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Demand Response in Brazil

image credit: DR
Rafael Herzberg's picture
Consultant energy affairs, Self employed

Rafael Herzberg- is an independent energy consultant, self-employed (since 2018) based in São Paulo, Brazil* Focus on C level, VPs and upper managers associated to energy related info, analysis...

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  • Dec 23, 2020
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Demand Response in Brazil

The pilot program officially launched in the North and Northeast two years ago has now been offically extended to all the country.

It is aimed at free, deregulated consumers. The logic is simple and over-tested and approved in the developed world. When demand is high, a generous financial bonus encourages consumption to be avoided. It is cheaper than the alternative of dispatching very expensive thermal plants.

But there is a catch with our demand response program. What would be the motivation for a consumer to join this program if the compensation is of the order of the PLD (spot pice as published by the power clearinghouse)?

It would be much simpler to avoid consumption and automaticallysell the energy not used at the ongoing spot pice.

In other words, the demand response program, in order to thrive, needs to offer bonuses much higher than the official ceiling of the spot prices.

Discussions
Matt Chester's picture
Matt Chester on Dec 23, 2020

Good to hear demand response is expanding in Brazil. Are there restrictions as to who the participants are (commercial/industrial vs. residential)? And how are customers receiving signals that the price is high? 

Rafael Herzberg's picture
Rafael Herzberg on Dec 23, 2020

Hi Matt!

DR is only available for "large" deregulated energy users (typically industrial ones above 3 MW).

Price signals will be indicated by the regulator/independent system operator - the most likely scenario is a virtual auction for each time there is a need to reduce demand. The winners will be "awarded" with the DR deals.

Matt Chester's picture
Matt Chester on Dec 23, 2020

Got it-- thanks for the info! I wonder if success with these large customers will then lead to expansion to medium and smaller customers as well. 

Rafael Herzberg's picture
Rafael Herzberg on Dec 23, 2020

Potentially yes BUT though the deregulated power markets represent 1/3 of the country's consumption it is about a small fraction of the energy users (just the "big ones").

My guess is: it will take a fairly long time for the independent system operator, regulator and the power clearinghouse to make sure they are really prepared for a large number of players (not just the A from the ABC curve as of now).

Rafael Herzberg's picture
Thank Rafael for the Post!
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