The electrical sector is in the eve of profound modifications due to the market diffusion of several related technologies. Some drivers of this transition are: the increasing support from society for reducing carbon emissions; the growing speed of development and cost reduction of renewable energy generation technologies; new energy storage devices; new automation spread all over the network; a dramatic increase of the computational capacity; and new regulations related to energy usage. Innovation will play a key role in the transition process of the electric sector, promoting changes and creating opportunities for new technology, products, system, regulation and business structures. Since July 2000, law 9.991 established the Brazilian Electric Sector R&D Program that states that 1% of the income of the electric companies must be invested in R&D (research and development) projects, 40% of this overall budget stay under the electric company discretion (the Program is coordinated by the Brazilian electric sector regulatory agency, ANEEL). As a result, BRL 13.5 Billion (approximately equivalent to USD 3.5 Billion) were invested in 4,300 projects from the year 2000 until 2014. What were the results achieved by the Program? And how has it contributed (or not) to the ongoing transition process? To date, no systematic and comprehensive study has looked at the whole period of the Program. This study introduces the first insights of a two-year research project that seeks to address these questions and to fill this gap. It presents an overview of the projects that have been carried out since 2000, and develops a unique methodology that will be used to evaluate the qualitative and quantitative historical benefits of the Program. The methodology considers four perspectives: electric companies, electric sector, academic sector and systems and services providers. It will also present scenarios that will be considered to improve the R&D Program and to inform related public policies and regulations that seek to stimulate Brazilian companies to invest in the electric sector innovation process, and ultimately contribute to the sector’s transition.
In 2004 came into force a new model for the Brazilian Electricity Sector (BES). This model was established based on three pillars: expansion of the installed capacity, reasonable tariffs and universalization of the access to electricity. The main change that took place was the resumption of the energy planning for the State’s responsibility, which had been transferred to private players in the previous liberal period. This resumption takes place through the creation of the Empresa de Pesquisa Energética (EPE), whose purpose is the development of studies and researches to support the planning of the energy sector, guiding the government and industry players in their decision making process and guidelines establishment. Among the major studies carried out by EPE is the Plano Decenal de Expansão de Energia (PDE), that annually formulates forecasts for the expansion of the supply and demand of energy for a period of 10 years ahead, therefore becoming an important planning tool for the BES. Thus, the PDE indicates the future electricity mix for the sector. However, EPE’s planning is only indicative, making it essential to analyze whether their propositions occur in reality. Therefore, the procurement of installed capacity to be added to the BES and the sources that will compose this future mix need to be investigated. Moreover, with the new model, the procurement of new installed capacity starts to occur through energy auctions. In these auctions, the concession of new plants occurs and it is guaranteed the future supply to attend the demand anticipated by the distribution companies for the regulated consumers. The electricity auctions aim to contract energy with reasonable tariffs. In order for that to happen, the criterion used to define the winner is the lowest rate offered. Thus it is through the electricity auctions that the government coordinates the expansion of the generating capacity and the winner sources will compose the future electricity mix. The composition derived from the results of the auctions often differs from the projections of the PDE, making this differentiation the central object of analysis in this article. In that way, the question that arises is what are the causes that explain the differences between the results of these energy auctions and what it was projected and estimated by EPE in its ten-year planning. The article seeks to make a comparison of PDE’s projections since its first formulation in 2006, with the results of the new energy auctions held so far. Essentially, it seeks to answer if, through the indicative planning and the auctions, we are in fact moving towards a strategic electricity mix for the BES.
Since the second half of the 1980s, when electric utilities were first privatized, the ability of the private sector to manage the supply of electricity with safety and quality has become a matter of high relevance for national governments wherever privatization has taken place. In this regard, the severe financial problems that have affected some electric utilities in different countries from time to time, have made it increasingly clear that exposure to financial risk can compromise a utility’s ability to maintain service quality and continuity, and therefore that regulatory authorities should pay attention to the identification and control of utilities’ financial risk exposure. This article aims to explore the factors that could contribute to the financial vulnerability of electricity distribution companies, in order to identify potential instruments for risk recognition and management. This study also proposes to examine possible regulatory policies for monitoring and addressing financial sustainability problems in these companies, a topic which has so far received scant attention in the international literature on electricity regulation. Lastly, this paper will evaluate the feasibility of regulating the financial exposure of electricity distributors.
The development of smart grids is a complex, multidimensional process, which contemplates the emergence of new technologies, their dissemination and social acceptance, and also a difficult market-creation phase. Such process is therefore better understood through an interdisciplinary approach. In recent years, the approach of the multilevel perspective (MLP) has gained acceptance as an explanatory dynamic methodology of technological transitions; it is based on the concepts of socio-technological regimes, niches and “landscapes”. The purpose of this paper is to analyze the smart grids in Brazil based on the theoretical framework multi-level perspective. The analysis of the status quo and perspectives of development of smart grids in Brazil requires prior knowledge of the motivations and challenges involved. The Brazilian landscape in which smart grids are embedded points to efficiency gains, to the promotion of a more reliable system, and to higher quality as key drivers for the transition, in a context of significant growth in demand. But, it is noteworthy that the current regulatory framework does not encourage investment in network modernization (development of smart grids). Thus, existing smart grid projects in Brazil are currently restricted to early-stage research and development projects, particularly pilot projects.
This paper takes the regulatory impact evaluation of the incentive mechanism to improve the technical quality of electricity distributors in Brazil. The methodology proposed by the Brazilian regulatory agency (ANEEL) follows the concept of the mechanism RPI – X know by subtracting the productivity gains in the annual tariff adjustments. Inside the X factor the regulator has created a mechanism that increases the tariff recognition of companies that can improve the quality of service. However, this mechanism does not have an empirical model that corroborates the estimated results and set in a discretionary manner the limits of incentive structure. In this paper we have created an empirical model that confronts the estimated elasticity percentage to increase (or decrease) recognition of costs following a panel fixed effects model. In this statistical model it is possible confront the magnitude of the trade-off in the structure of regulatory incentives linked to the amount of reconnaissance of operation and capital costs. The results indicate that in some underlying criteria the tariff recognition is insufficient to offset the increased costs that ensure the improvement of technical quality in both perspectives: punishment and incentive recognition for operate with better practices, especially in some immature concession areas.
Higher efficiency and reliability of the electric system are important goals to be achieved. The increasing growth and importance of intermittent renewable energy sources and its massive incorporation into the electricity grid, given the efforts to diversify the energy mix and reduce the carbon emissions, bring new challenges to the sector, such as the need of higher levels of flexibility. In this context, demand-side flexibility measures come to light as a way of improving system reliability and, at the same time, defer the need for investments in the expansion of distribution and transmission grids, reducing the demand for additional generation capacity and allowing the shave of peak demand, resulting in a reduction of electricity costs. Among these measures, demand response figures as one of great importance. It is based on electricity consumers’ capability to respond to price signals, increasing the consumers’ role in ensuring system security in a cost effective way. The objective of this article is to examine some of the main challenges and opportunities for enabling demand response programs, taking some lessons from the international experience. An additional effort is to focus on Brazilian case. The methodology consists of bibliographic and documental review, with the analysis of challenges and opportunities, followed by an investigation of demand response programs in Brazil. This paper was developed under the framework of a project supported by the ANEEL’s R&D Program. It was found that technological requirements of demand response can be a great obstacle, as observed in some of the European countries cost-benefit analysis and in the Brazilian case. The Brazilian experience is by all means only incipient and takes advantage of a small part of the full demand response potential, but even in this condition, shows some positive results in efficiency.
Electric integration is a topic discussed and promoted worldwide due to the advantages for the countries involved. In order to enjoy these advantages several countries, mainly in Europe, have created regional electricity markets. For South America countries the creation of a regional electricity market is still a distant option due to economic and social asymmetries and, especially, because of incompatibilities in the regulatory framework and in energy trading mechanisms. This paper aims to analyze the electrical integration process in the South America, concentrating in Brazil the central focus of the analysis. The main constraints of Brazil’s regulatory and electricity trading model are also analyzed, highlighting that the last restructuring process of the electric sector (2003-2004) has defined a commercial model where financial contracts of “physical guarantee” are traded and not electricity itself, and where the power plants do not have autonomy over their production. The characteristics and specificities of the Brazilian model determine boundaries and conditions that must be considered to enable international electricity trade. The already existing integration projects are also analyzed highlighting that these projects were developed under special conditions for taking advantage of specific opportunities without the support of a strategic integration policy. Additionally, the paper addresses two other electrical integration projects that are under discussion, the binational hydroelectric power plants between Brazil-Argentina and between Brazil-Bolivia. The paper concludes that electrical integration with direct participation of Brazil is more feasible for binational projects and short-term surplus trade because of the differences between the Brazilian market design and the other countries market design.
The Annual Energy Production (AEP) estimated over the lifecycle of the project is one of the most important factors to determine the profitability of wind power project. The methods used to estimate the AEP in a wind farm requires an assessment of the uncertainties associated at all steps. To finance a wind power project, banks requires that the developer submit the uncertainties related to the estimation of AEP’s wind farm, to mitigate errors and increase the project reliability. The appropriate assessment of uncertainties is critical to determine the feasibility and risk in developing a wind energy project. This study presents the main sources of uncertainty in the energy estimate process in wind farms. This information is important for the correct analysis of the economic viability of the project.
The promotion of a reliable and sustainable power system has as key drivers the development of smart grids associated with demand-side management schemes, diffusion of electric mobility, accommodation of larger shares of distributed generation, in particular microgeneration and the introduction of storage systems. In addition, these technological development vectors represent new business opportunities for several players (utilities, retailers, ESCOs, aggregator entities, etc.), which should be considered by regulatory guidelines accounting for technical efficiency, economic feasibility and tariff affordability. The technical and economic characteristics of the electricity sector (capital intensive, undifferentiated product, regulated tariffs, almost inelastic demand, need of instantaneous balance between supply and demand, etc.) do not induce that the process of technological innovation happens in an endogenous manner within the sector dynamics. Therefore, public policies have a role to play in this process. This communication presents an approach using Problem Structuring Methods to frame the problem of analyzing and evaluating technological innovations and associate incentive policies in the electricity sector. The results of this structuring phase using Soft Systems Methodology suggest a large number of issues that were organized as a hierarchy of objectives. These objectives will correspond to the criteria of a Multicriteria Decision Analysis methodology devoted to assessing the potential courses of action promoting technological innovation. This methodology should provide decision support to policy and decision makers to shape policies aimed at fostering more reliable and sustainable electricity systems.
The transmission network is the first link between large power generation facilities and electricity customers. It supplies energy at high voltages to substations, where the energy is distributed via the distribution network. The transmission network today operates with a high level of reliability, but presently a variety of technologies offers the possibility of great improvement in system performance. Sophisticated new monitoring systems may reduce the likelihood of system failures and disruptions that cause serious economic and social consequences. Emerging efficient technologies may also help to solve network expansion constraints, including difficulties to install new transmission lines and to incorporate growing participation of intermittent energy plants, like wind and solar. This paper starts presenting the status and perspectives of the Brazilian transmission sector showing the high level of investment planned until 2024 – 60% cumulative growth of line extensions and the same 60% rate for transformation capacity. In the second part the paper presents the emerging technologies and the potential opportunities it offer to increase, among other factors, the energy quality, O&M structure, availability and reduction of technical losses. These advantages impact not only for new assets but also for the existing ones. Considering the existing assets the paper starts a discussion about the regulatory framework ant the right economic signals to promote investment in innovation and automation. The paper then addresses the emerging regulatory of OFGEM in UK and the existing regulatory barriers that still exists internationally and in Brazil. The paper concludes by identifying an opportunity for developing a regulatory R&D project to deeply analyze this subject and to propose a new regulatory framework to promote an economical feasible innovation process for the Brazilian transmission sector. In the last part the paper presents the guidelines and structure of the project GESEL is starting to develop in the scope of the Brazilian ANEEL regulated R&D program.