Solving the major challenges in transmission asset investment in the competitive environment: The Brazilian case

Abstract

Transmission networks provide the critical physical link between generation and load. Therefore, the adequate resolution of transmission-related issues such as planning of reinforcements and pricing of transmission services is essential for the successful implementation of a competitive electricity market. While there is some industry consensus on the overall organization principles of the generation sector, in the transmission area the situation is far less clear. The institutional challenges related to the interface between regulated (transmission) and competitive (generation) environments, combined with the technical challenges form the backbone of the new transmission planning activities in restructured electricity markets. Latin American countries provide a good illustration of the complexity and importance of transmission expansion: have a great diversity in size, network characteristics, strong presence of hydro power and heavy investments in both generation and transmission are required to serve their growing economies. This article reviews the planning structure and regulation of transmission expansion-related activities in Brazil, which is a large-scale hydrothermal system that incorporates all previous characteristics, complexities and has a fast-growing economy, demanding intense investments in new generation and transmission. This paper was prepared as part of the invited presentation for the panel session “Solving the Major Challenges in Transmission Asset Investment in the Competitive Environment” at the 2009 IEEE PES General Meeting, in Calgary, Canada.