How much does it cost to increase supply?

How much does it cost to increase supply?

Future energy prices in Brazil and around the world depend essentially on the cost of expanding the supply side of the electricity sector's value chain.

Since this is a capital-intensive sector, assessing the investment required is essential. And here are the conditions that point to a substantial increase in energy prices in Brazil:

1. Prioritization of non-firm energy

Solar and wind energy have been the "darlings". However, each kW of installed power involving these sources generates much less than conventional hydroelectric plants with reservoirs.

2. Investment in non-firm energy is much higher in $/kW

Additional investments in the "back up" to deal with the lack of sun and wind must be considered, involving generation, transmission and distribution.

3. "Curtailment"

Non-firm energy causes energy deliveries when (sometimes) there is no need according to the dispatch of the national system operator, requiring its "curtailment" and associated cost. What will the decision-making process be like in Brazil: focusing on the "darlings" or aiming at the merit of costs?