What is a balanced power price?
Market price is about supply x demand! Sure! This is the concept of free business environments.
But... how to identify a systemic equilibrium price? Reasonable for buyers and sellers?
I really like using the marginal cost of expansion (MCE) criterion. It is derived from the construction of new power plants, considering a market compound interest rate (including country risk, inflation and a real interest rate) and a term consistent with projects of this type.
I make this calculation on month by month basis to be able to offer this reference to my clients. Today, this calculation ends up at R$ 180/MWh.
The market - this week - is offering "conventional energy" at R$156/MWh. So it's a "sexy" price in relation to the MCE.
1 USD = R$ 5.2
Rafael Herzberg
Expert Member
Top Contributor