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What's the Brazilian power market's outlook in 7 questions

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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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  • May 4, 2020

What's the Brazilian power market's outlook in 7 questions

The most likely scenario involves a set of factors that will significantly increase the cost of electricity in Brazil in the medium and long terms.

1) Electricity tariffs

Will rise above inflation, as the cost of official assistance to the electricity sector due to the pandemic, will be passed on to energy-consuming customers.

2) Demand response programs

Conceived in developed countries a decade ago, to smooth the spikes in demand and thus avoid cost increases with consequences on tariffs, they are still far from being commercially available in Brazil

3) Speed ​​of official decisions

There is no deadline for resolving the official Clearinghouse's billionaire default, which has already lasted for 5 years. And so, consumers of deregulated power will continue to pay an extra cost when selling their monthly "leftovers" 

4) Privatization

A list of state-controlled power companies will remain so as there is no set deadline for their privatization. In the meantime, there are no financial resources to expand their business and no drive to become more efficient.

5) Natural gas

The gas supply from Bolivia is priced in USD. The exchange rate has risen sharply in recent times, escalating costs of thermal generation in the local currency

6) Small dams

The storage capacity, measured in months of national power consumption, of our hydroelectric plants (70% of the power matrix) decreased over time. Therefore the volatility of the spot prices will be more pronounced

7) More expensive solar energy

The escalation of the exchange rate (USD x R$) will significantly increase the cost of one of the most important items in a photovoltaic system: the imported solar panel.

In this context, how to set up a strategy to minimize energy cost? It will be worth for companies and institutions exploring the alternatives!

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