February 8, 2021

What Is the Profile of the New Free Energy Consumer?

The combination of low prices, high electricity tariffs and rates, and regulatory changes is reshaping the profile of free energy consumers. Learn about this new type of free energy consumer.

Since 2018, the Ministry of Mines and Energy (MME) has been working on reducing the demand necessary for a load to be classified as free. These reductions, combined with relatively high electricity tariffs/rates, lower prices in the free energy market, and an increase in the number of energy traders across the country, have given rise to a new profile of free energy consumers.

A report from the Electric Energy Trading Chamber (CCEE) shows a strong consumer migration from the regulated market (ACR) to the free energy market throughout 2020.

In total, 1,732 migrations took place during the year, including 1,618 special consumers and 114 free consumers. This led to a 23% increase in the number of special consumers, now totaling 7,556. The number of free consumers grew by 11%, reaching 1,023.

Why Is There a New Profile of Free Energy Consumers?

The Brazilian free energy market was created in 1995. At that time, only consumers connected to the high-voltage grid (with a supply equal to or greater than 69 kV) and with a contracted demand of 10,000 kW or more could choose their energy supplier.

The first transactions only took place in 1999, when the threshold was lowered to 3,000 kW. At the time, consumer migration was concentrated among energy-intensive consumers, such as cement, steel, chemical, and aluminum industries.

Since then, the evolution of electricity sector regulations and the development of the trading market have ensured significant expansion. The combination of increasingly higher tariffs and ratesin the regulated market (ACR) with relatively low prices in the free energy market (ACL) has also contributed to the market’s growth.

What Is the Profile of the New Free Energy Consumer?

According to Ordinance 465/2019, as of January 2021, any load with a contracted demand equal to or greater than 1.5 MW can be classified as a free consumer. The ordinance also outlines further reductions, with the threshold lowering to 1 MW in 2022 and 500 kW the following year.

These units were already able to participate in the free energy market but as special consumers, requiring them to contract energy from incentivized sources. The new rules, therefore, expand the energy contracting options for these consumers.

At the same time, the number of energy traders has also grown significantly. In 2020, the number of traders increased by 16%, reaching 397 companies. In their pursuit of new clients, these companies have been promoting the free energy market across the country.

As a result, there has been a notable presence of companies from sectors such as commerce, services, and food in this contracting environment, as shown in the CCEE graph depicting migrations by activity sector and the number of modeled loads up to November 2020.

How Traders Can Benefit From This New Profile

With this new profile, energy trading companies have access to more potential clients. EnerLeads, a sales lead generation system developed by TR Soluções, provides contact information for companies that belong to business groups with the potential to operate as free or special consumers.

This information helps traders identify energy consumption segments and attract them to the free contracting environment.

The system uses lookalike techniques, offering data organized by municipalities and economic activity segments.

Did you enjoy learning about the new energy consumer profile? Discover TR’s solutions.