Energy Operation

Mid-term Horizon

In 2015, the Energy Operation Plan 2015/2019 (PEN 2015) was unusuallyissuedin September, considering the information of the 2ndOwn Load Reviewin August. The results subsidiesthe Electric Sector Monitoring Committee (CMSE) and the Energy Research Company (EPE) onthe possible need for generation expansion planning studies and regional interconnections, to adjust the power supply to guarantee criteria supply established by the National Energy Policy Council (CNPE).

The new energy aggregate by the auctions and the addition of new transmission lines increased energy offer in the period. Hydroelectricity will remain as the main source of electric power generation, in spite of its share being reducedfrom 73.7% in 2014 to 68.0% at the end of the horizon. There will be a significant increase in wind power plants installed capacity, which will rise from 3.7% of the electric matrix to 9.4% at the end of 2019.

The paradigm shift in how to operate the BIPS is to be highlighted, as pointed out in several studies issued in recent years, due to the lack of new multi-year regulation reservoirs; the more intensive use of thermal generation even with average hydrology and to complement the supply to peak load; the importance of transmission expansion to the reduce operating costs; the significant growth of wind generation and new run of river hydroelectric projects in the Amazonian Region and with seasonal offer.

The 2ndQuarterly Load Review’s power load and demands values, brought forward to August 2015, were used in this study. This review considers: the economic and market environment during the first half of 2015; the observed deviations between the observed load and projections made in April for the 1st QuarterlyLoad Review of the year; the current dynamics of the economy; the releaseof the increase in electricity tariffs due to variable tariffs, the extraordinary and common tariff revision already occurred; and an annual average GDP increase rate in the period of 2015/2019 to 2,5% p.a.

The supply conditions evaluations were divided into two horizons in the 2015 PEN. In the first one, 2015/2016, environmental, deterministic and stochastic analyzes were carried out, highlighting each BIPS’s subsystem storage evolution. In general, during this period, power plants and transmission lines configurations are defined, and there is hardly any possibility of incorporating or forwarding new projects. The second horizon comprehends the three remaining years, 2017-2019, and shows a more structural feature, whereindicators such asdeficit risks and operation marginal costwere observed. During this period, the expansion of generation and transmission is key to increase thesecurity of supplyto the market in a structural form.

Due to the loss of the system’s regulating capacity face to load growth,it can be noted that there is an increase in the influence in the initial storage conditions concerning the results in the first two years of the evaluation horizon, impacting the metric typically used such as deficit risks, expected value of non-supplied energy and operation marginal costs.

Regarding the analysis of load supply conditions, the 2017/2019 horizon probabilistic assessments, based on the energy deficit risks,point to suitability to the supply criteria set by the National Energy Policy Council (CNPE), to the extent  deficit risks are lower than 5% in all subsystems;

The maximum demand supplyanalysisindicates that, despite the existence of available surpluses to meet the BIPS’s maximum demand,special dispatch actions may be required to keep the frequency control in situations of demand’s unanticipated increases in the maximum demand due to temperature rise in the summer months, once the maximum demand tends to increase to around 4,000 MW every 10 ° C, from temperatures near 35 ° C;

In addition, it could be identified a high frequency of congestion in the North / South interconnection, reducing at the end of the horizon, with the entryinto operation of the reinforcement associated with the energy flow fromBelo Monte power plant, confirming the energy assessments diagnosis on the need for cost / benefit assessments of reinforcements / anticipations.

 

Short-Term Horizon

Under the climatic point of view, 2015, since the very beginning, was marked by occurrence of a positive anomaly of atmospheric pressure in the South - Central region of the country, which caused a blockage of the entrance of cold fronts and low pressure systems. This phenomenon also led to a reduction of the humidity transport fromthe Amazonian Regionto the Southeastern Region of Brazil and led to the non-occurrence of episodes of South Atlantic Convergence Zone (SACZ). Therefore, there was significantly below average precipitation in the hydro basins located in the Southeastern, Midwestern, Northeastern and Northern Regions, creating an unfavorable situation in the wet period in major basins of the BIPS, such as the Paranaíba, Grande, São Francisco and Tocantins.

The occurrence of the El Niño phenomenon, associated with the rise in sea surface temperature in the Equatorial Pacific Region, began to have a strong influence on the rain regime in Brazil. In the Southern Region, especially, episodes of high precipitation occurred, and in areas located further north in the Northeastern and Northern Regions, a negative precipitation anomaliesoccurred. The El Niño event that began during the 2015summer / fall, was classified as very strong and is among the three most intense in history, reaching its peak in November 2015.

In this context, the Southeastern / Mid-Westernsubsystem presented unfavorable inflows in the 2015 wet season,following what had been observed in 2014, with only 74% of the LTA (long-term average), representing the eighth worst wet season in history. The dry period had inflows around average, with 109% of LTA, which totaled an annual amount of 89% of the LTA. In the South subsystem, the inflows were very favorable, 140% of LTA in the year. In the Northsubsystem, the inflow behavior was unfavorable, 73% of the LTA, especially during the rainy season (71% of theLTA). In the Northeast, the year was very critical, with 38% of the LTA, being classified as one of the driest in the history - 85 years, even worse than 2014, which had been described as the worst at that moment.

In 2015, once more, the hydrologic diversity of the BIPS’s component subsystems was highlighted.A hydrological transition condition was shifted from critical to average in the Southeast / Mid-West subsystem; very humid in the South, reflecting the start the El Niño actuation; drought in the North; and the most critical in the Northeast, establishing in this subsystem, a new critical multi-year period, as shown in Table 1.

Table 1 – Energy Inflow by Subsystem

Table 2 summarizes the 2015 river basinsinflow conditions, also showing the hydrologic diversity observed within the main ones in the Southeast / Midwestsubsystem. While critical conditions were observed in the basins of the Rio Grande, Paranaíba, Tietê, Paraiba do Sul, Paraná and Doce (worse one in history), there were very favorable inflows in on the Paranapanema and Madeira rivers. In this table, the Jacuí, Iguaçu and Uruguayriver basins, components of theSouth subsystem, showed a very uniform and favorable behavior in 2015.

Table 2 – StorageandEnergy Inflowby Basin

As a result of these reduced inflows in most basins of the Southeast / Mid-West subsystems, especially during the wet season, and in the basins of the North and Northeast subsystems, reservoir storage levels in these three subsystems remained low, reaching the end of year, as is the case of the Northeast and North, lower values than the ones recorded in the previous year, according to Table 3.

Table 3 – Energy Stored by Subsystem

The operative measures and the management of water resources adopted in 2014, due to the water shortage observed in the main basins of the Southeast / Midwest and Northeast subsystems inthat year, were kept face to the permanence of hydrological conditions and the unfavorable storage in these subsystems in 2015, requiring ONS to prepare the Monthly Operation Program (PMO) and its weekly review, the careful management of the available hydro resources. Among the operational measures implemented to this purpose, it can be highlighted the preservation of the headwater reservoirs storage of the main hydro basins, the full dispatch of power plants availability for energy security, and the use of power transmission capacity to carry out transfers from regions with higher energy availability, North and South, to those in worse conditions, Northeast and Southeast / Midwest.

Besides, the following had great importance to ensure the electric energy supply in 2015:keeping the operating flexibilitypolicy of some of the main hydraulic constraints of the BIPS, resulting from the articulations and joint work between ONS, the regulatory agencies ANA and ANEEL; IBAMA, MME, MMA, Basin Committees and sector Agents, in order to match the energy requirements with those associated with the multiple use of water, especially:

• Minimum navigation levels from the Tietê / ParanáWaterway to the downstream area of the Nova Avanhandava plant;
• Minimum Outflowof Três Marias, Sobradinho, Xingó, Jupiá, Porto Primavera, Caconde plants and of Santa Ceciliadam;
• Minimum Generation of hydro plants generating units during light load periods;
• Itaipu plantoperation as a regulating reservoir, between the maximum level of 220.40 m and a minimum of 216.00 m;
• Minimum storage at Mascarenhas de Moraes hydro plant (75% of its storage volume) to capture water and crossing the reservoir byferry; and
• Special rule for lowering the Jirau and Santo Antônio plantsreservoirs, which ensured conditions not to aggravate the flooding upstream and downstream of the plants, minimizing the risk of plants inoperability.

The implementation of these operational measures associated with the of  the BIPS’s hydroelectric conditions over the year, as well as the expectation of achieving storage levels of around 30% in the Southeastern / Midwestern Regions, at the end of November 2015, enabled CMSE to deliberate for the shutdown of thermal power plants with Variable cost per Unit (CVU) above R$ 600 / MWh, dispatchedforEnergy Security, from August 08, 2015, with a reduction of about 2,000 average MW and consequently amonthly operation cost savings of thermal plants.