The impact of regulations in economic sectors on asset management

The impact of regulations in economic sectors on asset management

Understand what asset management is, how regulations impact the entire industry, and why it matters for investments.

To carry out good asset management, it is important to understand the regulations that operate in the sector. In the case of energy, there is a clear trend towards innovation and use of technology in search of a clean and renewable matrix.

Asset management considers, in addition to the physical assets themselves, whether tangible or not, financial assets, people and everything that is relevant to a process within a regulated environment. In this context, when investing, it is essential to understand the regulations that differentiate sectors, such as infrastructure, oil, gas, water and energy, because at certain times, these assets go together.

The regulations of each sector in Brazil

Regulations are an important part of risk analysis as they bring legal certainty to investors. Thus, in Brazil, performing asset management in the energy sector implies understanding the regulations of some agents.

The National Electric Energy Agency (ANEEL), for example, is an autarchy linked to the federal government. She is responsible for overseeing government policies and guidelines for the use and development of the electricity sector. In other countries, energy contracts are different from the model in Brazil.

Colombia and Peru, for example, opt for short-term contracts, with the intention of following market trends in real time, the so-called grass pool. The United Kingdom and Portugal use the net pool style, in which generators are free to conduct bilateral negotiations with retailers. This hybrid model is a combination of grass pool and tight pool, a model followed by Brazil and Chile.

The National Electric System Operator (ONS) is responsible for coordinating and controlling the operation of electricity generation and transmission throughout the country. Oil and gas are governed by the National Agency for Petroleum, Natural Gas and Biofuels (ANP), which in addition to inspecting the sector, may apply administrative and monetary sanctions and grant authorizations.

The future of asset management in the energy market

Brazil has more than 4000 agents investing in the electricity generation market. In other words, as this market is very broad, being impacted by various sectors and regulated by various bodies, understanding the position and importance of each one is essential.

On the positive side, the energy sector has been transforming, making room for new technologies. This creates several possibilities for exploration and elevates techniques in favor of the environment.

British Petroleum (PB) studies indicate that by 2040, 48% of the energy used in Brazil will come from clean and renewable sources. In addition, technological advances in the area of ​​batteries and electric mobility point to cost optimization and ease of marketing.

With the pandemic, renewable energy became a means of economic recovery around the world. In Brazil, solar energy grew 58% in 2020 alone, and renewable sources such as wind, solar and biomass have gained increasing prominence in national energy plans, organized by the Energy Research Company (EPE). Thus, the trend is that the energy market, especially the rules that regulate renewables, change over the years to keep up with the sector’s advances.

Therefore, in addition to analyzing financing risks, understanding regulation and market movements are essential for good asset management. If you liked the text and want to invest in this area, please contact us.


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