Câmara de Comercialização de Energia Elétrica – CCEE

Brazilian Market Operator

Roberto CastroAdministration Board

Overview of the Brazilian

Electricity Industry

Schedule

� CCEE´s Role in the Brazilian Electricity Industry

� Highlights of Brazilian Electricity Industry

� Enabling Distributed Generation Trading

� Conclusions

2

CCEE´s Role in the Brazilian

Electricity Industry

3

Câmara de Comercialização

de Energia Elétrica

Agência Nacional de Energia

ElétricaEmpresa de Pesquisa

Energética

Governance of the Brazilian Electricity Industry

CNPE: Definition of energy policies, with focus on ensuring adequate supply

MME: Planning, management and development of energy sectors legislation; supervision and control of energy policies execution; responsibilities also over the mining sector

EPE: Planning of generation and transmission expansion; technical support of energy auctions

CMSE: Monitoring of the power system, in order to ensure adequate supply

ANEEL: Regulates and supervises generation,

transmission, distribution and

commercialization of electricity. Regulated

tariffs setting

ONS: Optimized operation of the National

Interconnected System, with focus on

ensuring adequate supply at reasonable costs

CCEE: Provide an environment for energy

trading activities and operations, improving

solutions according to the market needs with

integrity, transparency and accountability

CNPEConselho Nacional de

Política Energética

CMSEComitê de Monitoramento

do Setor Elétrico

Operador Nacional

do Sistema Elétrico

Government

Government

4

CCEE´s role as Brazilian Market Operator

� Created in 1999, CCEE is a nonprofit private

legal entity, regulated and supervised by ANEEL

Accounting and

settlement

Tecnology and systems to

improve market operation

Divulgation of

information and results

Training for agents and

institutions

Registering of the power

contracts

Metering (generation and

consumption)

Main atributions

� Operations held by CCEE

accounts US$ 8,51 billion

in 2016 (January – July)

5

� CCEE´s mission is to

promote the electricity

commercialization

activities in Brazil

Previsibility

Atractive enviroment

to investors

Spot Market Settlement (shallow pool)

RequirementsRequirementsRequirements

ResourcesResources

Spot

Market

Spot

Market

� Each month, CCEE calculates and compares, for every associated company

power availability and requirements

� Considers consumption, production, power purchases or sales

� The differences between requirements and availabilities are settled in the

spot market by the Price for Settlement of Differences - PLD

Spot market balance Spot market settlement

Exposure

XPLD

(R$ / MWh)

Spot Price

6

(MWh) (MWh)

(MWh)

Settlement

Buyers: Distribution

(regulated consumers)

Regulated Market

Buyers: Free consumers,

generation and trading

Free Market

Brazilian Regulated and Free Markets

Public actions Bilateral negotiations

Generators

Self-Producers

Independent

Producers

Traders

Free

Consumers

Buyers

Sellers

7

Energy Auctions – Regulated market

� DISCOs are obligated to contract 100% of their load in pool, through

public auctions

� Ceiling prices are defined by the Ministry of Mines and Energy

� Investors compete for concessions/ selling energy in long-term contracts

Regulated consumers

Auction

Competition amongst generation investors

DISCO DISCO DISCO DISCO

Auction model

emulates a

Single Buyer

8

“A-1”“A-3”“A-5”

Existing Energy Auctions

1 - 15 years contracts

New Energy Auctions

20 - 30 years contracts

“A”

“Adjust”

Alternative Sources Auctions Reserve Energy Auctions

Year A: Delivery year

Sellers: Generators technically approved by EPE or ANEEL

� Hydro: contracts of 30 years

� Thermal, Wind, PV and Biomass: contracts of 20 or 25 years

Energy Auctions – Regulated market

9

Results of new capacity auctions by source,

Dec-2005 to Sep-2016

2.216;

6% 679; 2%

13.674; 38%

12.868; 36%

6.630; 18%

Biomass Solar Thermal Hydro Wind

5.601;

41%

968;

7%

4.770;

35%

543; 4%1.793;

13%

Natural Gas NLG Combustible Oil Diesel Coal

FEC – Firm Energy Certificates in average MW

Energy Auctions – Results (MWm)

10

Highlights of Brazilian

Electricity Industry

11

Brazil

Area 8.514.876 km²

States 27

Cities 5.570

Population (2014) 204 million

Main figures of the Brazilian Electricity Industry

Electricity Industry

� Transmission lines 125.639 km

� Installed capacity 157 GW

� Consumption (2015) 464 TWh

Regulated Market: 75 % (jul/16)

Free Market: 25 % (jul/16)

12

Interligatted Hydro Basin

National Interconnected System - How big is it?

13

INS (SIN )

x

Europe

� Long distances

� Regional characteristics

� Electric restrictions� (Technical and stability limits)

� Hydrothermal System

13

Installed capacity by source (MW)

81%

16%

1%2%

72%

21%

6% 1%

Hydro

Thermal

Wind

Nuclear

2012

(December)

2016

(July)

86.244

112.543

Thermal

33.681

17.086

2.007

1.990

Hydro 30% 97% Nuclear1%

14

Wind

9.453

1.171

707%

Generation by source (MWm)

48.710

42.874

Thermal

10.451

5.455

1.414

1.836

Hydro 91% Nuclear23%12%

48.71042.874

5.45510.451

1.836 1.414

590 4.386

Hydro Thermal Nuclear Wind

Tota

l: 5

9.1

26

Tota

l: 5

6.5

91

86,1%

9,6%

3,2%1,1%

72,5%

17,6%

2,3%

7,4%

15

Wind

4.386

590

643%

2012 2016

Brazil Expectations as in 2023- Investment opportunities

85

GW

2

GW

10

GW0

GW

2

GW

11

GW3

GW

5

GW

119

GW

22

GW14

GW

4

GW3

GW

20

GW

3

GW

4

GW

40%

967%

42%

3500%74%

89%

0%-10%

0

20

40

60

80

100

120

140

Hydro Wind Biomass Solar Nuclear Gas Coal Oil

2013

2023

2023

Growth (%)2023* PDE 2023 (EPE)

Exchange rate: US$ 1 = R$ 2.60

Expected investments (2013 – 2023)

Generation - US$ 115,7 billion

Transmission - US$ 86 billion

Installed capacity – Expected growth of 60%

2013 – 118 GW

2023 – 189 GW

16

Enabling Distributed

Generation Trading

17

Trading

“Virtual Power Plant”

in CCEE

aggregation

Sales contract

Sales contract

Study Analysis

Alternative to power compensation system (current model)

� Consumer chooses to sell all the energy injected, without

offsetting their consumption with local distributor

18

Trading 1

4) Aggregated data is

transferred to he CCEE,

representing the

generation of virtual

power plants of each

trading

Distribution(Retail)

3) Measurement

aggregation according

to the sales negotiations

of consumer surplus for

each trading

CCEE(Wholesale)

2) Measurement collection of

mini and microgeneration

surplus with current

measurement systempaid services

Trading 2

1) Sales of surplus to the trading are

registered with the local distributor

5) Energy is usully

negotiated in the free

Market through sales

contracts acoording to

current regulations

Contracts in the

free market

Contracts in the

free market

Study Analysis

Contracts in the

free market

Contracts in the

free market

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Conclusions

20

Conclusions

Political instability Industrial activity Electricity industry

� Large number of lawsuits (294) impact energy Market with financial default

Dialogue to find solutions

� Energy supply security with diversified generation matrix

Brazilian power generation is

changing into a hydrothermal

and wind matrix

� Positive perspectives for market developments to the security of the

regulated market and the free market growth

21

Roberto CastroAdministration Board

E-mail: roberto.castro@ccee.org.br

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