BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano, Luisa Tortolano Barreto and Julia Braga, Tauil & Chequer Advogados in association with Mayer Brown
sions in MME Public Consultations No 32 and 33/2017. They provide for free market expan- sion, unbundling of the contracting of capac- ity and power, and a self-production regime, among other things. As further detailed in 1.1 Law Governing the Structure and Ownership of the Power Industry , Provisional Measure No 1,300/2025 anticipated some changes included in those bills of law. However, further reforms are still expected. 1.8 Unique Aspects of the Power Industry Brazil has one of the cleanest electric matrices in the world, as 85.06% of its power generation capacity comes from renewable sources. This share is led by hydroelectric plants (52.35%), fol- lowed by wind (15.89%), biomass (8.41%) and solar photovoltaic power plants (8.41%). Brazil- ian energy is clean and meets international com- mitments for the environment, such as those signed by Brazil at COP 21 in Paris (Brazil’s first round of commitments). Highlights include wind power, which has grown rapidly (especially in Brazil’s north-east region), sugar cane biomass thermal power generation and, more recently, both centralised and distrib- uted solar power generation. Investments in renewable energy will continue to flow in parallel with investments in gas-fuelled thermal power plants, which increase the stabil- ity and safety of the power supply. Brazil is a continental country that has been making continuous investments in energy trans- mission and distribution facilities, despite the continuous increase of distributed generation resources.
With an increasing energy consumption of 70 GW average (reference year: 2024), Brazil is among the top ten countries in the world in terms of electricity demand, and only about 40% of such demand is contracted in the free market, with 60% of the demand still supplied by power distribution companies in the regulated market. 2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market The structure of the electricity market in Brazil is divided between the regulated market ( Ambiente de Contratação Regulada or ACR) and the free market ( Ambiente de Contratação Livre or ACL). The Regulated Market It can be said that the regulated market aims ultimately at serving the retail electricity market, considering that all power distribution utilities mandatorily purchase 100% of the demand of their consumers’ market (“captive customers”) through public auctions defined by the MME and carried out by ANEEL and the CCEE. In these public reverse auctions, power genera- tion companies compete to be awarded long- term power purchase agreements at the lowest electricity prices. This results in regulated prices for consumers. Around 60% of the total energy demand in Brazil is supplied through the regu- lated market. The Free Market On the other hand, the free market covers power sale and purchase transactions freely negotiated among generation companies, trading compa- nies, export and import companies, and free consumers. Due to requirements for entering the free market, it can be said that this currently serves the wholesale electricity market.
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