January 18, 2021
How to Design a Commercial Strategy for the Free Energy Market
Do you know the best way to design a commercial strategy for the free energy market? Learn all about it in this article!
Migration to the free energy market can lead companies to significant electricity cost savings. A study by the Brazilian Association of Energy Traders (ABRACEEL) shows that in 2019, free and special consumers achieved an average savings of 34% in energy expenses in this market compared to prices in the regulated market.
In this contracting environment, where consumers can freely choose their supplier, the significant reduction in electricity bills, compared to the regulated market, is due to direct negotiation with suppliers.
Do you know how to design the best commercial strategy for your company in this market? Check out this article.
What Is the Free Energy Market?
Since 1998, the free energy market has been the environment where electricity purchase and sale transactions are carried out with free negotiation of conditions, such as price and term, between suppliers (generators and traders) and consumers.
Data from the Electric Energy Trading Chamber (CCEE) indicates that there are nearly 2,000 energy traders in operation in the country and over 12,000 consumers purchasing energy in this market.
While energy transportation costs (infrastructure for transmission and distribution) and most sector charges are set by ANEEL and are paid equally by both regulated and free consumers, 32% of the electricity used in Brazil is currently traded through the free energy market. In the case of the manufacturing industry, this share is 62%, according to CCEE data.
Who Can Migrate to This Environment?
Brazilian electricity consumers can be divided into two groups:
1. Free and Special Consumers
Free consumers are those who can choose their own supplier and become entitled for energy contract negotiation.
To be a free consumer, a company must have at least 1,500 kW of contracted demand (reduced to 1,000 kW as of January 1, 2022, and 500 kW as of January 1, 2023).
Companies with demand between 500 kW and 3,000 kW can operate as special consumers by purchasing energy from incentivized sources (Small Hydroelectric Plants, Solar, Wind, or Biomass).
2. Regulated Consumers
Consumers connected to the low-voltage grid, such as residences and small businesses, and others who do not meet the conditions mentioned above must purchase electricity from the utility responsible for their region.
The tariffs/rates are set by ANEEL, and these consumers cannot participate in the free market or choose their suppliers.
It is important to note that many companies eligible to migrate to the free market are still operating in the regulated market. EnerLeads, TR Soluções' lead generation system, provides contacts for companies that are part of business groups with the potential to operate as free or special consumers. This system helps energy traders identify these consumers and attract them to the new contracting environment. EnerLeads uses lookalike techniques and offers data organized by municipalities and economic activity segments.
How to Design a Commercial Strategy for the Free Energy Market?
The prices to be paid in the free market depend on an economic and financial feasibility analysis, always considering the regulated market tariffs and rates. The use of an electricity tariff and rates projection system is a fundamental step in forecasting how tariffs will behave over time and making an informed decision.
TR Soluções, a technology company specializing in the electricity sector, projects tariffs through the Energy Tariff Estimation Service (SETE). This system considers hundreds of variables to ensure the best tariff/rate projections over a horizon of up to six years. This allows companies to design a winning commercial strategy for the free energy market.
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