'Brazil is very well positioned to receive infra, energy investments'

Brazil is very well positioned to receive investments, especially in relation to other emerging countries such as Russia and China, Paulo Mantovani (pictured), energy & power director at insurance broker and risk advisor Marsh Brasil, told BNamericas. 

He believes that the recent improvement to the country's investment grade by Fitch Ratings, coupled with the prospect of falling interest rates, will further improve conditions for new local infrastructure and energy projects. 

"The tendency is for us to start having a different look compared with six months ago. This ends up mitigating the risks of the projects because money is contracted at a more palatable cost, helping the margins and the approval of the investment," the executive said.  

From the point of view of construction risks, Mantovani pointed to the perspective that damage resulting from natural phenomena tends to occur at a greater intensity and frequency because of global warming. 

He cited as a hypothetical example the risk of windstorms or floods damaging or causing the total loss of photovoltaic panels during the construction of a solar plant. 

Andrew George, global head of Marsh's energy & power practice, said that Brazil is facing the challenge of keeping its hydroelectric plants in good working order and accelerating investments in isolated systems (i.e., those not connected to the transmission grid). 

"How can we accelerate investments in isolated systems, bringing reliable energy at a viable price?" he asked during an event hosted by Marsh on Wednesday in Rio de Janeiro, pointing out that costs should increase as the different sectors of the economy become electrified. 

Among the challenges for Brazil, George also underlined the need to increase energy efficiency, install smart consumption meters and increase investments in research, development and innovation, which is still low compared with other countries.

Flávia Antunes, Neoenergia's risk superintendent, highlighted the expansion of distributed generation as a positive factor in Brazil. 

"This is important because consumption is getting closer to energy generation, increasing efficiency," she said.

On the other hand, the country needs to discuss the democratization of the electricity market, considering the growth of the free (non-regulated) market.

"The consumer with access to information will quickly migrate to the free market, with low rates, while the low-income consumer may be subject to high costs [in the regulated market]," Antunes warned.

In 2022, Brazil’s mines and energy ministry (MME) published an administrative rule that allows all high-voltage consumers, such as industries and medium-sized companies, to operate in the free market as of 2024. Currently, only consumers with a load of 500kW or more can choose their own supplier.

The ministry also opened a public consultation for market contributions regarding the opening schedule for low-voltage units. The suggested schedule releases access for commercial and industrial units starting in 2026 and for residences starting in 2028.