Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico

In recent years electricity sectors worldwide have undergone major transformations, referred to as the “energy transition”. This has required energy planning to quickly adapt to provide useful inputs to the regulation activity so that a cost-effective electricity market emerges to facilitate the int...

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Autores principales:	Ana Werlang, Gabriel Cunha, João Bastos, Juliana Serra, Bruno Barbosa, Luiz Barroso
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	regulation energy transition Brazil Mexico renewables reliability Technology T
Acceso en línea:	https://doaj.org/article/12549fd3b6c6438d9d229b7bcd431bce
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spelling	oai:doaj.org-article:12549fd3b6c6438d9d229b7bcd431bce2021-11-11T16:08:22ZReliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico10.3390/en142174281996-1073https://doaj.org/article/12549fd3b6c6438d9d229b7bcd431bce2021-11-01T00:00:00Zhttps://www.mdpi.com/1996-1073/14/21/7428https://doaj.org/toc/1996-1073In recent years electricity sectors worldwide have undergone major transformations, referred to as the “energy transition”. This has required energy planning to quickly adapt to provide useful inputs to the regulation activity so that a cost-effective electricity market emerges to facilitate the integration of renewables. This paper analyzes the role of system planning and regulations on two specific elements in the energy market design: the concept of firm capacity and the presence of distributed energy resources, both of which can be influenced by regulation. We assess the total cost of different regulatory mechanisms in the Brazilian and Mexican systems using optimization tools to determine optimal long-term expansion for a given regulatory framework. In particular, we quantitatively analyze the role of the current regulation in the total cost of these two electricity systems when compared to a reference “efficient” energy planning scenario that adopts standard cost-minimization principles and that is well suited to the most relevant features of the new energy transformation scenario. We show that two very common features of regulatory designs that can lead to distortions are: (i) renewables commonly having a lower “perceived cost” under the current regulations, either due to direct incentives such as tax breaks or due to indirect access to more attractive contracts or financing conditions; and (ii) requirements for reliability are often defined more conservatively than they should be, overstating the hardships imposed by renewable generation on the existing system and underestimating their potential to form portfolios.Ana WerlangGabriel CunhaJoão BastosJuliana SerraBruno BarbosaLuiz BarrosoMDPI AGarticleregulationenergy transitionBrazilMexicorenewablesreliabilityTechnologyTENEnergies, Vol 14, Iss 7428, p 7428 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	regulation energy transition Brazil Mexico renewables reliability Technology T
spellingShingle	regulation energy transition Brazil Mexico renewables reliability Technology T Ana Werlang Gabriel Cunha João Bastos Juliana Serra Bruno Barbosa Luiz Barroso Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
description	In recent years electricity sectors worldwide have undergone major transformations, referred to as the “energy transition”. This has required energy planning to quickly adapt to provide useful inputs to the regulation activity so that a cost-effective electricity market emerges to facilitate the integration of renewables. This paper analyzes the role of system planning and regulations on two specific elements in the energy market design: the concept of firm capacity and the presence of distributed energy resources, both of which can be influenced by regulation. We assess the total cost of different regulatory mechanisms in the Brazilian and Mexican systems using optimization tools to determine optimal long-term expansion for a given regulatory framework. In particular, we quantitatively analyze the role of the current regulation in the total cost of these two electricity systems when compared to a reference “efficient” energy planning scenario that adopts standard cost-minimization principles and that is well suited to the most relevant features of the new energy transformation scenario. We show that two very common features of regulatory designs that can lead to distortions are: (i) renewables commonly having a lower “perceived cost” under the current regulations, either due to direct incentives such as tax breaks or due to indirect access to more attractive contracts or financing conditions; and (ii) requirements for reliability are often defined more conservatively than they should be, overstating the hardships imposed by renewable generation on the existing system and underestimating their potential to form portfolios.
format	article
author	Ana Werlang Gabriel Cunha João Bastos Juliana Serra Bruno Barbosa Luiz Barroso
author_facet	Ana Werlang Gabriel Cunha João Bastos Juliana Serra Bruno Barbosa Luiz Barroso
author_sort	Ana Werlang
title	Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
title_short	Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
title_full	Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
title_fullStr	Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
title_full_unstemmed	Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico
title_sort	reliability metrics for generation planning and the role of regulation in the energy transition: case studies of brazil and mexico
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/12549fd3b6c6438d9d229b7bcd431bce
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Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico

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