Abstract

This paper describes the main characteristics of the Brazilian electrical sector and the main features of the its restructuring process. It is highlighted that the trading arrangements will be based around a tight pool scheme, i.e., a central optimization system dispatch procedure in which the spot price will be based on the short run marginal cost. As the Brazilian system is hydro dominated, these spot prices present an intrinsic volatility due to the uncertainties associated to future inflows to the reservoirs. In this way, the hydrological risk provokes commercialization risks for which possible mitigation mechanisms are discussed. Finally, a case study considering the risk aspects of inserting a new thermal power plant in the Brazilian hydrothermal system is discussed as well as the impact of a long term contract to reduce the exposure to the spot prices.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.