Eletrobras has noticed an increase in demand for electricity contracts from medium and small businesses. The company is also looking to attract new customers who have transitioned to the free market and are reaching the end of their initial contracts, according to the marketing director, Italo de Freitas.
The company’s executive restated the focus on increasing energy sales from its mainly hydroelectric assets, noting a market preference for traditional water-generated energy amid potential regulatory shifts affecting wind and solar projects.
Buying renewable energy (such as solar and wind power) today involves significant risks, according to him.
Eletrobras, Brazil’s biggest electricity producer with 44 gigawatts (GW) of capacity, currently focuses on energy sales as a key aspect of its operations.
After being privatized in 2022, the region became more important when a plan to sell a large amount of energy in the free market was initiated, enabling the company to profit from increased prices.
A reluctance to take risks involving Eletrobras.
Freitas stated that Eletrobras anticipates that energy prices will remain stable in the future, influenced by factors like increased risk aversion towards the energy pricing model and the growth of solar distributed generation, which is placing greater demands on the electrical system and consequently increasing operational costs.
Aversion to risk influences pricing, especially in distributed generation. The impact on prices is also driven by the need to guarantee power supply. Future price trends will be influenced by rain conditions, as energy prices in the spot market are highly sensitive to weather patterns.
Eletrobras chose to focus on increasing sales in the first quarter and reduce sales for the rest of the year as part of their energy marketing strategy, anticipating a price increase which turned out to be a successful decision, according to executives.
The company lacks a specific strategy as revealing such details is commercially confidential.
Freitas mentioned that medium and small customers are driving the demand for energy procurement due to more favorable pricing conditions in the energy-free market compared to the regulated market.
Opportunities for Eletrobras lie in the contractual renewal process of smaller clients who switched to the free market “three or four years ago” and are now reaching the end of their initial contracts, as stated by the executive.
We are starting to observe a rise in the number of individuals who have already moved and are looking for renewal.
Recent challenges in the energy marketing sector, such as the decline of established independent firms, are expected to benefit stronger entities like Eletrobras due to their generation assets.
The initial migration to these smaller regions encountered various challenges involving managers and retailers, some facing issues such as disruptions or financial difficulties. As a result, this market naturally experiences a period of learning and adaptation.
The company is still investing in strategic partnerships with entities like TIM and Banco do Brasil to expand its reach in energy sales to smaller clients, as well as streamlining systems to simplify operations.
Conventional energy sources
Freitas observed a shift in customer preferences towards energy produced by hydropower, which is categorized as “conventional energy” in the industry. This change comes amidst uncertainties surrounding new wind and solar projects following government measures released this year.
The government has suggested stricter regulations for self-production of energy and the elimination of discounts on consumption for the purchase of “incentivized” energy like wind, solar, and biomass.
We cannot predict what will be approved, but those investing in renewable energy through self-production using wind or solar, or through PPA contracts, are taking on significant risks.
Today, in my view, it’s not worth it; it’s better to purchase traditional (energy), he stated.
The proposed changes to renewable energy were outlined in provisional measure 1,300, which was published in May. However, they have yet to be reviewed by the mixed commission. The text may expire if not reviewed by mid-September.
