Rafael Herzberg's picture
Consultant energy affairs, Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Jan 9, 2023
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Power prices: opportunity (Brazil)

Two factors contribute to the market's very attractive ongoing deregulated prices:

1°) Reservoirs

That supply the hydroelectric plants (which represent the largest fraction of the country's power matrix) are full!

2nd) Demand

The Brazilian GDP is anaemic and therefore the demand for energy is low

Numerically:

* Long-term (2024 to 2027) market price is at BRL 130/MWh 

* Long-term "equilibrium" price is BRL 167/MWh

This is the calculation I always do (marginal cost of expansion).

Bottom line: market prices are BELOW the one that would properly compensate the power generation investmentos.

1 USD = BRL 5.2
 

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Rafael Herzberg's picture
Thank Rafael for the Post!
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