By Brazil Stock Guide – Eletrobras (B3: ELET3, ELET6; NYSE: EBR) is sharpening its focus on small and mid-sized corporate buyers in Brazil’s free power market, betting on a wave of contract renewals from customers who switched suppliers three to four years ago. The strategy and market view were outlined by Commercialization Director Ítalo de Freitas in an interview published by Reuters.
The executive said the company—Brazil’s largest generator, with 44 gigawatts of installed capacity—aims to expand sales from its predominantly hydroelectric portfolio and sees buyers tilting back to “conventional” hydro power as regulatory risks cloud new wind and solar deals. “Today, anyone buying renewable energy (solar and wind) is taking a big risk. That’s a fact,” Freitas said.
Following its 2022 privatization and the ongoing “descotização” process that frees legacy volumes from the regulated quota regime, Eletrobras has turned commercialization into a profit lever by selling more into the free market. Freitas expects structurally firmer prices ahead, citing a higher risk premium in price formation and the need for more system capacity as distributed solar expands. Spot prices remain highly volatile and rain-dependent, he noted.
The company front-loaded more sales into the first quarter and left a larger slice uncontracted for the rest of the year—a stance executives recently said proved prescient as prices rose. Detail on the book is limited for competitive reasons. Still, volume demand is strongest among SMEs attracted by free-market pricing versus rising distribution tariffs and charges in the regulated market, Freitas said.
After several independent retailers stumbled or failed in recent years, Eletrobras sees brand strength and owned generation as advantages. “The first wave of migration among smaller customers brought a series of issues with some retailers—some went broke or faced more complex financial situations. Naturally, the market is learning,” he said. Partnerships with TIM (B3: TIMS3; NYSE: TIMB) and Banco do Brasil (B3: BBAS3; OTC: BDORY) are designed to extend commercial reach, alongside process digitalization to speed onboarding.
Regulatory uncertainty is the key overhang for new renewables. Provisional Measure 1,300, issued in May, proposes tighter rules for self-production and ends discounts for “incentivized” energy (wind, solar, biomass). The text still awaits a joint committee in Congress and could lapse by mid-September if not taken up. “Whether through self-production in wind or solar, or directly via PPAs, entering renewables is a big risk,” Freitas said. “In my view, it doesn’t pay today—it’s better to buy conventional power.”