Current mechanism: Considers all tariff components. Possible mechanisms: Different combinations of tariff components. In case of interest, please contact: [email protected]; [email protected]; [email protected] Remaining R enewable and C lean: S ome R egulatory C hallenges o f the E lectrical E nergy S ector in Brazil Wadaed Uturbey, Ana Lopes, Heinz Ahn Reference Materials • NREL-2017 “Next-Generation Performance-Based Regulation, Emphasizing Utility Performance to Unleash Power Sector Innovation” Technical Report NREL/TP-6A50-68512, September 2017 • BRASIL-2018 and 2019, ANEEL, Avaliações de Impacto e Resultado Regulatório, Technical notes nº 27/SRM/SGT/SPE/SRD-2019/ANEEL and nº 0004/2018-SRD/SCG/SMA/ANEEL Keywords Regulation, electricity sector, energy transition, operational costs, quality of service, Brazil Acknowledgement Gefördert vom DAAD aus Mitteln des Bundesministeriums für Bildung und Forschung (BMBF) Financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - Brasil (CAPES) BRAZILIAN ELECTRICITY MATRIX TODAY More than 165 GW of installed generation capacity. High proportion of renewables: Hydroelectric 63%, biomass 9%, wind 9% and solar PV 1.2%. However : Environmental requirements prevent the utilization of most of the remaining hydro potential. Peak resources: Not clearly specified in the report; the demand management pilot project implemented in 2017-2018 failed to contract demand reductions to cope with wind variability in the northeast region, and thermal generators were used. Possible consequences, if not appropriately managed: More expensive energy and decrease of the quality of service. Official projection for the participation of each generation source (EPE: PDE-2027) Hydro Thermal Small hydro + Wind + Bio + PV Peak resources DISTRIBUTED ENERGY RESOURCES Net metering mechanism available since 2012; applied only for grid-connected generation in consumers’ facilities and without storage (DG). >> More than 120,000 engaged consumers and more than 1 GW of installed distributed generation. The future of net-metering: Proposal to modify low voltage tariffs. The monomial tariff will be gradually transformed to binomial or trinomial. Compensation by net metering will consider only volumetric components. Therefore, the attractivity of distributed generation will significantly decrease. Tariff composition: Network + Energy (includes some system charges) + System charges + Levies Projection of Installed DG under different mechanisms of tariff compensation in net metering (ANEEL 2018) TRANSMISSION AND DISTRIBUTION Regulated monopolies, but different regulatory environments >> TSOs operate in a less risky environment than DSOs. In both segments, incentive regulation by benchmarking models (DEA) is applied to evaluate the operational costs efficiency. The quality of the service is one of the aspects included in the benchmarking models that is neither completely understood nor well represented. Quality of service – Distribution (source: ANEEL 2019) Quality of service – Transmission (source: Brazilian ISO at www.ons.org.br) THE DISCUSSION The analysis evidenced: important regulatory modifications should be carried out to attain the challenges imposed by distributed resources and alternative renewables and, simultaneously, improving (or, at least, maintaining) the quality of service. ▪ Flexibility requirements: Under the (yet quite small) presence of wind generation, they are not clearly understood. Further growth of solar is expected, increasing the challenge. ▪ DERs: Net metering will be a barrier for deployment. ▪ Distribution: Quality of service has improved in the average, but many operators have worsened. ▪ Transmission: The north and northeast regions perform worst in quality of service. Those are regions with low demand and significant renewable generation potential not yet developed. 0 0,5 1 1,5 2 2,5 2013 2014 2015 2016 2017 2018 Frequency of interruptions System SE/CO South Northeast North 0 50 100 150 200 250 2013 2014 2015 2016 2017 2018 Duration of interruptions Number of installed DG (Millions) SAIDI SAIFI SAIDI-limit SAIFI-limit Aggregated quality indexes and the regulatory maximum limits Operators performance Eventual regulatory barriers to the development of the sector and the possibility of effectively unlocking the expected grow of distributed resources and alternative renewable energies.