Future power prices (Brazil)
Currently the price of electricity (conventional) on the free market, for long-term delivery, is in the range of R$ 131/MWh.
It is a very attractive price, especially considering that the marginal cost of expansion (referring to new power plants, to be built) is around R$221/MWh.
And what are the 8 reasons for this huge difference?
1. Dollar exchange rate rise
2. Higher required internal rate of return (Brazil' country risk)
3. Fiscal imbalance predicted for Brazil in the coming years
4. Institutional instability in the electricity sector
5. Maintenance of subsidies no longer necessary
6. Crony projects without economic viability to benefit "friends"
7. Lack of demand response programs
8. Stronger demand for energy
PS 1 USD = R$ 5.3
Rafael Herzberg
Expert Member
Top Contributor
Thu, Apr 18