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Why should subsidies end in Brazil?

Why should subsidies end in Brazil?

While subsidies may have been justifiable in the past, it is now time to question them.
The rationality of the subsidies no longer exists.

In the past, it was necessary to subsidize for enabling the universal service for electric energy.

  1. The are more attractive alternatives than the subsidy

    As a rule, entire regions of Brazil are served by thermal plants, which cost 3 to 5 times that of hydroelectric, wind and even photovoltaic plants 
  2. The advantages that the market already offers (in Brazil) 

    Contracting energy from solar farms, wind farms, small hydroelectric plants, and cogeneration linked to the agricultural sector is a reality that the free market presents at a price much lower than thermal power plants 

A consumer in Roraima - fro example - pays subsidized rates for the energy they consume. In other words, a plant that costs more than USD 200/MWh is charged to the local consumers at about 1/3 of this amount. The difference is paid by all other Brazilian consumers.

If the tariffs in Roraima reflected the USD 200/MWh there would be a natural movement of the solution providers  to make viable power contracts much more competitive than this reference.

If there is a much more interesting and convenient alternative, what would be the logic of maintaining subsidies?

Rafael Herzberg's picture

Thank Rafael for the Post!

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