Palestra "Brazilian Electricity Market" no 4° Encontro Latino-Americano de Economia da Energia - ELAEE

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Palestra realizada pelo membro do Conselho de Administração da CCEE Luciano Freire durante o 4° Encontro Latino-Americano de Economia da Energia - ELAEE, realizado em 8 e 9 de abril de 2013, em …

Palestra realizada pelo membro do Conselho de Administração da CCEE Luciano Freire durante o 4° Encontro Latino-Americano de Economia da Energia - ELAEE, realizado em 8 e 9 de abril de 2013, em Montevidéu, Uruguai. Apresentação em inglês.

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  • 1. Brazilian Electricity Market 4th ELAEE ConferenceEnergy Trends and Development in Latin America Luciano Freire CCEE - Electric Energy Commercialization Chamber April 8, 2013 Montevideo, Uruguay
  • 2. MAIN FACTS AND FIGURES ABOUT BRAZIL How big is it?
  • 3. Main Figures and Facts about BrazilBrazil Territorial Extension 8,514,876 km² Population (Aug 2012) 193.9 million GDP 2012* US$ 2.25 trillion 6th World EconomyElectricity Sector Installed capacity (Dec 2012) 121 GW Hydro 66% Thermal 27% Others 7% Transmission lines 103,362 km Consumption (Dec 2012) 45 TWh Captive Market: 75 % Free Market: 25 % Source: ONS * using the 2012 average exchange rate 3
  • 4. Main Figures and Facts about BrazilNumber of Market Participants Total (Dez 2012): 2,461 Contracts (2012) Number of Contracts/month 19,487 Volume traded (Dec 2012) 59 TWh Energy Auctions (from 2004 until now) Volume (energy TWh) 6,469.3 Average Price (US$/MWh) 65 Volume (US$ billion) 420 4
  • 5. Brazil’s Electricity Market at a Glance Electricity Generation Competition in the Market Transmission and Distribution OTC and Electronic Platform Natural Monopoly Auctions & tariff 25% of the market Two Regulated Free MarketsDISTCO & captive consumers Traders & free consumers State-owned and private enterprises operating side-by-side Centralized Dispatch optimized by the National Power System Operator CCEE: Brazilian Market Operator 5
  • 6. CCEE Role as Brazilian Market Operator - Main Activities Spot Price Calculation Accountability & Settlement ofRegistration of all Contracts the Market Metering Auctions for Regulated Market Market Surveillance Analysis & Market Data 6
  • 7. BRAZILIAN REGULATORY SCENARIO AT A GLANCE What is new to the market?
  • 8. Brazilian regulatory scenario Ex-ante Nomination and Federal Government Tariff Reduction Price Transparency Initiative Ministry of Mines and Energy directive (Bylaw 12,783, Jan/2013) (MME nº 455, Aug/2012) Objective: reduction in end-user tariffs around 20%Objective: Improve default risk management andenhance information symmetry • Renewal of concessions in the electricity industry – Generation, Transmission and DistributionFrom July/13: Obligation to nominate the freemarket bilateral contracts before the energy delivery Conditions for renewal of generation concessions:(ex-ante), in a weekly basis Regulated prices (reduction estimation from US$ 44.36 to US$ 14.79)Obligation of reporting price information to CCEE, All the energy were allocated to distributors in long-allowing the creation of price references in the free term contracts (regulated market)market (price indexes and forward curve) What are we talking about? Generation: 13% of the current installed capacity (15,279 MW) Transmission: 67% of the national interconnected system Distribution: 35% of the regulated market • End or reduction of some charges of the electricity industry
  • 9. Comparison of Electricity Markets’ Churn Rates Electricity Markets’ Churn Rates10 Germany8 Nord Pool6 GB4 Netherlands Brazil2 France Colombia0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: OFGEM/CCEE Liquidity α ( immediacy; resilience ) 9
  • 10. Liquidity in the Brazilian Electricity Market Brazilian Liquidity in the Free Market NCRE:Non-conventional (Renewable Energy)
  • 11. TECHNICAL EXCHANGE CCEE – EPEXSPOT – ECC White Paper
  • 12. Technical Exchange CCEE – EPEXSPOT – ECCCCEE has partnered with the European Power Exchange (EPEXSPOT) and the EuropeanCommodity Clearing AG (ECC) for technical exchange formalized by a Memorandum ofUnderstanding (MoU) signed in February 2012Partners Deliverable Documents Feasibility study developed by CCEE – EPEXSPOT – ECC White Paper with a prospective vision to be presented to the Brazilian authorities and stakeholdersObjectives – launched in November 2012, in Improving the collateralization Salvador, Brazil methodology of the spot market Conceptual roadmap containing an Studying trading platform design and indicative timeline to improve the clearing solutions Brazilian electricity market (under construction) Enhancing quality in price formation 12
  • 13. White Paper – Building a Smart Brazilian Electricity Marketbenefits to the Financially secure Competitive Transparentmarket Sustainable Organized market place A tough – and challenging! – path 5. Organize market surveillance a 4. Clear separation of wholesale and retail market and c incorporating demand response t i 3. Implement clearing solutions o n 2. Develop products to smooth the market functioning s 1. Get the PLD (spot price) closer to real-time operationthe basis ofa mature Symmetry of Neutrality Liquidityenergy market information• Find out complete version of the White Paper: www.ccee.org.br 13
  • 14. Thank you! you! Luciano Freire luciano.freire@ccee.org.brCCEE - Electric Energy Commercialization Chamber www.ccee.org.br