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Power-price-trends (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,...

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  • Mar 31, 2021

Power-price-trends (Brazil)

The changes in the political/economic scenario in Brazil point to a new level of power prices for future delivery.

The calculations that I always show clients is related to the amortization of investments in the expansion of the supply side. It is a simple, robust and easy to understand.

* Investment in renewable plants: R$ 5,800/kW
* Amortization term: 20 years
* Monthly interest rate: 1.2% (includes country risk)
* Load factor: 50%

It results in a cost of R$ 240/MWh.

The current market price, offered by renewable power plants, for long-term contracts, is around R$ 170/MWh.

Bottom line: the prevailing trend is of an important increase in power prices of those plants to be built ("marginal cost of expansion")..

PS 1 USD = R$ 5.8


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Rafael Herzberg's picture
Thank Rafael for the Post!
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