Auren projects low electricity prices until early 2027, with a trend reversal expected in 2028, driven by alignment with expansion costs.
The Brazilian electric sector is experiencing a period of adjustment and recalibration of expectations. Auren, one of the market’s leading players, indicates that the electricity price scenario will remain pressured downward until the first quarter of 2027, a direct reflection of the prolonged impacts of the El Niño climate phenomenon on the country’s reservoirs.
However, the long‑term outlook signals a significant shift. After a period of contained values, the company projects that from 2028 market prices will resume an upward trajectory, aligning more closely with the marginal expansion costs of the national electric system.
Trend shift in 2028
During the third‑quarter 2026 earnings conference call, Auren CEO Fabio Zanfelice detailed how the company is navigating this volatility. According to the executive, the market experienced a year of below‑expected prices, but the dynamics for the coming years already present new fundamentals.
“From 2028, market prices are higher than we observed at the beginning of the year, increasingly showing a coupling of this long‑term price with the system’s marginal expansion cost. This also benefits the company, given its long position from 2028 onward,” said Zanfelice.
Climate impacts and operational efficiency
Uncertainty about rainfall patterns remains the main volatility driver for the sector. While El Niño kept prices in check in 2026, Auren highlights that strategic management of its sales positions was decisive in capturing the benefits of the current scenario, optimizing the company’s financial outcome.
For the second half of 2027, the market is now turning its attention to the possible transition from El Niño to the La Niña phenomenon. This climatic shift is closely monitored by the company’s board, which notes a reduction in trading activity for that period due to agents’ caution regarding new rainfall patterns.
Sector Modernization and the Capacity Auction
An optimistic point for Auren is the revision of the pricing models of the ONS (National System Operator). The company argues that adopting greater transparency and faster scenario calculations will be essential for the maturity of the Brazilian market.
Additionally, the company maintains strategic caution regarding the LRCap (Capacity Reserve Auction) for batteries. While the technology is seen as an important ally for renewable portfolio flexibility, Auren conditions its participation on economic viability and the resolution of regulatory uncertainties, reiterating that its current priority is the financial deleveraging process.
With solid performance in the third quarter, reversing the loss recorded the previous year and achieving an Ebitda of R$ 1 billion, Auren positions itself to face the challenges of 2027 while focusing on operational efficiency and preparing for the higher price cycle expected in 2028.