The Real Possibility of Competitive Generation Markets in Hydro Systems-The Case of Brazil
Author: Antonio Estache and Martin Rodriguez-Pardina Date: 2/1/1997 (PDF, 200KB)
In Brazil's electricity system--one of the world's largest--plans are afoot to privatize and to introduce competition, unbundling the sector into competitive and monopoly segments. Moving to a competitive generation pool in a hydro-based system such as Brazil's poses two significant technical challenges: ensuring open entry for generators and designing a market that will enable investors to recover the high costs of investment characteristic of hydro systems. Antonio Estache and Martin Rodriguez-Pardina propose an approach using incentive-based organization and regulation, a model with potential application in other hydro systems.