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The Brazilian electricity market architecture: An analysis of instruments and misalignments

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  • Hochberg, Michael
  • Poudineh, Rahmatallah

Abstract

Brazil's current electricity market design heavily relies on auctions, long-term contracts, and central coordination mechanisms. Combining these instruments has proved to be effective in ensuring resource adequacy, a key policy objective. However, the implications of the dominance of the centrally coordinated auctions for long-term contracts are worth examining. This paper argues that the current market architecture may not represent the optimum long-term solution for a sustainable market as it ignores consumer preferences to drive investment decisions, transfers risks to consumers, has made the short-term market less relevant, and suffers from regulatory and design complexities.

Suggested Citation

  • Hochberg, Michael & Poudineh, Rahmatallah, 2021. "The Brazilian electricity market architecture: An analysis of instruments and misalignments," Utilities Policy, Elsevier, vol. 72(C).
    • Handle: RePEc:eee:juipol:v:72:y:2021:i:c:s0957178721001016
    DOI: 10.1016/j.jup.2021.101267
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    References listed on IDEAS

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    1. Vasconcelos, Gláucia Fernandes & Castilho, Hérika Atala, 2025. "A SWOT analysis for the evolution of Brazil’s renewable energy sector," Utilities Policy, Elsevier, vol. 96(C).
    2. Silva, Lucas Santos e & Bugarin, Mauricio Soares, 2025. "Auctioning electricity transmission margins for competitive access to Brazil's National Interconnected System," Utilities Policy, Elsevier, vol. 95(C).
    3. Wang, Xiangzhen & Li, Yapeng & Gong, Shun & Hu, Xue & Cheng, Chuntian, 2025. "An enhanced micro-PSO method to deal with asymmetric electricity markets competition within hydropower cascade," Applied Energy, Elsevier, vol. 377(PA).
    4. Nametala, Ciniro Aparecido Leite & Faria, Wandry Rodrigues & Lage, Guilherme Guimarães & Pereira, Benvindo Rodrigues, 2023. "Analysis of hourly price granularity implementation in the Brazilian deregulated electricity contracting environment," Utilities Policy, Elsevier, vol. 81(C).
    5. Silva, Walquiria N. & Rego, Erik Eduardo & Vieira, Giovani G.T.T. & Lourenço, Luís F.N. & Salles, Mauricio B.C., 2025. "An overview of Brazil's electricity market: Planning, dispatch models, pricing, and modernization," Utilities Policy, Elsevier, vol. 96(C).
    6. Maestri, Cláudia Olímpia Neves Mamede & Andrade, Maria Elisabeth Moreira Carvalho, 2022. "Priorities for tariff compensation of distributed electricity generation in Brazil," Utilities Policy, Elsevier, vol. 76(C).

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