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Electricity Prices/Costs: 3 mixed signals 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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  • Oct 9, 2021
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Electricity Prices/costs: 3 mixed signals in Brazil

A combination of factors makes the scenario of future prices quite confusing.

1. Recent auctions point to very competitive prices

Out of wind, hydraulic and biomass power plants. Even the thermals closed at very reasonable levels!

2. "Trojan horse"

There is a list of not competitive projects with a potential cost increase of USD 10 billion that have a chance of being included in MP 1055, such as

* Gas ​​pipelines to be assigned to electric energy transmission tariffs,

* Extension of subsidies for coal,

* Extension of the market reserve period for the compulsory purchase from small hydro power plants

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* Addition of new projects to "Proinfa" (subsidized) contracts that may be extended.

The challenge is to create a strategy that considers the above two signals, in order to reach a consistent operational plan of each company or institution.

3. Official spot price dropped

On October 8, 2022, the National System Operator and the Electric Energy Trading Chamber announced the spot at R$ 200/MWh,. A value consistent with filled reservoirs (right now it is below 20% nominal capacity).

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Thank Rafael for the Post!
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