Brazil urges for power demand response program

Some Brazil power market participants say a voluntary demand response program is urgently needed to replace a temporary one that expired earlier this year.

Brazil took the first step toward establishing such a program — where free market customers could opt for lowering power demand in exchange for reducing their surcharges — last year, when it faced its worst hydropower crisis in history.

Power regulator Aneel's pilot program allowed open market consumers to offer to decrease their power consumption for a price, and then receive a surcharge reduction every time the grid operator accepted their offer. The pilot program ran until 27 June, but during a late-July mines and energy ministry event to get feedback from market participants, companies urged Aneel to quickly put in a place a new — and permanent — one.

The issue may be addressed at Aneel's next board meetings on 9 August and 16 August after being delayed from earlier meetings when a director asked for further information. If the issue is not addressed in the upcoming meetings, Aneel may not return to it again until next year, as the director responsible for it will finish his term after the 16 August meeting, said Victor Iocca, director of electricity sector programs at industry association Abrace.

There is a widespread consensus in the sector that a voluntary demand response program is needed to improve efficiency, said Bernardo Sicsu, vice-president of electricity resellers' association Abraceel. Iocca said Abrace sought support from the ministry during the late-July meeting to push Aneel to create a new demand response program. Otherwise, Iocca said Brazil can reactivate 2021's temporary program for 2022-2023 if additional capacity is needed at the end of its dry season.

During the ministry's event, market participants also pushed for ways to develop ancillary services to support grid stability compatible with the new market model that Brazil is preparing to adopt, Sicsu said. These specialty services are key to unlocking technological advancements to the grid, such as hybrid and pumped storage power plants and power storage units.

But the grid operator, the main ancillary service client, still needs to sort its priorities concerning these services, Iocca said. Once these are clearer, the market can better position itself to meet demands.

Iocca said the ministry is also interested in speeding up the development of ancillary services, because many of them are already underway and there is high demand for new solutions, such as power storage.

By Rebecca Gompertz