Annual Report 2018
Economics
COST FUNCTION OF THE ELECTRICITY DEFICIT
The cost of the electricity deficit is one of the most important aspects
for planning expansion and operation of the Brazilian electric power
system. This project tested methodological improvements able
to better reflect the real impact of electricity shortage considering
the heterogeneity of consumers in various deficit scenarios.
OBJECTIVE
•
The deficit cost represents the maximum value that can be attributed to a new project
able to avoid shortage of electricity, or more generally, the economic cost of shortage or
lack of availability of electric power.
Considering the relevance of the deficit cost to the Brazilian electricity system and the
outmoded method for calculating costs used now, the aim of the project was to pro-
pose and test methodological improvements able to better reflect the true impact of
power shortage.
RESEARCH METHOD
1.
To attain the expected results, the project was divided into six steps:
2.
3.
4.
5.
6.
Updating of the model currently used, proposed by the Electric System Planning Co-
ordination Group in 1988. The model was updated with more recent data on the sys-
tem in Brazil's national accounts (input-output matrix for 2010 and table of resources
and uses for 2013), also including changes in electricity tariffs and in the system to
obtain the sectorial costs.
Calculation of the deficit cost applying a computable general equilibrium model.
Although representing reality in very simplified way, the model is extremely trac-
table and presents highly robust results (results adherent to actual data on the
Brazilian economy).
Conduction of a direct survey of end consumers of electricity, including residential,
commercial and industrial consumers, to investigate the perception of different con-
sumer classes about the socioeconomic costs of energy possible rationing. The ob-
jective was to discover the monetary value that would have a similar (or compensa-
tory) effect on the welfare of consumers in general.
Proposal of a methodology to estimate the implicit deficit cost.
Evaluation of the proposed methods. Comparison criteria were defined to evaluate
the proposed methods, considering the difference between models and measuring
the main characteristics and fragilities of each one: representativeness of social costs,
premises, robustness (stability), reproducibility and complexity. Each model was able
to better reflect a specific need.
Estimation of the effects of the deficit cost functions proposed in the computational
models for the electric power sector (NEWAVE).
RESULTS
.
Besides updates of the current methodology, alternative models were developed, eval-
uated and estimated, in line with the state of the art in the literature and international
practices.
Among the models that were adapted to Brazilian reality, the standout was the approach
using surveys among consumers to estimate the value attributed by different groups to
the consumption of electricity, and as a consequence, to the effects of possible shortage.
Irrespective of the method chosen, good governance in operation of the electric system
is vital. The models and methods to calculate the cost of the deficit should be transparent
and the operation of the system should be consistent with the dynamic optimization
processes, to effectively reflect the targets and needs of that operation.
CONTRIBUTIONS OF THE STUDY
•
The study offers and tests methodological improvements able to better reflect the
true impact of possible shortage of electricity, considering the heterogeneity of con-
sumers and various deficit scenarios.
Besides using and improving the current method of calculating the deficit cost, an in-
ternationally recognized approach, not previously employed in Brazil, was developed,
characterizing the innovation of the research project - direct research/contingent val-
uation. The implementation of a computable general equilibrium model for the prob-
lem also is an innovative application in the Brazilian electric sector.
The study incorporates the use of complementary methods, including the one cur-
rently applied in Brazil, which is based on an input-output matrix and the country's
national accounts system.
APPLICATIONS OF THE RESULTS AND POSSIBLE EXTENSIONS OF THE STUDY
The results presented will allow improving the economic signs necessary for planning
the operation and expansion of the electricity system. They can also offer support for
a possible policy of managing cutoffs in case of a crisis and the development of regu-
latory and contractual mechanisms able to improve the allocation of energy resources
in moments of shortage, with gains for the economy as a whole.
AUTHOR:
Joisa Campanher Dutra.
RESEARCHERS:
Cezar Santos, Claudio Considera, Denise Teixeira, Edmilson Varejão, Edson Gonçalves,
Gustavo Timponi, Jimmy Medeiros, Leontina Pinto, Luana Pimentel, Márcio Grijó, Patricia
Naccache, Raquel Soares, Vinícius Botelho and Vivian Figer.
ORGANIZATION:
Center for Regulation and Infrastructure Studies (CERI).
SUPPORT:
Campos Novos Energia S.A. (ENERCAN), Energética Barra Grande S.A. (BAESA),
Companhia Energética de São Paulo (CESP), Itiquira Energética S.A. (ITISA), Energética
Águas da Pedra S.A. (EAPSA), Candeias Energia S.A., Companhia Energética Manauara
S.A., Foz do Chapecó Energia S.A., Companhia Paranaense de Energia (COPEL),
Petrobras, Companhia Energética Rio das Antas (CERAN), Companhia Energética
de Minas Gerais (CEMIG), Geração e Transmissão S.A., CEMIG Distribuição S.A., Duke
Energy International Geração Paranapanema S.A., Centrais Elétricas da Paraíba
(EPASA), Companhia Paulista de Força e Luz (CPFL Paulista), CPFL Piratininga, CPFL
Jaguari, CPFL Sul Paulista, CPFL Mococa, Rio Grande Energia (RGE), ELEKTRO and
Santo Antônio Energia, Narandiba - Grupo Neoenergia.
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Annual Report 2018
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RESEARCHView entire presentation