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Future energy prices - trends

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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Future energy prices - trends (Brazil)

For companies and institutions, which contract captive or free electricity, an important question always arises, since it is a Top 10 account but often, Top 5.

What range of values ​​to bet on for the future contemplated in your business plans?

The variables at stake are many and defy the conventional approach of "looking in the rear view" and using a historical average updated by an inflation index.

1. Marginal cost of expansion

It originated from generation, transmission and distribution to be built, respecting the national energy matrix. The trend is strong upward.

2. Marginal cost of operation

It is the one producing by the current matrix, in the short term. It is the "spot". It points to the maintenance of the current levels during the summer and significant increase in the autumn, winter and spring, due to the reservoirs of the hydroelectric plants.

3. Exchange rate

It always has an important influence since the electricity sector is capital intensive and an important part of everything that is contracted is imported.

4. New phenomena

Changing the profile of the matrix, with the increasing presence of intermittent sources (wind and solar) brings challenges (and associated costs) in managing the dispatch of the national integrated system

5. Government

As the open questions, for years on end (defaults, theft, demand response, etc.) will be dealt with (or not).

Suggestion: be carefull before deciding about power price level in your business plan.

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