The 4% monthly churn rate translates to potential customer base turnover exceeding 40% annually, driven by contracts with low exit barriers, limited product understanding, aggressive sales practices and price competition. This dynamic compounds the vacancy problem in shared generation projects, where installed capacity fails to attract sufficient subscribers. Susteras warns that investments made ahead of effective demand increase financial exposure for market participants, a pattern likely to repeat in the free market through excessive contracting that exposes retailers to Brazil’s short-term electricity market.
Average discounts in subscription solar reached 17% annually, rising to 19% in 2026. The combination of customer acquisition costs, payment delinquency, working capital requirements and competitive pressure may push electricity retailers to reduce margins excessively in pursuit of market share. Susteras emphasizes that strategies based exclusively on lower prices risk compromising operational financial sustainability. Retailer bankruptcies could force consumers onto supplier-of-last-resort arrangements, potentially at higher costs.
The study cites data from Brazilian restaurant and bar association Abrasel indicating electricity does not rank among small business owners’ top four priorities, which center on staffing, supplies, sales and tax matters. This asymmetry means consumers may enter supply contracts without fully understanding commercial terms, billing structures or contractual obligations. Bueno identifies this information gap as critical, creating situations where consumers claim not to recognize contracts or struggle to understand invoiced charges.
Timing complexities add further friction. Subscription solar involves up to 90 days between contract signing and benefit delivery, with similar delays for service cancellation and return to original conditions. The free market presents greater challenges, as returning to distributor supply after leaving a retailer can take up to one year. Susteras argues that sector governance must advance beyond monitoring physical and energy balance to address working capital, liquidity, contract robustness, credit assessment, anti-fraud mechanisms and commercial practices for retail market sustainability.
This article was curated and published as part of our South American energy market coverage.
