IDEAS home Printed from https://ideas.repec.org/a/gam/jeners/v14y2021i21p7428-d674440.html
   My bibliography  Save this article

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

Author

Listed:
  • Ana Werlang

    (PSR Energy Consulting & Analytics, Rio de Janeiro 22250-040, Brazil)

  • Gabriel Cunha

    (PSR Energy Consulting & Analytics, Rio de Janeiro 22250-040, Brazil)

  • João Bastos

    (PSR Energy Consulting & Analytics, Rio de Janeiro 22250-040, Brazil)

  • Juliana Serra

    (PSR Energy Consulting & Analytics, Rio de Janeiro 22250-040, Brazil)

  • Bruno Barbosa

    (PSR Energy Consulting & Analytics, Rio de Janeiro 22250-040, Brazil)

  • Luiz Barroso

    (Instituto de Investigación Tecnológica, Escuela Técnica Superior de Ingeniería (ICAI), Universidad Pontificia Comillas, 28015 Madrid, Spain)

Abstract

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.

Suggested Citation

  • Ana Werlang & Gabriel Cunha & João Bastos & Juliana Serra & Bruno Barbosa & Luiz Barroso, 2021. "Reliability Metrics for Generation Planning and the Role of Regulation in the Energy Transition: Case Studies of Brazil and Mexico," Energies, MDPI, vol. 14(21), pages 1-27, November.
    • Handle: RePEc:gam:jeners:v:14:y:2021:i:21:p:7428-:d:674440
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1996-1073/14/21/7428/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1996-1073/14/21/7428/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Daglish, Toby & de Bragança, Gabriel Godofredo Fiuza & Owen, Sally & Romano, Teresa, 2021. "Pricing effects of the electricity market reform in Brazil," Energy Economics, Elsevier, vol. 97(C).
    2. Tolmasquim, Maurício T. & de Barros Correia, Tiago & Addas Porto, Natália & Kruger, Wikus, 2021. "Electricity market design and renewable energy auctions: The case of Brazil," Energy Policy, Elsevier, vol. 158(C).
    3. EHRENMANN, Andreas & SMEERS, Yves, 2013. "Risk adjusted discounted cash flows in capacity expansion models," LIDAM Reprints CORE 2550, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Gonzalez-Romero, Isaac-Camilo & Wogrin, Sonja & Gomez, Tomas, 2021. "Transmission and storage expansion planning under imperfect market competition: Social planner versus merchant investor," Energy Economics, Elsevier, vol. 103(C).
    5. Пигнастый, Олег & Koжевников, Георгий, 2019. "Распределенная Динамическая Pde-Модель Программного Управления Загрузкой Технологического Оборудования Производственной Линии [Distributed dynamic PDE-model of a program control by utilization of t," MPRA Paper 93278, University Library of Munich, Germany, revised 02 Feb 2019.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Andr s Oviedo-G mez & Sandra Milena Londo o-Hern ndez & Diego Fernando Manotas-Duque, 2023. "Directional Spillover of Fossil Fuels Prices on a Hydrothermal Power Generation Market," International Journal of Energy Economics and Policy, Econjournals, vol. 13(1), pages 85-90, January.
    2. Dolf Gielen, 2022. "Energy Planning," Energies, MDPI, vol. 15(7), pages 1-6, April.
    3. Costa, Vinicius Braga Ferreira da & Bonatto, Benedito Donizeti, 2023. "Cutting-edge public policy proposal to maximize the long-term benefits of distributed energy resources," Renewable Energy, Elsevier, vol. 203(C), pages 357-372.
    4. Huclin, Sébastien & Ramos, Andrés & Chaves, José Pablo & Matanza, Javier & González-Eguino, Mikel, 2023. "A methodological approach for assessing flexibility and capacity value in renewable-dominated power systems: A Spanish case study in 2030," Energy, Elsevier, vol. 285(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrés Velastegui-Montoya & Aline de Lima & Viviana Herrera-Matamoros, 2022. "What Is the Socioeconomic Impact of the Tucuruí Dam on Its Surrounding Municipalities?," Sustainability, MDPI, vol. 14(3), pages 1-11, January.
    2. Elisa Alòs & Maria Elvira Mancino & Tai-Ho Wang, 2019. "Volatility and volatility-linked derivatives: estimation, modeling, and pricing," Decisions in Economics and Finance, Springer;Associazione per la Matematica, vol. 42(2), pages 321-349, December.
    3. Keppler, Jan Horst & Quemin, Simon & Saguan, Marcelo, 2022. "Why the sustainable provision of low-carbon electricity needs hybrid markets," Energy Policy, Elsevier, vol. 171(C).
    4. Grimm, Veronika & Schewe, Lars & Schmidt, Martin & Zöttl, Gregor, 2017. "Uniqueness of market equilibrium on a network: A peak-load pricing approach," European Journal of Operational Research, Elsevier, vol. 261(3), pages 971-983.
    5. Elena-Corina Cipu, 2019. "Duality Results in Quasiinvex Variational Control Problems with Curvilinear Integral Functionals," Mathematics, MDPI, vol. 7(9), pages 1-9, September.
    6. Hanno Gottschalk & Marco Reese, 2021. "An Analytical Study in Multi-physics and Multi-criteria Shape Optimization," Journal of Optimization Theory and Applications, Springer, vol. 189(2), pages 486-512, May.
    7. Karel Van Bockstal, 2020. "Existence of a Unique Weak Solution to a Nonlinear Non-Autonomous Time-Fractional Wave Equation (of Distributed-Order)," Mathematics, MDPI, vol. 8(8), pages 1-16, August.
    8. Savin Treanţă, 2019. "On Locally and Globally Optimal Solutions in Scalar Variational Control Problems," Mathematics, MDPI, vol. 7(9), pages 1-8, September.
    9. Darvishi, M.T. & Najafi, Mohammad & Wazwaz, Abdul-Majid, 2021. "Conformable space-time fractional nonlinear (1+1)-dimensional Schrödinger-type models and their traveling wave solutions," Chaos, Solitons & Fractals, Elsevier, vol. 150(C).
    10. Ivan Francisco Yupanqui Tello & Alain Vande Wouwer & Daniel Coutinho, 2021. "A Concise Review of State Estimation Techniques for Partial Differential Equation Systems," Mathematics, MDPI, vol. 9(24), pages 1-15, December.
    11. Christian Klein & Julien Riton & Nikola Stoilov, 2021. "Multi-domain spectral approach for the Hilbert transform on the real line," Partial Differential Equations and Applications, Springer, vol. 2(3), pages 1-19, June.
    12. Marco Cirant & Roberto Gianni & Paola Mannucci, 2020. "Short-Time Existence for a General Backward–Forward Parabolic System Arising from Mean-Field Games," Dynamic Games and Applications, Springer, vol. 10(1), pages 100-119, March.
    13. Le Cadre, Hélène & Mou, Yuting & Höschle, Hanspeter, 2022. "Parametrized Inexact-ADMM based coordination games: A normalized Nash equilibrium approach," European Journal of Operational Research, Elsevier, vol. 296(2), pages 696-716.
    14. Christian Kuehn & Cinzia Soresina, 2020. "Numerical continuation for a fast-reaction system and its cross-diffusion limit," Partial Differential Equations and Applications, Springer, vol. 1(2), pages 1-26, April.
    15. Zaiping Zhu & Andres Iglesias & Liqi Zhou & Lihua You & Jianjun Zhang, 2022. "PDE-Based 3D Surface Reconstruction from Multi-View 2D Images," Mathematics, MDPI, vol. 10(4), pages 1-17, February.
    16. Gu, Jiu & Zhou, Shichao & Wang, Lingling & Jiang, Chuanwen & Li, Zuyi, 2025. "A generation directrix-based regulation energy market mechanism for fairer competition in power systems with high renewable energy penetration," Energy, Elsevier, vol. 315(C).
    17. Wei Zhou & Xingxing Hao & Kaidi Wang & Zhenyang Zhang & Yongxiang Yu & Haonan Su & Kang Li & Xin Cao & Arjan Kuijper, 2020. "Improved estimation of motion blur parameters for restoration from a single image," PLOS ONE, Public Library of Science, vol. 15(9), pages 1-21, September.
    18. Denny Ivanal Hakim & Yoshihiro Sawano, 2021. "Complex interpolation of variable Morrey spaces," Mathematische Nachrichten, Wiley Blackwell, vol. 294(11), pages 2140-2150, November.
    19. Knut K. Aase & Petter Bjerksund, 2021. "The Optimal Spending Rate versus the Expected Real Return of a Sovereign Wealth Fund," JRFM, MDPI, vol. 14(9), pages 1-36, September.
    20. Luiz Moreira Coelho Junior & Edvaldo Pereira Santos Júnior, 2022. "Space-Time Conglomerates Analysis of the Forest-Based Power Plants in Brazil (2000–2019)," Energies, MDPI, vol. 15(11), pages 1-12, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jeners:v:14:y:2021:i:21:p:7428-:d:674440. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.