ON December 1, 2018
Originally published in APEx Newsletter Volume VIII – December 2018.
With a population of 207 million people and a territory as large as the European continent, Brazil’s large dimensions and diversity create excellent opportunities that involve big challenges for planning, operating and trading electric energy. Ensuring supply reliability, security, quality of service and cost optimization are the main aspects that drive institutions and agents of the Brazilian market.
Present for 20 years in this complex and riveting electric sector framework, the Chamber of Commerce of Electric Energy – CCEE plays a fundamental role in operating and developing the electric energy industry in Brazil. As CCEE grows along the energy market, the company innovates and promotes the evolution of the sector. Always appreciating visibility and transparency, the institution organizes forums and promotes debates with agents and other institutions to discuss and consolidate proposals for modernizing the sector.
This avant-garde practice stimulates the development of improvements, with the broadening of the free market to allow consumers with smaller demands to choose their energy suppliers; the change in the spot price calculation (to be based on hours from 2020 on); and the separation between guarantee and energy (currently traded together in the Brazilian market) are a few of the several items that integrate the present process of sector modernization.
The chamber sustains an efficient structure of direct service to market agents and is consolidated as an entity that has become a benchmark in offering relevant information to all the society about the evolution of consumption and generation of electric energy throughout the whole interlinked National system. It is important to highlight that the electric sector governance establishes a structural division between the system operator (National Electric System Operator – ONS) and the market operator (CCEE). Thus, decisions around energy security for supplying energy to the population are made with no influence of the transactions carried out by these companies.
Created in 1999 with the task to trade energy, CCEE grows year after year and continuously adapts to the needs and demands of the market. With over 7 thousand agents, the institution managed over R$ 43 bi (US$11 bi) in financial settlements in 2017. Along the years, the company has also stimulated investment in the sector by carrying out 73 auctions for contracting business, which represent R$ 1,7 trillion in financial contribution.
The energy market in Brazil is divided into two large segments: regulated and free markets. In the first, the distributors buy energy from generators in auctions, which is later delivered to the consumers, who are charged in fees regulated by the National Electric Energy Agency Aneel. Currently, the regulated market represents 70% of the Brazilian consumption. On the other hand, larger consumers can purchase energy directly from generators or energy traders, which negotiate price and contract terms bilaterally and, this way, can obtain a large reduction in cost. That market represents 30% of the consumption in Brazil, although it amounts to 85% of all Brazilian industry consumption.
With a huge potential in wind power and photovoltaic solar energy, Brazil has undergone a transformation in its electric grid. Out of 158,49 GW of installed capacity, 80% are renewable energy, with 64% from hydro, 9% biomass, 8% wind power and 1% solar. Considering that scenario, the system operation needs to be changed in order to become appropriate to the existing intermittence, which impacts commercial relations. The evolution in the methodology of price calculation, the funding of generation projects by the free market, the effectiveness in response to demand, the large scale of storage and electric cars compose a new scenario in the Brazilian market.
Holder of great technical knowledge and operational excellence, CCEE continues applying effort to develop the energy market sustainably and in a way that appeals to investors.