The Free Energy Market is a specialized environment for companies and industries to choose electricity suppliers and negotiate contractual terms more flexibly.
What is the Free Energy Market?
The Free Energy Market is a specialized environment for companies and industries to choose electricity suppliers and negotiate contractual terms more flexibly.
Unlike the Regulated Contracting Environment (ACR), where rules are imposed by the government, in the Free Market, or Free Contracting Environment (ACL), there is greater autonomy.
Consumers can negotiate not only the price but also the amount of energy, contractual terms, and delivery conditions.
This versatility allows companies to customize contracts according to their operational needs, promoting independence and efficiency in negotiations.
Despite the freedom to choose suppliers, the physical distribution of energy remains the responsibility of local companies. ANEEL regulates the sector, ensuring regular and reliable supply regardless of the chosen supplier in the Free Market.
Example:
As a consumer located in a city in the South of Minas Gerais, you will buy wind energy generated in Northeast Brazil, and distribution will be ensured by CEMIG.
In the Free Energy Market system, there are two types of service contracts:
1. Incentivized energy:
Used by the government to stimulate the expansion of renewable energy generators, buyers of this type of energy receive discounts on the distribution system usage tariff. Some examples include:
Small Hydroelectric Plants;
Biomass;
Solar Energy;
Wind Energy;
Geothermal Energy;
2. Conventional energy:
Part of traditional generation types, such as gas thermal plants or large hydroelectric plants. This type of energy does not provide the same tariff discount as incentivized energy.
The Emergence of the Free Energy Market
To effectively address the emergence of the Free Energy Market, it is necessary to take a brief look at the functioning of the Brazilian electrical sector a few decades ago. In 1962, as a way to coordinate related companies, Eletrobrás was created.
The state-owned company was responsible for promoting a process of nationalization and statization through large investments. The sector was one of the pillars of the period known as the "Brazilian Miracle". However, with the oil crises of the 1970s, the world scenario was shaken, and energy companies began to incur debt, leading to questioning of the state model.
The default of energy companies in the 1990s was unsustainable, and in 1995, the Concession Law was published, opening up space for the denationalization of several sectors of the country, including the electric sector. Privatizations began in the same year, first with Escelsa, followed by the sales of Light and Cerj in 1996.
During the same year of 1996, the National Electric Energy Agency (ANEEL) was created to regulate and supervise the processes of production, transmission, distribution, and commercialization of electric energy. Its attributions ranged from tariff application to conflict mediation.
Finally, the creation of the Free Contracting Environment (ACL) in 1998 brought about the Free Energy Market, allowing consumers to negotiate directly with electricity generators or retailers.
The Free Energy Market in Brazil
The participation of the free energy market in Brazil has grown in recent years, reaching 38% of total electricity consumption in 2023.
This growth is the result of a series of factors, including the fall in energy prices in the free market, increased energy consumption by large consumers, and the expansion of the market to new states.
CCEE and contracting models
Law No. 10,848 of 2004 established the creation of the Chamber of Electric Energy Commercialization (CCEE), responsible for promoting energy auctions and operating as a chamber for registering contracts for the purchase and sale of electric energy.
With this, the new way of buying electric energy was established, through purchase and sale contracts, signed directly with generating companies or retailers. Two contracting models also emerged: the wholesale consumer model and the retail consumer model.
In the wholesale model, the company wishing to contract services from the Free Market must directly associate with CCEE, thereby becoming an agent of the Chamber. Thus, it becomes necessary for the company to follow the sector's rules and procedures. This includes the need to obtain commercial adequacy, present financial guarantees, and be exposed to risks.
On the other hand, the retail model removes the need for the interested company to register with CCEE. A retail retailer is responsible for mediating, thus facilitating the adherence and bureaucracy of migration to the energy purchasing model.
HVEX, with its HX Power platform, acts as a retail retailer. In the service, the consumer can choose the contracting plan that best suits the needs of their company, considering both the contracting period and cost.
Migration to the Free Energy Market can result in savings of up to 45% on the energy bill.
How it worked before and how it works nowadays ?
Before the implementation of the Free Energy Market, companies were linked to regulated tariffs, without the possibility of negotiating specific contractual conditions.
With the introduction of the free market, companies gained the ability to negotiate contracts directly with energy generators and retailers.
Currently, companies opting for the Free Market have the flexibility to choose between different energy sources, adapt contracts according to their consumption needs, and consequently achieve potential savings.
Who can migrate to the Free Market?
After January 1, 2024, the Free Energy Market ceased to be restricted to consumers whose minimum consumption limit was 500 kW, including the medium and high voltage market. Thus, migration became possible for all consumers belonging to group A, regardless of sector or volume of contracted demand.
1. Free Consumers:
With a demand equal to or greater than 500 kW and any voltage level.
They can purchase energy from various sources, whether alternative or conventional.
2. Special Consumers:
Contracted demand greater than or equal to 500 kW and less than 1500 kW.
Can contract Special Incentivized and Conventional energy.
3. Retail Consumers:
All Special Consumers are part of Group A.