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Generation

Electric power in Brazil is generated from renewable sources (like water, wind, biomass, sun, etc.) and non-renewable sources (like fossil and nuclear fuels).

Brazil’s electric matrix, according to the National Agency of Electric Power (Agência Nacional de Energia Elétrica - ANEEL) information, is divided as follows:

Light Energia, a company of the Group responsible for the electric power generation, owns a set of two hydroelectric power stations and two pumping stations, with a total capacity installed of 855 MWm, whose concessions will be due by 2026. They are: Santa Branca, Ilha dos Pombos, Fontes Novas, Nilo Peçanha and Pereira Passos.

Guaranteed power output is the maximum amount of power, in average MW, related to the Station, which can be used to evidence the load and trade compliance by means of agreements, and Light Energia hydroelectric power stations represent a total of 637 MWm that, deduced the amounts of losses and pumping, account for the tradable amount of 549 MWm.

In order to mitigate the risk of agreement noncompliance, at minimum 5% of the power are further reserved for trade, called Hedge. In a favorable hydric system situation, in case of generation “surplus”, such power is liquidated at the Balance Liquidation Value (Preço de Liquidação das Diferenças - PLD).

The chart below shows the company tradable power status (Hedge, Power Traded at ACL and Power available for trade) up to the year of 2022:

As regards the matter, it is important to know such terms, such as: 

Energy Relocation Mechanism (Mecanismo de Realocação de Energia - MRE):

The volume of power generated per stations is ruled by the National System Operator (Operador Nacional de Sistemas - ONS), which sets forth the order of dispatch for most hydroelectric and thermoelectric stations.

The Energy Relocation Mechanism (MRE) was created in order to mitigate and share hydrologic risks, affecting the hydraulic generation agents, and intended to ensure the optimization of hydroelectric resources of the National Interconnected System (Sistema Interligado Nacional - SIN).

The MRE encompasses the hydroelectric stations subject to ONS centralized dispatch and relocates the power on an accountable basis, transferring the surplus of those who generated more than their guaranteed power output to those who generated less. This difference usually occurs because a region in a dry season stores water and thus generates less power, while a region in a rainy season produces power above the average, enabling the transfer of power between these regions.

Generating Scaling Factor (GSF):

The GSF represents the quantity generated by the hydroelectric generators, members of the MRE, based on what they undertook to generate. In simple terms, the hydroelectric stations have a ballast of power sales (guaranteed power output), based on their average generation capacity, and undertake to sell such volume "x" of power in long term agreements. It may be calculated as follows:

In case the GSF is higher than “1”, we will have a power “surplus” to be prorated by the MRE members – “secondary power”. In this assumption, all of its members will then have power sufficient to meet their contractual commitments and further share the mechanism benefits.

However, in unfavorable hydrologic scenarios, the ONS thermoelectric station dispatch, out of the merit order, for reasons of power safety, results in GSF below “1”.

The GSF “negative” amount results thus in debits to be paid by the electric power generators, who must acquire the power in the Short Term Market to comply with their sales agreements.

In 2015, there was an average GSF of 84.6%, that is, a deficit of 15.4%. Find below the table updated with the GSF history:

 

Electric Power Trade Chamber (Câmara de Comercialização de Energia Elétrica - CCEE) and Balance Liquidation Value (PLD):

The Brazilian power trade market, whose purchase and sale operations are accounted by the Electric Power Trade Chamber (CCEE), is divided into two market fields: the Regulated Contracting Environment (Ambiente de Contratação Regulada - ACR) and the Free Contracting Enviroment (Ambiente de Contratação Livre - ACL).

CCEE is responsible for monthly assessing the differences between the amounts contracted and the amounts generated or consumed by the market agents. Therefore, the agreements entered on between purchasers and sellers are recorded and the guaranteed power outputs moved by the agents are measured.

The power purchase and sale in the ACR is executed by means of generators and distributors, which take part in power purchase and sale auctions promoted by CCEE.

These environment agreements have specific regulations for aspects like power price, agreement registration and supply effectiveness submarket, and bilateral changes by the agents are not allowed.

 

In the ACL, on the other hand, generators, traders and free and special consumers are free to negotiate and establish in the agreements power purchase and sale volumes and their respective prices.

The non-contracted agents (100%) use the short term market to meet their commitments, paying the PLD for power purchase.

Understand the difference between the two environments in the comparative chart below:

In the ACR, the power purchase and sale auctions are promoted by CCEE, distinguishing by the type of power, duration and supply start:

In the short term market, the PLD price is influenced by the CMO (Marginal Operation Cost), which is raised due to the thermoelectric station dispatch. However, there is a minimum and maximum PLD amount, which is established by ANEEL. Then, in cases where the CMO is higher than the PLD ceiling amount, the difference is paid upon the System Service Charge (Encargo do Serviço dos Sistemas - ESS).

For the year of 2016, ANEEL approved the new PLD ceiling price in R$ 422.56 MWh, showing a 8,1% reduction compared to the prior amount of R$ 388,48 MWh. And a minimum PLD of R$ 30.25.


More information can be found at:

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