Why self-generation of energy should continue to grow in Brazil

Self-generation of energy is expected to continue growing in Brazil, according to experts interviewed by BNamericas. 

In this type of generation, companies or consumers produce their own renewable energy.

There are three structural models: typical, in which the consumer builds and operates their own plant independently; leasing, in which the plant's assets are transferred for a fixed price; and self-production through share matching, where a specific purpose company (SPE) is set up with a generator. 

The second and third options are currently the most widely adopted, according to consultancy Thymos Energia, since the consumer can rely on the experience of a generation player in the electricity sector to make the transaction viable.

“We continue to see a trend of demand for the self-production structure next year due to the market opening that took place this year, and to serve datacenters,” Jovanio Santos, director of new business at Thymos, told BNamericas. 

Another reason for the growth in self-production is the reduction in public auctions due to the stagnation of the regulated electricity market.

Federal energy research company EPE estimates that self-generation should reach 91.8TWh by 2034, equivalent to an annual growth rate of 2.4%. The sectors that should lead this growth are pulp, steel and petrochemicals. 

As for the datacenter sector, the mines and energy ministry (MME) has already registered 9GW of demand for connection to this market by 2035.

Thymos has enabled more than 2GW in self-production contracts in the last two years. That volume indicates that 40% of all contracts signed in Brazil in the period with these characteristics were advised by the company. 

The consultancy recently advised on projects by generators Atlas Renewable and Atiaia Renováveis for a partnership comprising 10 photovoltaic plants, and also the company V.tal, which bought energy for its datacenter business arm, Tecto. 

Expensive power rates

Walter Fróes, CEO of energy trader CMU, said the self-generation market should grow even more rapidly in the coming years, given the trend towards higher energy rates. 

He cited the energy development account (CDE), which is used to finance public policies in the electricity sector, as one of the main culprits behind the rise in rates. 

Its weight could increase even more if President Luiz Inácio Lula da Silva does not veto the jabutis (amendments or provisions added to a bill that are unrelated to its original purpose) in the offshore wind bill, including the obligation to contract thermal plants and gas pipelines. 

“Billions of reais will have to be paid through the CDE energy development account, and self-producers don't pay this bill,” Fróes told BNamericas. 

The executive says the approval of the bill in itself is a mistake. 

“Brazil still has a lot of onshore space to explore, and the capex for offshore wind is three times more expensive,” he argued.