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Electric power spot (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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Electric power spot (Brazil)

The spot price of electricity in the free market is based on a classic concept: the marginal cost of operating the electricity system.

That is, the cost for the national system operator (Brazilian ISO) to dispatch an additional 1 MWh considering the available power matrix.

As we all know, Brazil is facing a historic water crisis (that feed the hydro power plants) and thermal power plants are "saving" the country from a blackout.

A natural gas thermal power plant uses 1 m³ of fuel to produce 5 kWh. Considering the price of R$1.6/m³ of gas, the cost of fuel referred to the energy produced is something above R$300/MWh.

How can the spot published by the CCEE (Brazilian power clearinghouse)) be in the order of R$ 100/MWh?

1 USD = R$ 5,7

Rafael Herzberg's picture
Thank Rafael for the Post!
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