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The cost of Brazilian power will rise

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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  • Aug 10, 2022

The cost of Brazilian power will rise

The cost of electric power in Brazil has two main components. 1) The inherent to generation, transmission and distribution and 2) the "extras".

The "extras" are carefully established by politicians, regulators and the executive branch to ensure that their specific (questionable) interests are served. They involve dubious plants (called "tortoises" in the industry's jargon) associated with sweet heart deals, sources that are not necessarily competitive, and the decision to favor run-of-river plants (and not with reservoirs).

The inherent as mentioned above is a cost that should go up a lot. Because the matrix is ​​changing to meet a strategy of privileging intermittent sources (solar and wind) that have an important underlying cost of non-intermittent, "back-up" sources.

It means that investments in installed capacity will have to be increased, above the traditional one, to meet the intermittency. And, of course, this is a cost that will be passed on to energy consumers.

Too bad we don't have in our country a strategic look to the future, aiming at competitiveness.

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Julian Silk's picture
Julian Silk on Aug 10, 2022

Rafael, just as an alternative, could you give us a country that is coping with the future in the proper manner?

Rafael Herzberg's picture
Rafael Herzberg on Aug 10, 2022

Julian the point in this reflection is countries are facing two challenges: the ones that are NOT under their control and those that are. In Brazil, unfortunately, the challenges that are under the country's control are NOT being well handled. The end result is a future penalty in terms of costs.

The majority of countries that are facing their challenges (under their control) are potentially way better than the others. A list of developed countries are taking strong actions to have a brighter future. In the US the recent super potent program that has been approved is a strong signal. Most countries that are heading to lower emissions (wind, solar, biomass, etc.) are potentially reaching future more competitive costs as they are replacing expensive, traditional energy sources by renewable ones.

Audra Drazga's picture
Audra Drazga on Aug 12, 2022


Curious if you think Brazil will be affected at all but the Russia / Ukrain was as it pertains to energy.  I am not familiar with your system ad we really do not hear much about South America - do you rely on Natural Gas from overseas? 

Rafael Herzberg's picture
Rafael Herzberg on Aug 12, 2022


Brazil's power matrix is basically renewable: 70% hydro, 15% wind, 10% solar and thermal power plants are only dispatched when renewable is not available (not enough water at the hydro power plants reservoirs). 

It means that power cost depends primarily on Brazil's upper management (regulator, independent system operator, ministry of energy among others - especially politicians & cronies. And here lies the big troubles! A lot of interests that are NOT aligned with the majority of the population but ... with sweet heart deals.

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