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Electric power: costs x tariffs in Brazil

image credit: Cost is heavier than value - ref tariffs in 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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  • Jun 12, 2020

Electric power: costs x tariffs in Brazil

Objectively, the cost of adding generation capacity in the country requires investments in the matrix, which is, in round numbers, 70% renewable and 30% thermal.

* The cost of amortization of the investment in power plants is R$ 143/MWh
* The cost of natural gas used by thermal plants is R$ 200/MWh
* The weighted cost is therefore [70% x 143] + [30% x (143 + 200)] = R$ 200/MWh

The energy tariff, TE, off-peak, granted to ENEL/SãoPaulo is R$ 242/MWh.

Note that the energy portion is simply passed through. In other words, from a regulatory point of view, the concessionaire does not get any value added in this collection item. 

The existing "space" to make the cost of energy more competitive is therefore 242 - 200 = 42 which represents almost 20% of the current rate.

At stake is a mountain of subsidies, incentives and other items that have the opposite effect to the desired one. Instead of contributing to competitiveness, it places a burden on society as a whole.

1 USD = R$ 5

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Thank Rafael for the Post!
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