Brazil's power sector is suffering from a lack of government leadership guiding the market through its current problems, according to speakers at the Enase conference in Rio de Janeiro last week.
Market participants and specialists at the event drew attention to issues plaguing the sector such as high tariffs, the growth of power supply without increases in demand and cross-subsidies. Many panelists agreed that the challenges are not technical but stem from conflicting economic interests. They also said there is a lack of leadership coordinating public policies to overcome such hurdles.
Mines and energy minister Alexandre Silveira sent a video message to the event announcing a new national energy transition policy to be presented in July and plans for lowering residential power prices, but no representatives from the ministry attended in person.
The ministry has sent signals that it will seek a new deal to reconcile different interests in the power market, but participants are not satisfied with the direction of the discussions.
The power sector needs to leave its differences aside and come together with unified proposals to the ministry, president of the electricity resellers' association Abraceel Rodrigo Ferreira said. The sector can emphasize which issues are in dispute by highlighting the points of consensus, he said.
Other market participants say the government should not be seeking a new consensus, as the sector has already discussed these issues. There should be an effort to rescue the PL 414 power modernization bill, which was the consensus plan from previous discussions, according to Jerson Kelman, former general director for electricity regulator Aneel and for basic sanitation and water regulator ANA.
Brazil needs to use its renewable power surplus to become an energy transition leader, before the US catches up through a surge of investing, said power consultancy PSR's chief executive Luiz Augusto Barroso. The power sector needs government incentives and guidance to advance with technical and political leadership, which does not exist today, said former general director of Aneel, Edvaldo Santana.
The ministry and government agencies could have already taken some important measures if there was such leadership, the Brazilian Center for Regulation in Infrastructure's (FGV CERI) director Joisa Dutra Saraiva said. This includes separating power costs from distribution costs in the new concession contracts the government will soon sign with distribution companies, and taking a proposal to the ministry to address the problem of expensive power tariffs, she said.
Brazil also needs to be careful not to create new subsidies for renewable technology that will encumber power consumers, Saraiva said, referring to a proposal to exempt green hydrogen power from 80pc of its transmission and distribution costs.
