BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
comes from renewable sources. This share is led by hydroelectric plants (50.40%), followed by wind (15.91%), biomass (8.19%) and solar photovoltaic power plants (10.34%). Brazilian energy is clean and meets international commitments 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 rap- idly (especially in Brazil’s north-east region), sugar cane biomass thermal power generation and, more recently, both centralised and distributed solar power generation. Investments in renewable energy will continue to flow in parallel with investments in gas-fuelled thermal power plants, which increase the stability and safety of the power supply. Brazil is a continental country that has been making continuous investments in energy transmission and distribution facilities, despite the continuous increase of distributed generation resources. With an increasing energy consumption of approxi- mately 65 GW average (reference year: 2025, based on EPE grid consumption data), Brazil is among the top ten countries in the world in terms of electricity demand, and only about 44.8% of such demand is contracted in the free market, with 55% of the demand still supplied by power distribution companies in the regulated market.
defined by the MME and carried out by ANEEL and the CCEE. In these public reverse auctions, power gen- eration 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 regulated market. The Free Market On the other hand, the free market covers power sale and purchase transactions freely negotiated among generation companies, trading companies, 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 electric- ity market. Since January 2024, all consumers connected to the grid with a voltage level equal to or higher than 2.3 kV are allowed to freely negotiate in the free market, regardless of their consumption level. Customers with total demand below 500 kW must, however, be repre- sented by a retail trading company ( comercializadora varejista ) in order to participate in the free market. High-load consumers – such as industrial facilities and data centres – frequently opt to operate within the free market, given the potential for cost savings, contractual flexibility, and the ability to procure energy exclusively from renewable sources. As further detailed in 1.1 Law Governing the Struc- ture and Ownership of the Power Industry , Law No 15,269/2025 has introduced a gradual expansion of the free market. Industrial and commercial customers served at low voltage will be able to access the free market within 24 months from the entry into force of the relevant provision (expected by the end of 2027), while the remaining customers, including residential and rural users, may do so within 36 months (expect- ed by mid-2028), subject to the fulfilment of regulatory prerequisites established by the law. Distinctions Between the Two This distinction between the regulated market and the free market was created in 2004 by Law No 10,848/2004. The regulated market has been primarily responsible for the development of greenfield power
2. Market Structure, Supply and Pricing 2.1 The Wholesale Electricity Market
The structure of the electricity market in Brazil is divid- ed between the regulated market (ACR) and the free market (ACL). The Regulated Market It can be said that the regulated market aims ulti- mately at serving the retail electricity market, consid- ering that all power distribution utilities mandatorily purchase 100% of the demand of their consumers’ market (“captive customers”) through public auctions
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