Energy in Brazil Customer Challenges and Pains Analysis¶
Challenges and Pains faced by Customers¶
Customers in the Brazilian energy value chain, encompassing both the electricity and oil and gas sectors, encounter a variety of challenges and pains throughout the value chain. These issues stem from infrastructure limitations, regulatory complexities, market dynamics, and operational inefficiencies.
In the Electricity Sector, captive consumers (primarily residential and small businesses served by distribution companies) face challenges related to the cost and reliability of their energy supply. They receive electricity at regulated tariffs set by ANEEL, which can be a source of pain if these tariffs are high or increase frequently. Billing disputes and collection challenges, although operational issues for distributors, directly impact the customer experience and satisfaction. The need for continuous investment in aging infrastructure to ensure service quality and reduce the duration and frequency of power outages is a significant concern for these customers. High levels of non-technical losses, such as energy theft and fraud, are another major pain point for paying customers as these losses are factored into the regulated tariffs, effectively burdening compliant consumers with the costs of energy theft. Furthermore, captive consumers are bound to a single distribution company based on their geographic location, limiting their choice of energy supplier. Addressing energy poverty and ensuring affordable energy access for low-income populations remain persistent social challenges within this segment.
Free consumers in the Electricity Sector (larger industrial and commercial users, and increasingly, all medium/high voltage consumers) encounter different challenges. While they have the ability to choose their energy supplier and negotiate bilateral contracts in the Free Contracting Environment (ACL), the complexity of market rules and contract negotiation can be a barrier, particularly for businesses new to this environment. Price volatility in the short-term market (PLD) can impact the cost of energy for these consumers, requiring sophisticated risk management strategies. The process of migrating to the free market, managed by CCEE, requires careful execution, which can be a source of pain if not handled efficiently. Dependence on hydrological conditions also impacts the price volatility of energy purchased in the free market. Delays in the expansion of the transmission grid create bottlenecks that can prevent the efficient dispatch of power, potentially limiting access to energy from new, and possibly cheaper or renewable, generation sources located far from consumption centers.
In the Oil and Gas Sector, customers face pains related to the cost, availability, and quality of fuels and natural gas. Individual vehicle owners purchasing fuels at retail stations are directly impacted by the high logistics costs involved in transporting fuels across Brazil's vast territory, which contribute significantly to the final consumer prices. Fuel tax evasion and adulteration in the retail market distort competition and can lead to issues with fuel quality, impacting vehicle performance and consumer trust. The insufficient domestic refining capacity for certain products necessitates imports, exposing the market to global price volatility and logistical challenges that can affect the availability and price of fuels at the pump.
For businesses consuming fuels or natural gas (including fuel distributors, industrial users, power plants, and commercial establishments), limited natural gas pipeline coverage restricts the fuel's penetration into inland markets, limiting access to this energy source. Dependence on road transport for fuel distribution, particularly where pipeline infrastructure is unavailable, increases costs and logistical complexity. The lack of adequate natural gas storage capacity limits supply flexibility, which can be a concern for industrial users relying on a stable supply. The implementation of market reforms in the natural gas sector, aimed at increasing competition, still faces challenges in ensuring non-discriminatory third-party access to essential infrastructure like terminals and pipelines, which can impact the options and costs for businesses seeking to purchase natural gas from different suppliers. Fluctuating global oil prices also create uncertainty regarding the future costs of crude oil derivatives.
Prioritized table of challenges and pains¶
Based on the analysis of the provided reports, the main challenges and pains faced by customers can be prioritized as follows, correlating them with the relevant stages of the value chain:
| Priority | Category | Specific Challenge/Pain | Value Chain | Customer Segment | Correlation with Value Chain Step(s) |
|---|---|---|---|---|---|
| 1 | Cost, Supply/Access | High Cost/Tariffs & Price Volatility (due to hydrological risk, import dependency, etc.) | Electricity | B2C, B2B | Generation, Commercialization, Distribution (Tariffs), Refining & Processing (O&G) |
| 2 | Supply/Access | Infrastructure limitations (Transmission grid lag, limited gas pipelines, storage) | Electricity | B2C, B2B | Transmission (Electricity), Transportation & Distribution (O&G) |
| 3 | Service Quality, Cost | Distribution Losses (Non-technical losses) / Burden on paying customers | Electricity | B2C | Distribution |
| 4 | Service Quality, Market/Cost | Fuel Quality Issues & Tax Evasion/Adulteration | O&G | B2C | Commercialization |
| 5 | Market/Regulatory Complexity | Complexity of Free Market Rules & Migration / Negotiation Challenges | Electricity | B2B | Commercialization |
| 6 | Market/Regulatory Complexity | Regulatory Uncertainty and Complexity | Cross-cutting | B2C, B2B | All steps |
| 7 | Service Quality, Cost | Aging Distribution Infrastructure / Outages | Electricity | B2C | Distribution |
| 8 | Social | Ensuring Affordable Energy Access / Addressing Energy Poverty | Electricity | B2C | Distribution, Commercialization |
| 9 | Supply/Access, Cost | Import Dependency for Refined Products | O&G | B2C, B2B | Refining & Processing, Transportation & Distribution |
| 10 | Supply/Access, Market | Access to Infrastructure / Fair Competition (O&G Market Opening) | O&G | B2B | Transportation & Distribution, Commercialization |
Correlation with Value Chain¶
The challenges and pains faced by customers in the Brazilian energy sector are directly correlated with specific activities and bottlenecks within the electricity and oil and gas value chains.
For Electricity Sector customers, the pain of high costs and price volatility is linked to the Generation stage's heavy reliance on hydroelectricity, which is vulnerable to hydrological risk and requires activating more expensive thermal plants during droughts, impacting prices in both the regulated and free markets. In the Commercialization stage, market dynamics and price formation in the ACL contribute to volatility for free consumers. For captive consumers, the regulated Distribution tariffs consolidate costs from generation, transmission, and distribution, including the burden of non-technical losses, directly impacting their final price.
Supply and access limitations are primarily tied to the Transmission and Distribution stages. Delays in transmission line expansion prevent efficient power flow from generation centers to consumption areas, potentially limiting access to diverse and cheaper energy sources. Aging distribution infrastructure can lead to service quality issues and power outages experienced directly by captive consumers.
Service quality and reliability issues for captive consumers are a direct consequence of the operational challenges in the Distribution stage, including maintaining the network and combating technical and non-technical losses.
The complexity of free market rules and migration for B2B electricity customers is a challenge originating in the design and operation of the Commercialization environment (ACL) and the processes managed by CCEE.
For Oil and Gas Sector customers, the cost and availability of fuels are influenced by multiple value chain stages. The Refining and Processing stage's capacity limitations lead to import dependency, exposing customers to international price fluctuations and potential supply chain disruptions. Transportation and Distribution infrastructure, particularly the limited natural gas pipeline network and reliance on more expensive road transport for fuels, directly contributes to higher final prices and limits access to certain fuels like piped natural gas in many regions. Issues of fuel quality and unfair competition through tax evasion and adulteration occur at the Commercialization stage, directly impacting the retail customer experience. For B2B customers, challenges in accessing essential infrastructure in the Transportation and Distribution stages can hinder their ability to secure competitive supply in the liberalizing natural gas market.
Cross-cutting challenges like regulatory uncertainty and the complex environmental licensing process for new projects impact the entire value chain, potentially delaying investments in infrastructure and new capacity that could otherwise alleviate customer pains related to cost and supply. Social issues such as ensuring affordable energy access are a pain felt by vulnerable customers, reflecting the broader economic and regulatory context influencing pricing and social support programs at the Distribution and Commercialization levels.
References¶
Agência Nacional de Energia Elétrica (ANEEL). https://www.gov.br/anp/pt-br Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP). https://www.gov.br/anp/pt-br Análise do tamanho e participação do mercado downstream de petróleo e gás no Brasil- Relatório de pesquisa da indústria- Tendências de crescimento - Mordor Intelligence. As Maiores Empresas de Energia do Brasil em 2024: Um Panorama do Setor Elétrico Nacional. BOLETIM DE EXPLORAÇÃO E PRODUÇÃO DE PETRÓLEO E GÁS NATURAL — ANO 2014 - Ministério de Minas e Energia. BRASIL BATEU O RECORDE DE GERAÇÃO DE ENERGIA RENOVÁVEL EM 2023. CAPÍTULO III A EXPLORAÇÃO E PRODUÇÃO DE PETRÓLEO E GÁS1 Sinopse Este capítulo desenvolve o tema a partir de uma conceitu - Cembra. Crescimento de energia renovável brasileira equivale a mais de 3 usinas de Itaipu - CCEE. Destaque: as maiores produtoras de petróleo e gás do Brasil - BNamericas. Distribuidora de energia elétrica: papel das empresas - Replace Consultoria. Distribuidora de energia: tudo sobre fornecimento elétrico - Cobli. Energia solar atinge 50 GW de capacidade instalada no Brasil - Portal Solar. Estrangeiras já possuem 20% da produção de óleo e gás no Brasil - CNN Brasil. Maiores empresas de transmissão de energia do brasil - CredCarbo. Mercado livre de energia no Brasil está concentrado em 20 comercializadoras - InfoMoney. MM 2024: As maiores empresas do Brasil - Exame. Os marcos da exploração e produção de O&G em 2024 | Editora Brasil Energia. PANORAMA GERAL DO SETOR DE PETRÓLEO E GÁS: UMA AGENDA PARA O FUTURO - IBP. Regulação — Agência Nacional de Energia Elétrica - Portal Gov.br. Setor de Óleo e Gás - Genial Analisa. Setor Elétrico: 4 das maiores geradoras de energia do Brasil - Expert XP. Tamanho do mercado de energia brasileiro e análise de participação – Tendências e previsões de crescimento (2024 - Mordor Intelligence. Tamanho do mercado de energia renovável no Brasil e análise de participação. Volume das reservas de petróleo do Brasil é o maior desde 2014 - Poder360.