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Power prices volatility 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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  • Nov 9, 2020
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Power prices volatility in Brazil

For years, the official preference of the electricity sector has been to build thermal plants instead of reservoirs to mitigate hydrological risks. Thus, our "dams" are increasingly "thermal".

The result is large fluctuations in electricity prices.

This week the National System Operator announced that the Marginal Cost of Operation (a short-term reference) is USD 120/MWh - about 4 times the Marginal Cost of Expansion, which is that originated from power plants out of renewable sources (water, sun, wind) to be built.

Water reservoirs that feed hydro power plants are very low and the La Nina pointing to a prolonged dry season (especially in the south of the country) show our competitive fragility. A posed situation that is without official treatment to change as it would be so necessary.

Times to prepare your company for higher electricity costs.

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