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The stochastic effects on the Brazilian Electrical Sector

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  • Ferreira, Pedro Guilherme Costa
  • Oliveira, Fernando Luiz Cyrino
  • Souza, Reinaldo Castro

Abstract

The size and characteristics of the Brazilian Electrical Sector (BES) are unique. The system includes a large-scale hydrothermal power system with many hydroelectric plants and multiple owners. Due to the historical harnessing of natural resources, the National Interconnected System (NIS) was developed outside of the economic scale of the BES. The central components of the NIS enable energy generated in any part of Brazil to be consumed in distant regions, considering certain technical configurations. This interconnection results in a large-scale complex system and is controlled by robust computational models, used to support the planning and operation of the NIS. This study presents a different vision of the SEB, demonstrating the intrinsic relationship between hydrological stochasticity and the activities executed by the system, which is an important sector of the infrastructure in Brazil. The simulation of energy scenarios is crucial to the optimal manner to operate the sector and to supporting decisions about whether expansion is necessary, thus, avoiding unnecessary costs and/or losses. These scenarios are an imposing factor in the determination of the spot cost of electrical energy, given that the simulated quantities of water in the reservoirs are one of the determinants for the short-term energy price.

Suggested Citation

  • Ferreira, Pedro Guilherme Costa & Oliveira, Fernando Luiz Cyrino & Souza, Reinaldo Castro, 2015. "The stochastic effects on the Brazilian Electrical Sector," Energy Economics, Elsevier, vol. 49(C), pages 328-335.
  • Handle: RePEc:eee:eneeco:v:49:y:2015:i:c:p:328-335
    DOI: 10.1016/j.eneco.2015.03.004
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    References listed on IDEAS

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    Cited by:

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    13. Trotter, Ian M. & Bolkesjø, Torjus Folsland & Féres, José Gustavo & Hollanda, Lavinia, 2016. "Climate change and electricity demand in Brazil: A stochastic approach," Energy, Elsevier, vol. 102(C), pages 596-604.
    14. Fernandes, Gláucia & Lima Gomes, Leonardo & Teixeira Brandão, Luiz Eduardo, 2019. "Mitigating Hydrological Risk with Energy Derivatives," Energy Economics, Elsevier, vol. 81(C), pages 528-535.
    15. Sgarbi, Felipe de Albuquerque & Uhlig, Alexandre & Simões, André Felipe & Goldemberg, José, 2019. "An assessment of the socioeconomic externalities of hydropower plants in Brazil," Energy Policy, Elsevier, vol. 129(C), pages 868-879.
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    More about this item

    Keywords

    Brazilian Electrical Sector; Expansion planning; Operational planning; Spot price;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • C59 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Other
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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