Following an incident on the transmission line connecting the Xingu Substation to Rio de Janeiro, the Southeast and South markets are expected to face restrictions on the flow of energy from the North. As a result, energy prices during peak hours in these regions may increase.
It The assessment is by Vladimir Pinto, head of Energy and Sanitation at XP, and Bruno Vida, Utilities analyst at XP. According to experts, energy flows from the North to the Northeast are expected to grow, resulting in an increase in the curtailment of generation in renewable energy plants in the Northeast.
“As these temporary increases are driven by electrical transmission issues, neither the PLD (short-term power prices) nor the costs of curtailment for renewable power plants increase. Consequently, these costs will likely be passed on to end consumers through the ESS (System Service Charges),” they explain.
The transmission line was interrupted after the storms of January 22, preventing the delivery of 4 GW of energy from the Belo Monte Hydroelectric Plant to the Southeast and South markets. As a result, these regions will have to resort to more expensive thermal plants during peak hours. The situation is expected to return to normal by February 2.
XP experts, however, point out that some factors can mitigate the need for additional energy dispatch, such as:
- The forecast for milder temperatures in the Southeast this week, which should reduce energy consumption;
- The resumption of operations at the Angra nuclear power plant, alleviating the need for additional generation.
Despite the activation of more expensive plants, experts emphasize that the impact on energy prices in the South and Southeast markets will be limited, as the problem is of an electrical nature, caused by failures in the transmission system.
The additional costs will be covered by the System Service Charges and consequently reflected in the tariffs of end consumers. “Consequently, we do not anticipate that companies with uncontracted energy will benefit from this situation”, they state.
Another expected consequence is an increase in curtailment in the Northeast. With the flow of energy to the Southeast and South limited, energy flows from the North to the Northeast are expected to increase, reducing the demand for renewable generation in the region. However, analysts point out that “the impact should be minimal, since the reasons for these changes are mainly “electrical” and therefore should be offset by the electricity system as a whole.”
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