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Brazil is expected to see a surplus of 1,134MWa of incentivized energy in the free market in 2018, local electric power trading chamber CCEE reported.
The amount will result mostly from the release of electric power previously hired in the regulated environment through compensation mechanisms used by power distributors to balance their contracting levels.
Such a scenario may favor the migration of power consumers to the free market, Carlos Dornellas, an executive manager of CCEE, predicts.
"Agents will be able to analyze other factors such as the PLD [short-term electricity prices index] as well as power rates in the regulated environment to take the decision," he added.
In Brazil, units consuming over an average of 500KWh/month are eligible to negotiate prices directly in the free or deregulated market and obtain discounts or incentives when using renewable sources, such as wind, solar and biomass.
For 2019, however, CCEE is estimating a deficit of 236MWa due to the amount of power expected to be dehired this year by distributors.
In its latest meeting, the federal electric system monitoring committee (CMSE) reported that the current energy reallocation mechanisms established by Brazilian legislation are sufficient to deal with the surplus of power hired at the A-6 auction held last December.
"New improvements in the methodology to mitigate new over-contracting events are being evaluated for the next auctions," the committee said.