IEEE Power & Energy Magazine - September/October 2017 - 79

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Power (MW)

t-emporal arbitrage, capacity adequacy, and ancillary services
from being transparent to investors:
✔✔ weekly pricing intervals with the grouping of noncontiguous hours into blocks
✔✔ the absence of a reliability product based on the capacity contributions of assets to resource adequacy,
although firm energy contributions are valued
✔✔ a command-and-control approach for the selection
of assets providing secondary frequency control and
associated reserves, along with remuneration mechanisms based solely on reimbursement of installation,
operation, and maintenance costs for supervision and
control equipment, taking historically low incremental
costs for these services provided by hydropower plants
with large reservoirs as benchmarks.
In fact, these features result in scarce public information to
support the decision making of investors interested in evaluating opportunities for providing these services by other technologies. The modernization of these mechanisms, to reflect
a future reality where hydropower plants with large reservoirs
may not be the sole providers of these services, can reveal
opportunities for other solutions, including storage technologies other than the accumulation water reservoirs associated
with traditional hydropower plants.
A similar discussion applies to the retail segment, particularly tariffing mechanisms for consumers connected to lowvoltage distribution systems. In practice, these consumers are
currently subject to monomial tariff modalities, with all consumption being valued by a constant BRL$/kWh figure. There
are regulatory commands to introduce an opt-in time-of-use
tariff modality in 2018. This modality was original conceived
in 2012, but its practical rollout has not yet materialized. Retail
consumers connected to distribution networks at medium and
high voltages already experience stronger incentives to modulate their consumption and decrease demand charges and even
to jointly manage consumption and behind-the-meter generation patterns under the applicable net metering regulation.
Both in the wholesale and the retail segments, improvements in the current regulatory framework are needed to
ensure that the systemic value of services delivered by storage facilities translates into economic incentives captured by
market agents, leading to feasible business models and thus
to investments. Considering the current technological profile
of the Brazilian system, including the still large participation
of hydropower plants with large reservoirs in the country, it is
likely that these improvements would not immediately result
in the feasibility of massive investments in other storage

Power (MW)

Large water storage capacity and the surplus of
generation capacity greatly influenced the operating
conditions and regulation of the Brazilian power system.

(b)

figure 10. The average aggregated hourly wind power output in states of (a) Bahia and (b) Rio Grande do Norte for all
days in December 2016. The blue curve represents the average in the month, while the red curves represent the highest
and lowest value within the month. Other colored curves
represent output for each day. (Data source: ONS.)

technologies in all regions of the country. Yet, even if investments are currently limited to a few regions and applications, paving the way for a future rollout of other storage
technologies by adjusting regulatory instruments can be a
sensible strategy considering the envisaged decrease in technology costs, especially for batteries.

The Way Forward:
Energy Storage in Latin America
Hydropower generation has been the traditional source of
flexibility in hydrothermal power systems and will be key
for permitting efficient deployment of renewable generation
in countries like Brazil and Chile. Also, there are interesting opportunities to cooptimize the development and use
of hydropower plants with those from further storage technologies that, although currently more costly, can provide
similar services (including flexibility) without presenting
some of the techno-environmental constraints related to
traditional hydropower generation. Furthermore, other storage technologies are indeed better placed to provide services such as very fast (frequency) response for stability
purposes, congestion management, peak shaving at a local
level, low-voltage network management, and so forth, which
ieee power & energy magazine 	

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Table of Contents for the Digital Edition of IEEE Power & Energy Magazine - September/October 2017

IEEE Power & Energy Magazine - September/October 2017 - Cover1
IEEE Power & Energy Magazine - September/October 2017 - Cover2
IEEE Power & Energy Magazine - September/October 2017 - 1
IEEE Power & Energy Magazine - September/October 2017 - 2
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IEEE Power & Energy Magazine - September/October 2017 - Cover3
IEEE Power & Energy Magazine - September/October 2017 - Cover4
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