Tania Nalborczyk Leites
CERTI Foundation, Brazil
Title: Regulatory advances and improvements in Latin America: Case study of VPP markets in Brazil
Biography
Biography: Tania Nalborczyk Leites
Abstract
Globally, with the increasing liberalization of the energy market, opportunities to the emergence of new actors and innovative structures arise. One of these new actors is the Virtual Power Plant (VPP), an entity that aggregates generation and loads capacity, in order to create a single operating profile from a composite of the parameters characterizing each aggregated resource. This article explains the actual Brazilian regulatory framework for implementing Virtual Power Plants and estimates a roadmap for the creation of each market in which Virtual Power Plants could participate, contributing to understand the market potential of this new actor in the Brazilian scenario and the novel opportunities for monetizing resources while optimizing the electric grid operation. In the current regulatory scenario Demand Response (DR) figure does not exist and, therefore, it is not yet considered in regulation improvements. In addition, in terms of the energy market, the possibility of contracting ex post does not allow DR participation (characterized by a pre-sale of capacity). In this current context, VPP operators could only offer services to substitute generators value, but not the value of flexibility, represented by demand response resources. Furthermore, capacity and balancing markets do not exist yet, and therefore VPPs have limited opportunities of monetizing aggregation. Some of ongoing efforts in Brazil that are expected to contribute to leverage flexibility include an industrial demand-response pilot program (considering free consumers in North and Northeast subsystems), approved in November 2017 and valid until June 2019. The pilot aims to prove the value of Demand Response as an alternative for operating reserve and frequency regulation, encouraging a future regulation. Demand Response will be used in this pilot to supply operating reserve, peak power and frequency regulation. However, a series of trends indicate the future creation of different markets in which VPPs could participate.