IEEE Power & Energy Magazine - September/October 2017 - 78

ER 2016 (L3)
A-5 2016 (L1)
FA 2015 (L2)
A-5 2015 (L3)
ER 2016 (L9)
A-3 2015 (L4)
ER 2015 (L8)
ER 2015 (L9)
ER 2014 (L8)
A-5 2014 (L6)
A-3 2014 (L3)
ER 2013 (L5)
A-5 2013 (L6)
A-3 2013 (L9)
A-5 2013 (L10)
A-5 2012 (L6)
A-5 2011 (L7)
A-3 2011 (L2)
ER 2011 (L3)
EST (B.Mon) 2009
A-5 2010 (L3)
ER 2010 (L5)
FA 2010 (L7)
A-5 2010 (L4)
Thermal (incl. biomass)
Wind (US$/MWh)
Solar (US$/MWh)

ER 2009 (L3)
A-3 2009 (L2)
0

2,000

4,000

6,000

8,000

FA 2007 (L3)
A-3 2007 (L2)

10,000

A-5 2007 (L1)
EST (S.Ant) 2007

12,000

Hydro
Solar
Wind

EST (Jirau) 2008
ER 2008 (L1)
A-3 2008 (L2)
A-5 2008 (L3)

Contracted Capacity (Entire Plant) (MW)
ieee power & energy magazine	

figure 9. The contracted generation capacity in long-term auctions held in Brazil since 2007. The approximately 11 GW of hydropower capacity a- dditions in a- uction EST
2009 correspond to the Belo Monte hydropower plant. Data source: ANEEL.) FA: auctions for renewables; A-X: regular energy auctions, with contracting X years before
delivery date; EST: large hydro auctions; ER: auctions of reserve energy (renewables).

0

20

40

60

80

100

120

Average Prices (Nominal US$/MWh)
78	

contributed to congestion among pricing
zones, also imposing costs on the systems.
These phenomena clearly illustrate the
in-creasing demand for assets or solutions
capable of providing temporal arbitrage and
capacity adequacy services under high participation of renewable generation sources
with significant short-term variability in
Brazil. To date, clear evidence of this is li--mited
to the northeastern region and, to a certain
extent, associated with changes in the hydrological behavior of the main river basin in
the region; but new wind and solar capacity
additions in the country may lead to similar
behavior being verified in other subsystems
of the Brazilian grid in the future.
It is reasonable to assume an increasing demand for assets capable of providing
temporal arbitrage and capacity adequacy
services to be accompanied by increasing
demand for secondary frequency control
and associated reserves. Hydropower plants
with large reservoirs can provide all these
services at low incremental and opportunity costs, but they represent a decreasing
share of the capacity mix at a time of rising participation of renewables with large
short-term variability.
Opportunities for storage technologies
other than the water reservoirs of traditional
hydropower plants may increase in Brazil
due to the increasing demand for assets able
to provide temporal arbitrage, capacity adequacy, and, in particular, ancillary services.
Obviously, other classes of assets, such as
flexible thermal power plants and demand
response, will compete with storage technologies for some of these market niches, with
the optimal systemic solution depending on
the competitiveness of the assets in providing
these services-as well as congestion management and grid investment deferral (not
discussed in this work, but equally important
in Brazil)-as a bundle.

The Need for an
Evolving Regulation
Relevant changes in the Brazilian regulatory
and commercial framework are required
if market mechanisms are expected to be
the main drivers for the rollout of the optimal solutions mentioned in the preceding
sections. We previously identified several
features of the Brazilian wholesale market that prevent the values of (short-term)
september/october 2017
Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2017
