Brazilian power consumers are looking to self-production to escape the growing surcharges expected in the next few years, leaving behind power grid costs to the remaining contracts in the regulated and bilateral markets.
The difference in distribution tariffs and surcharges costs for free market consumers versus self-producers through 2031 will continue to grow, according to a study conducted by power sector consultancy TR Solucoes.
Distribution tariffs are charged to both consumers in the free market and self-producers — power consumers in bilateral power supply contracts that can generate their own energy while maintaining their connection to the grid — with the latter paying less. Self-producers are also not subject to maintenance surcharges of the Brazilian power grid and interconnected system charged by the chamber of electric energy commercialization CCEE.
The study focused on a specific group of electricity consumers within the medium-voltage range, which includes smaller industrial operations. Those consumers are eligible to sign their first bilateral power supply contracts as of 2024.
Per the study, self-producers pay R23/MWh ($4.45/MWh) in distribution tariffs, while liberalized market consumers pay R133/MWh for distribution tariffs and CCEE surcharges.
The study assumes that the reserve power capacity thermal plants under construction stemming from the Eletrobras privatization law and the Angra 3 nuclear plant will begin operations in 2029, which is expected to increase the gap between the two consumer categories — to R29/MWh for self-producers and R161/MWh for liberalized market consumers. Part of the difference is partially attributed to the costs of building Angra 3 and the maintenance of reserve power capacity plants, not being charged to self-producers.
The Brazilian association of energy-intensive industries (Abrace) has similar expectations for increased costs once the thermal plants come online. "This impression that self-producers are running away [from these costs] drives attention but we must strive to restrain the uncontrolledgrowth of these costs," Abrace's power director Victor Iocca said.
The association proposes stopping the Eletrobras' thermal plants, developing a more comprehensive model to add reserve power capacity to the grid and dividing Angra 3's costsbetween shareholders and the government.
Initially, becoming a self-producerrequired an investment in generation equipment and other infrastructure, which restricts the number of participants in the segment. But the scope of self-production has increased to include consumers in special-purpose entities with generation companies, which are responsible for the power plant's development, construction, operation and maintenance. That opens space for more companies to choose self-production and benefit from its surcharge and partial tariff exemptions.
Expansion in self-production exemptions concerns the sector, potentially shiffiting more costs for the regulated and non-self-producing bilateral market.
