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May 11, 2021

How to Analyze the Economic Feasibility of Migrating to the Free Energy Market


Energy expenses significantly impact the competitiveness of companies. Therefore, seeking better negotiation conditions, such as the migration to the free energy market, can be an option to achieve electricity cost reduction. However, before migrating, it is essential to evaluate the economic feasibility of migration to ensure the investment is worthwhile.

But how can you conduct this energy market feasibility analysis for migration to the free energy market?In this article, you will learn:

  • What an economic feasibility of migration is;

  • How to conduct this analysis for migration to the free energy market; and

  • Which energy sources can be the most advantageous.

What Is an Economic Feasibility Analysis?

Conducting an economic feasibility analysis means, as the name suggests, analyzing whether a certain investment or project is viable for the company. This is done by comparing the potential return with alternatives, based on the analysis of indicators and assumptions.

In the context of energy market investment strategy, this type of analysis considers the costs, benefits, and risks of changing the company’s current energy supply model. For companies considering a shift from the regulated vs. free energy market, this analysis becomes even more crucial.

How to Analyze the Economic Feasibility of Migrating to the Free Energy Market?

To analyze the economic feasibility of migration to the free energy market, you need to conduct a structured energy market feasibility analysis that includes the following steps:

  • Compare the cost of energy in the free market with the tariffs/rates paid in the regulated market: one of the first steps in this process is to perform a tariff comparison between the regulated vs. free energy market. This comparison helps identify the potential for electricity cost reduction, which is a key motivation for many companies to migrate.

  • Analyze projections of energy tariffsover time and compare them with the expected cost evolution for energy in the free market: since energy prices can fluctuate, it is essential to track energy market price fluctuations to understand how they may affect future expenses. Companies often use technological tools like TR Soluções’ SETE (Energy Tariff Estimate System) to make projections and compare potential savings in both the regulated and free markets.

  • Compare this with the adoption of alternatives such as Distributed Generation (DG) systems: companies can also consider alternative solutions like Distributed Generation (DG) as part of their energy market investment strategy. In some cases, a combination of DG and energy supply contract analysis within the free market may present an optimal strategy for reducing electricity costs.

To assist with this analysis, TR Soluções, a company specializing in applied technology for the electricity sector, provides the SETE (Energy Tariff Estimate System). With SETE, it is possible to compare, track, project, and analyze the tariffs and rates of all electricity utilities in the country. As it is continuously updated, SETE users can also simulate the tariff and rate impacts of any government or regulatory measures. This approach offers companies a clearer path to defining their free market entry strategy.

Which Energy Sources Can Be More Advantageous?

The search for sustainability is growing, and companies are increasingly looking for greener energy consumption. In the free energy market, consumers have the flexibility to choose more sustainable energy options while still obtaining financial advantages.

Wind, photovoltaic, biomass, qualified cogeneration, and small hydroelectric plants are considered “incentivized energy” sources. Therefore, companies that consume these types of energy as special consumers are guaranteed discounts on transmission and distribution system usage tariffs. This form of incentive plays a role in the energy supply contract analysis when companies evaluate different options for entering the free market.

Depending on the project conditions, these sources can be the most advantageous in terms of cost and environmental impact, making them a key part of a company’s energy market investment strategy.

Did you enjoy learning how to analyze the economic feasibility of migration to the free energy market? Also, check out our article on how to save energy in your company.