Enabling system change in the energy sector

dummy Energy  is top of mind for us all right now. As the world transitions to cleaner alternatives, the entire sector worldwide is both driving and experiencing massive change, with new players emerging all the time.

For new energy providers joining the market, there are still some growing pains, especially in terms of access to appropriate financial tools. Specifically, recent developments in dummy Brazil’s energy market reveal opportunities for business growth and introduce a new dynamic in the country’s energy sector.

The Brazilian energy sector was systemically organized in the late 1990s, and since that time, the energy market has undergone massive changes. The high price of energy, though, has remained a near constant. To lock in rates, companies that consume large quantities of energy have started to buy directly from power generators through long-term contracts.

These new contracts have paved the way for a huge shift in the market, where previously there were no credit insurance guarantees. Instead, the industry had been based on surety and banking letters of credit.

Long-term contracts mean there are lower energy prices for buyers, while for sellers it has become easier and cheaper to create extra supply. This enables them to attract more customers and generate cash flow.

The natural consequence of lower prices for energy suppliers was an increase in buyers, mostly dummy small and medium enterprises (SMEs). However, this welcome change for both parties also created an issue.

Energy suppliers lacked the tools to grant credit and found it hard to manage their large new portfolio of SME buyers. From the buyers’ point of view, the fact that most of them were SMEs made it more difficult to get banking dummy letters of credit and dummy surety bonds.

This created a difficult situation. Many companies risked losing out on a huge business opportunity because they were required to dummy offer credit to SMEs, but many SME customers could not present the necessary guarantees.

With this market mismatch in mind, Allianz Trade approached key stakeholders in Brazil’s energy sector to discuss solutions for aligning the interests of buyers and sellers. By combining expertise in quick and reliable credit analysis with the large number of new SME clients flocking to this new energy segment, it was able to create a dedicated trade credit policy for this particular niche market.

The result is a solution that helps SMEs buy long-term energy contracts and take advantage of cheaper prices, while securing suppliers against the risk of non-payment.

The global network of experts at Allianz Trade helps identify and set up appropriate financial tools that can support entire sectors to seize opportunities and grow safely.