Energy in Brazil: Chaotic signals
The Brazilian electricity sector emits signals that generate systemic distortions.
Signal I: increasing peak consumption
With the current signalling, it would make perfect sense to increase energy consumption in the afternoon when wire fees are lower, even though, according to the ONS (National System Operator), this is the period with the highest recorded hourly demand of the day (for quite some time now)!
Signal II: increasing consumption from other sources
With the current signalling, it would also make perfect sense for a business consumer located in the southeast-central-west region to consider using other sources such as natural gas, LPG and biomass for a cost arbitrage strategy.
Signal III: reducing power consumption to settle at the CCEE
The price of energy in the free market is around R$ 170/MWh. The PLD (“spot”) for the Southeast-Central West region is R$360/MWh. It is possible to sell the energy for more than double the purchase price!
