Nearly R$52bn may stem from low voltage migration, says strategy&; free supplier choice could capture 65% of the market
11/10/2024
The complete opening of Brazil’s electricity market to consumers on low voltage connections could generate an estimated R$120 billion by 2040. Of this total, R$52 billion would come from new consumers migrating to the free market, where they can choose their electricity supplier and contractual terms, according to projections by Strategy&, a PwC consultancy analysis arm.
If market liberalization occurs by 2030, Strategy& forecasts a significant increase in the volume of electricity traded in Brazil, potentially representing up to 65% of the total electricity market by 2040. Data from the Energy Research Company (EPE) reveals that the regulated market, managed by utility companies, currently includes over 90 million consumer units, half of which are residential.
There is anticipation within the energy sector that starting January 2026, the option to migrate will extend to industrial and commercial energy users on low voltage. Full liberalization, including residential and rural properties, is projected for January 2030, although this shift still requires studies and regulatory changes that have yet to be outlined.
Since the beginning of the year, the free market has allowed any energy consumer on high voltage networks over 2.3 kilovolts (kV) to migrate, typically involving customers with electricity bills exceeding R$10,000 monthly. For instance, a supermarket chain could have moved several stores to the free market. The latest data from the Electric Energy Commercialization Chamber (CCEE) indicates over 16,000 consumer units have transitioned to the free market.
The Brazilian Electric Energy Agency (ANEEL) reports that 31,400 energy consumers have notified their respective distribution companies about migrating to the free market this year and in 2025, averaging 2,500 migrations monthly.
Adriano Correia, a partner and leader of the energy and utilities sector at PwC Brazil, notes that it is crucial to see how market liberalization is structured within the Brazilian Congress. Technically, he believes it could be very beneficial for the energy market.
Mr. Correia sees potential for new investments to cater to a new consumer profile with a lower average ticket than currently observed. Future investments, he stated, are likely to involve initiatives like new types of energy consumption meters, specific marketing models, process automation, and establishing new commercial and communication channels with consumers.
He cites the example of a retail chain negotiating a migration to the free market, which required the installation of electric vehicle chargers in store parking lots as a condition for closing the deal. The commercializer agreed, he recalls.
“We can imagine, for instance, contracting energy efficiency services. Or, later on, combining the free market with distributed generation. There’s a vast field to explore for interesting solutions and, further down the line, to sophisticate the market,” Mr. Correia said.
One of the most anticipated regulatory measures is redesigning the role of power distribution companies. Currently, they purchase energy in auctions and manage distribution to regulated market clients through the transmission network. With the expected redesign, a regulated marketer will emerge, responsible for buying energy in auctions and negotiating it with distributors. These companies will then be compensated solely for delivering the energy to consumers.
Mr. Correia emphasizes that with this separation, distribution companies will be able to act more assertively to retain customers, maintaining scale and financial margins.
*By Fábio Couto — Rio de Janeiro
Source: Valor International
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