Now is the 'best time' to migrate to Brazil's free energy market

This is the best time "in recent years" for Brazilian energy consumers to join the free energy market, Ciro Neto, commercial head of energy trader and generator 2W Ecobank, told BNamericas.

The reason, according to the executive, is the prospect of energy price growth at the end of this semester, as the end of the El Niño weather phenomenon should result in a period of scarcer rainfall. 

Around 60% of Brazil's electricity matrix is based on hydro power. When the level of the plants' reservoirs drops, the national system operator (ONS) activates thermoelectric plants, which are more expensive, putting pressure on prices.

As of January 1, 2024, all high-voltage consumers (Group A) became eligible to migrate to the free energy market, where they can choose their electricity suppliers.

"The free market will bring a new dynamic to small and medium-sized companies in Brazil, leading to more competitiveness and sustainability for the Brazilian economy," said Neto, who believes that more than 30% of Group A companies will migrate this year.

He pointed out that energy distribution utilities will have to adapt and focus on improving their operations in order to guarantee an efficient and reliable supply to consumers.

Generators, meanwhile, will have the opportunity to interact directly with consumers, understanding their needs and offering customized solutions. 

"This includes offering renewable energy sources, special power rate plans and additional services," said Neto.

2W Ecobank's customer base more than quadrupled in 2023, reaching 1,000 customers, 40% of which are in the southern region of the country. The firm is expected to at least double its customers again in 2024.

"With the official opening of the market and the accelerated advance of the sustainability issue due to the set of extreme climatic events that have occurred in recent years, entrepreneurs are educating themselves, which should favor the rapid growth of the market due to the need for companies to consume clean and sustainable energy at fair prices," said Neto.

In 2023, 2W Ecobank reached 480 companies in the South region, an increase of 300% from the previous year, with Santa Catarina state standing out with 39% of migrations, ahead of Paraná with 35% and Rio Grande do Sul with 26%.

One of these companies was meatpacker Frigorífico Tomelin, from Jaraguá do Sul in Santa Catarina state. The partnership between 2W and the firm has resulted in a five-year contract, in which the company will adopt renewable energy from wind power. 

This change will bring savings of approximately 1.6mn reais (US$330,000) on the company's energy bills over the period of the contract.

In Rio Grande do Sul, Malta Indústria de Equipamentos e Utilidades Domésticas has also joined the free market with 2W. 

The 10-year contract provides for the use of wind and solar energy, with expected savings of 165,000 reais on the company's energy bills. 

Other recent cases include the companies Cerâmica Escorpião in Paraná; Fifor Polímeros, Printex Têntil, and Madeireira Nova Trento in Santa Catarina; and Central Polímeros in Rio Grande do Sul, which together will save around 780,000 reais in energy costs.