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Energy and the devaluation of the Brazilian Real

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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  • Apr 1, 2020

Energy and the devaluation of the Brazilian Real

According to the analysts the Real was one of the currencies that depreciated the most among the emerging countries.

In question, the huge imbalance in public finances associated with 1) an ostensible willingness of the three constituted powers to maintain their special conditions and 2) expensive and inefficient public management.

How does this situation reverberate in the energy business?

1) Solar energy

A good part of the generation system is imported and therefore denominated in hard currency

2) Foreign investors

They calculate their energy projects with returns also in hard currency.

3) Thermal power plants

It makes up a not insignificant part of the national energy matrix, and also depend on imported fuels designated in Dollar

4) Brazilian Risk

A not insignificant and increasing premium enters the financial equation of projects in Brazil to include "country risk".

Long-term energy prices, out of new new plants, to be built, are expected to accompany, to a large extent, hard currencies. Or do you believe in fairy tales?

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Thank Rafael for the Post!
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