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Two-settlement system for the Brazilian electricity market

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  • Munhoz, Fernando Colli

Abstract

The Brazilian cost-based market employs the single-settlement system to clear electricity. Besides single, this system adopts a hybrid mechanism in which the amount of electricity measured during production and consumption in the real-time market is cleared with the electricity price set during the operation's schedule in the day-ahead market. The result is that the intersection between demand and supply does not set the electricity price neither in the day-ahead market nor in the real-time market. This work studies the flaws of the Brazilian settlement system. The study demonstrates that the two-settlement system is a better option for this market because it prices the electricity correctly at the moment of production and consumption, encourages the market participants to furnish accurate data for the system operation, mitigates anti-competitive practices, and induces market efficiency.

Suggested Citation

  • Munhoz, Fernando Colli, 2021. "Two-settlement system for the Brazilian electricity market," Energy Policy, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521001038
    DOI: 10.1016/j.enpol.2021.112234
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    References listed on IDEAS

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    Cited by:

    1. Marchetti, Isabella & Rego, Erik Eduardo, 2022. "The impact of hourly pricing for renewable generation projects in Brazil," Renewable Energy, Elsevier, vol. 189(C), pages 601-617.

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