The free power market, a segment in which consumers with high demand negotiate directly with generation companies and traders, may generate R$6.3 billion in investments in 10 years to draw customers, a projection by consultancy Thymos Energia made at Valor’s request shows.
The cost for companies to draw consumers who want to migrate from the regulated market to the free power market is higher than R$1,000, the consultancy said. However, the value is expected to fall to only R$100 as a result of a digitalization drive.
The calculation is based on the number of potential consumers that can migrate from the regulated market to the free market. In Brazil, there are about 87 million consumers. However, Alexandre Viana, a partner and head of consulting at Thymos, believes that about 63 million will change to the free market.
“The cost of drawing customers multiplied by the number of consumers who can migrate to the free market is equal to R$6.3 billion in investments in 10 years, excluding other injections that may come from generation and services,” he said.
The consultancy’s survey outlines a conservative, a baseline and an aggressive scenarios for electricity consumption and projects that the free power market will account for almost 73% of the total load of the National Interconnected System (SIN) in 2035, compared with 35.4% now.
This scenario takes into account that as of 2024 the free market will open fully to all consumers of high voltage, as proposed by the Ministry of Mines and Energy (MME), and THAT in 2026 the opening follows for low-voltage consumers.
“In 2035, this curve will stop growing because low income, public services and rural [clients] will have more difficulty migrating and will remain in the regulated market,” Mr. Viana said.
Bills in Congress on the modernization of the electric sector and regulations can speed up the migration of consumers, the executive added.
As for businesses, some power trading companies no longer want to only buy and sell energy and are expanding their operations by offering services to consumers and generation companies.
This is the case of 2W. With an eye on the liberalization of the market, the company is increasing the supply of renewable power to sell on the free market with the construction of two wind power farms, and has set aside funds for the acquisition of new customers.
“We see a more liberal market in the second half of this decade. For this, it is key to have generation assets so that we are not in the middle of the chain having to buy power from a generation company to sell it to the customer…We have R$150 million for customer acquisition cost to be able to tap the market and sell electricity from these farms,” CEO Claudio Ribeiro said.
Tradener follows a similar path. The company sells about 800 average megawatts and serves between 20% and 30% of its customer portfolio with its own generation. CEO Walfrido Avila said that the investment relies on better market conditions.
“We have 400 MW of projects, but we will do this in tandem with the economy. The interest rates are very high right now. This is bad for financing and this hinders investments,” he said.
For Alexandre Lopes, vice-president of the Brazilian Association of Power Trading Companies (Abraceel), this is a trend since the sector has been driving competitiveness in companies for more than 20 years and the expansion of the electric system.
“The free market has become the flagship of the expansion of electric power generation in Brazil, responsible for more than 70% of the plants under construction, mainly of renewable origin, aligned with national public policy and the global energy transition.”
Source: Valor international