One of the most relevant topics in the Brazilian electricity sector today, the process of forming short-term electricity prices was discussed in the workshop “Meta II Formação de Preço: Percepções e Condicionantes”, held by the Electric Energy Trading Chamber (CCEE) and PSR, in October, in São Paulo.

The workshop was the first of its kind within the scope of the study “Short-Term Electricity Price Formation: An Analysis of the Brazilian Market” which will be carried out by a consortium led by PSR and contracted by CCEE in May this year.

One of the main objectives of the meeting, which brought together authorities and companies in the electrical energy market, was to present the project to the sector and collect suggestions from agents on the current pricing model in Brazil, in addition to discussing challenges and opportunities for pricing models by cost and by offer. A topic that stimulates discussions and studies in the sector, energy pricing has become even more challenging, in an environment of market opening and greater penetration of intermittent renewable sources in the grid.

“This first event levels the issue of price formation as a whole”, stated the CEO of PSR, Luiz Augusto Barroso. “This is a project that will bring a lot of information to the sector”, he added.

Talita Porto, vice-president of the CCEE Board of Directors, highlighted that any change in the calculation methodology will be deeply studied and discussed with the market. “For CCEE, price is an important variable. We believe that predictability, transparency and reproducibility are essential in pricing,” she said.

Present at the event, the general director of the National Electric Energy Agency (Aneel), Sandoval Feitosa, highlighted that price formation is a topic that the market has been focusing on for at least two decades. “This project will contribute a lot to the decision which path we will follow,” he said.

Cristiano Vieira, director of the National Electric System Operator (ONS), also highlighted the importance of the subject for the operation of the system. “When we talk about price, we can’t help but think about the challenges we are experiencing in the operation,” he said, remembering that, in an environment with increasing penetration of variable renewables, it is important to improve a market design that reveals an efficient price. and, at the same time, support the operator in making decisions during real-time programming.

Angela Livino, director of Corporate Management at the Empresa de Pesquisa Energética (EPE), considered the event as an opportunity to debate and monitor the project’s status. “The development of this project brings important elements to planning. We are very aligned with this initiative.”

In addition to the PSR team, which featured presentations by Gabriel Cunha, Celso Dall’Orto, Paula Valenzuela, Joaquim Garcia and Erik Rego, the workshop was attended by Rodrigo Sacchi (CCEE), Dorel Soares Ramos (Poli/USP) Richard Lee Hochstetler (Acende Brasil), Lucas Cechetto (Engie), Marcos Keller (Engie), Bernardo Costa (FGV) and Vitor Matos (Norus).

The event brought together around 200 people in person and received more than 1,300 views on the online broadcast, the full recording of which is available at this link: https://www.youtube.com/watch?v=wpGTb1yaZko. More details of the project can be found on the initiative’s website https://www.meta2formacaodepreco.com.br/.

Four other workshops are planned within the project, which aims to indicate the best arrangement for the Brazilian market, including the necessary adjustments to the commercial and regulatory environment and best business practices. The work also involves a phase of analysis of the current cost-based pricing mechanism, which should indicate the advances necessary to improve operational efficiency and economic signaling associated with computational models.

The project is part of the “Meta II” program, established by the International Bank for Reconstruction and Development (IBRD) and the Brazilian Ministry of Mines and Energy, with approximately US$38 million in investments in dozens of initiatives. The action strengthens the role of ministerial coordination, as participants do not pay financial compensation and work together with the ministry. CCEE received a budget of R$ 33 million for a total of four projects, including price formation, whose execution bid was won by a consortium led by PSR.