GIZ BR ESOF Product 2

ENERGY SYSTEMS
OF THE FUTURE:
Integrating variable renewable energy
sources in Brazil's energy matrix
PRODUCT 2:
ENERGY STUDIES
Energy systems of the future: Final Report
Integrating variable renewable energy sources in Brazil's energy matrix
Processing No.: 15.2126.9-001.00
Energy Systems of the Future: Integrating Variable Renewable Energy Sources

in Brazil's Energy Matrix
Document Title: Product 2 – Energy Studies

Título do Documento: Produto 2 – Estudos Energéticos
Prepared by: Lahmeyer International GmbH

Elaborado por: Tractebel Engineering S.A.
PSR Soluções e Consultoria em Energia Ltda
Authors: Mario Pereira, Rafael Kelman, Juliana Pontes (PSR)

Autores:
Date: May 2019

Data: Maio 2019
Coordination: Florian Geyer (GIZ)

Coordenação: Juarez Castrillon Lopes (EPE), in memoriam
Karim Karoui (Tractebel)
Leonardo Rese (Tractebel)
Livio Teixeira Filho (MME)
Marcelo Prais (ONS)
Rafael Kelman (PSR)
Renata Carvalho (EPE)
Roberto Castro (GIZ)
This study was carried out within the scope of the German Cooperation for Sustainable
Development, through the Deutsche Gesellschaft für Internationale Zusammenarbeit
(GIZ), within the Energy Systems of the Future Program. On the Brazilian side, the
Program has as its political coordinating partner the Ministry of Mines and Energy
(MME), also counting on the participation of other relevant institutions in the national
electricity sector, such as the Empresa de Pesquisa Energetica (EPE) and the Operador
Nacional do Sistema Eletrico (ONS), technical implementing partners of this study.
Este estudo foi elaborado no âmbito da Cooperação Alemã para o Desenvolvimento

Sustentável, por intermédio da Deutsche Gesellschaft für Internationale
Zusammenarbeit – GIZ, dentro do Programa Sistemas de Energia do Futuro. Pelo lado
brasileiro, o Programa tem como parceiro coordenador político o Ministério de Minas e
Energia (MME), contando também com a participação de outras relevantes instituições
do setor elétrico nacional, destacando aqui a Empresa de Pesquisa Energética (EPE)
e o Operador do Sistema Elétrico Nacional (ONS), parceiros executores técnicos deste
estudo.
Processing No.: 15.2126.9-001.00
Legal Information
1. All indications, data and results of this study were compiled and carefully reviewed
by the author(s). However, errors regarding the content cannot be avoided.
Consequently, neither GIZ or the author(s) can be held responsible for any direct or
indirect claim, loss or damage resulting from the use or reliance placed on the
information contained in this study, or directly or indirectly resulting from errors,
inaccuracies or omissions of information in this study.
2. Duplication or reproduction of all or parts of the study (including the transfer of data
to media storage systems) and distribution for non-commercial purposes is
permitted, provided GIZ is cited as the source of the information. For other
commercial uses, including duplication, reproduction or distribution of all or parts of
this study, written consent from GIZ is required.
Informações Legais
1. Todas as indicações, dados e resultados deste estudo foram compilados e

cuidadosamente revisados pelo(s) autor(es). No entanto, erros com relação ao
conteúdo não podem ser evitados. Consequentemente, nem a GIZ ou o(s) autor(es)
podem ser responsabilizados por qualquer reivindicação, perda ou prejuízo direto
ou indireto resultante do uso ou confiança depositada sobre as informações
contidas neste estudo, ou direta ou indiretamente resultante dos erros, imprecisões
ou omissões de informações neste estudo.
2. A duplicação ou reprodução de todo ou partes do estudo (incluindo a transferência
de dados para sistemas de armazenamento de mídia) e distribuição para fins não
comerciais é permitida, desde que a GIZ seja citada como fonte da informação.
Para outros usos comerciais, incluindo duplicação, reprodução ou distribuição de
todo ou partes deste estudo, é necessário o consentimento escrito da GIZ.
Processing No.: 15.2126.9-001.00
List of Participants / Lista de Participantes
Steering Committee / Comitê Gestor

Florian Geyer (GIZ)
Juarez Castrillon Lopes (EPE)
Karim Karoui (Tractebel)
Leonardo Rese (Tractebel)
Marcelo Prais (ONS)
Rafael Kelman (PSR)
Renata Carvalho (EPE)
Roberto Castro (GIZ)
Technical Committee / Comitê Técnico – EPE

Bruno Cesar Mota Macada; Bruno Scarpa Alves da Silveira; Caio Monteiro
Leocadio; Carolina Moreira Borges; Cristiano Saboia Ruschel; Daniel José
Tavares de Souza; Fabiano Schmidt; Fabio de Almeida Rocha; Flavio Alberto
Figueredo Rosa; Gabriel Konzen; Glaysson de Mello Muller ; Gustavo
Brandão Haydt de Souza; Gustavo Pires da Ponte; Gustavo Valeriano Neves
Luizon; Igor Chaves; Jean Carlo Morassi; João Henriques Magalhães
Almeida; Jorge Trinkenreich; Jose Filho da Costa Castro; José Marcos
Bressane; Leandro Moda; Leandro Pereira de Andrade; Lucas Simões de
Oliveira; Luiz Felipe Froede Lorentz; Marcelo Willian Henriques Szrajbman;
Marcos Vinícius G. da S. Farinha; Maria Cecilia Pereira de Araújo; Maxwell
Cury Junior; Paulo Fernando de Matos Araujo; Pedro Americo Moretz-Sohn
David; Renata de Azevedo Moreira da Silva; Renato Haddad Simões
Machado; Rodrigo Ribeiro Ferreira; Rodrigo Rodrigues Cabral; Roney
Nakano Vitorino ; Samir de Oliveira Ferreira; Sergio Felipe Falcão Lima;
Simone Quaresma Brandão; Thais Pacheco Teixeira; Thiago de Faria Rocha
Dourado Martins; Tiago Campos Rizzotto; Tiago Veiga Madureira.
Technical Committee / Comitê Técnico – ONS

André Snaider; Angela Barbosa Greenhalgh; Elder Sales de Santanna; Karine
Rejane de Oliveira Franca Louzada; Lillian Monteath; Paulo Eduardo Martins
Quintão; Roseane de Souza Nunes; Tatiane Moraes Pestana Cortes; Vitor
Silva Duarte.
Technical Committee / Comitê Técnico – Consultant / Consultor

Achim Schreider; Alexis Bonneschky; Atom Mirakyan; Enrique Salazar; Felix
Knicker; Francois Botreau; Jörg Großmann; Julia Hoepp; Julio Sanchez; Kai-
Uwe Horn; Matthias Drosch; Oliver Heil; Ralf Bucher; Stefan Drenkard
(Lahmeyer International). Christian Merckx; François Promel; Françoise
Dassy; Guillaume Brunieau; Karim Karoui; Leonardo Rese; Loïc Maudoux;
Lucas Manso da Silva; Pieter Tielens; Rebecca Sinder; Rodolfo Bialecki; Stijn
Cole (Tractebel). Alessandro Soares; João Marcos; Juliana Pontes; Julio
Alberto; Lucas Okamura; Maria Luján Latorre; Mario Veiga Pereira; Martha
Rosa; Maynara Aredes; Rafael Kelman; Silvio Binato; Tainá Martins (PSR).
Processing No.: 15.2126.9-001.00
Presentation
The study “Integrating Variable Renewable Energy Sources in Brazil's Energy Matrix”
was conceived within the scope of German Cooperation for Sustainable Development,
through Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), within the
“Energy Systems of the Future” Program. On the Brazilian side, the Program has as its
political coordinating partner the Ministry of Mines and Energy (MME), also counting on
the participation of other relevant institutions in the national electricity sector, with an
emphasis to the Empresa de Pesquisa Energetica (EPE) and the Operador Nacional
do Sistema Eletrico (ONS), technical implementing partners of this study.
The study was structured into five main products: Technical Regulation Studies (Grid
Codes); Energy Studies; Power System Studies; Methodology Studies and Technology
Studies, which, all together, have as an end result an analysis of the impacts of the
integration of large amounts of variable renewable energy sources in the National
Interconnected System (SIN). The study takes into account the analysis of energy and
power aspects and considers technological and cost trends, as well as a methodological
proposal and analytical tools for studies of this nature.
In order to carry out the study, an international bidding process was carried out, in which
the Consortium formed by the companies Lahmeyer International, Tractebel and PSR
was awarded to carry out the work.
One aspect that should be highlighted was the active participation of EPE and ONS
experts in the project execution, who, together with the contracted consultant, made
their knowledge available in the preparation of the products, as well as in the
participation of the various training sessions that were carried out during the work.
Objective
The study aims to analyse the impacts of the integration of large amounts of variable
renewable energy sources in the National Interconnected System and has the following
main objectives: i) to review the planning practices for the integration of renewable
energy sources in Brazil; ii) identify any gaps in current planning practices in Brazil with
respect to international practices; iii) to propose improvements in terms of
methodologies and analytical tools for the planning of the Brazilian electrical system;
and iv) carry out a case study using the methodologies and analytical tools proposed in
the study. Additionally, technical training sections carried out by the Consultant to
experts of EPE and ONS teams constituted an important part of this project.
Enjoy the reading.

Processing No.: 15.2126.9-001.00
Apresentação
O estudo sobre a Integração de Fontes Renováveis Variáveis na Matriz Elétrica

Brasileira foi concebido no âmbito da Cooperação Alemã para o Desenvolvimento
Sustentável, por intermédio da Deutsche Gesellschaft für Internationale
Zusammenarbeit – GIZ, dentro do Programa Sistemas de Energia do Futuro. Pelo lado
brasileiro, o Programa tem como parceiro coordenador político o Ministério de Minas e
Energia (MME), contando também com a participação de outras relevantes instituições
do setor elétrico nacional, destacando aqui a Empresa de Pesquisa Energética (EPE)
e o Operador do Sistema Elétrico Nacional (ONS), parceiros executores técnicos deste
estudo.
O estudo foi estruturado em cinco produtos principais: Estudos Regulatórios (Códigos
de Rede); Estudos Energéticos; Estudos Elétricos; Estudos Metodológicos e Estudos
Tecnológicos, que, integrados entre si, tem como resultado final uma análise dos
impactos da integração de grandes quantidades de fontes renováveis de energia no
Sistema Interligado Nacional (SIN), principalmente solar e eólica, avaliando aspectos
energéticos e elétricos e considerando tendências tecnológicas e de custos, bem como
uma proposta metodológica e de ferramentas analíticas para estudos desta natureza.
Para execução do estudo, foi realizada uma licitação internacional onde o Consórcio
formado pelas empresas Lahmeyer International, Tractebel e PSR sagrou-se vencedor
do certame para realização do trabalho.
Um aspecto que deve ser ressaltado foi a participação ativa dos colaboradores da EPE
e ONS, que, juntos com a consultoria contratada, disponibilizaram seu conhecimento
na elaboração dos produtos, bem como na participação das diversas capacitações que
foram realizadas durante o trabalho.
Objetivo
O estudo visa analisar os impactos da integração de grandes quantidades de fontes
renováveis de energia no Sistema Interligado Nacional e possui os seguintes objetivos
principais: i) revisar as práticas de planejamento para a integração de fontes renováveis
de energia no Brasil; ii) identificar eventuais lacunas das práticas de planejamento
atuais no Brasil com respeito às práticas internacionais; iii) propor melhorias em termos
de metodologias e ferramentas analíticas para o planejamento do sistema elétrico
brasileiro; e iv) realizar um estudo de caso aplicando as metodologias e ferramentas
analíticas propostas no estudo. Adicionalmente, ações de capacitação técnica das
equipes da EPE e ONS constituem parte importante deste projeto.
Boa leitura.
Processing No.: 15.2126.9-001.00
Acknowledgements
The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), thanks the

Empresa de Pesquisa Energética (EPE and the Operador Nacional do Sistema Elétrico
(ONS), the focal points of the respective institutions, Juarez Castrillon Lopes, Renata
Carvalho and Marcelo Prais, and all members of the working groups that during the
study made their time and knowledge available in order to achieve results of technical
excellence. Last but not least, we would like to thank the contracted Consultant
Consortium, Lahmeyer International, Tractebel and PSR, for the excellent work carried
out and for the way in which the negotiations have always been conducted. Special
thanks are due to the consultants Rafael Kelman (PSR) and Leonardo Rese (Tractebel),
for their availability, attention and technical quality provided to the work.
Many thanks to all.
Special thanks to the friend and colleague Juarez Castrillon Lopes
At the conclusion of this study, the project team could not fail to pay
a special tribute to our friend and colleague Juarez Castrillon Lopes,
who toasted us with his presence, joy, friendship and knowledge
during the execution of the study, but which unfortunately left us on
15 April 2020.
From the first conversations in the conception of this study, Juarez
has always shown himself as an idealizer and encourager of work.
The first ideas for this study were written by him in conversations
over coffee, on napkins, which were later refined until the elaboration
of the terms of reference detailing the content of the study. From the
beginning defending a greater interaction between system operation and planning, he
motivated the joint participation of EPE and ONS in all discussions about the study.
During its execution, Juarez always kept the work in the direction that the final objective
was reached, participating in all study working groups, always actively, enriching the
discussions with his high technical knowledge and creating a fraternal work environment
within the team. His always active participation was one of the factors that led to the
end of delivering a study of technical excellence. Juarez will definitely be missed by his
friends and colleagues who had the opportunity to share the life and work with him.
This acknowledgment does not intend to reflect everything that this electrical engineer,
promoter of wind energy and “Botafoguense”, contributed to the electricity sector in
these almost 45 years of dedication, but rather, to leave a simple and sincere tribute to
those who had the opportunity to enjoy his presence in the execution of this study.
Thank you very much from the entire team.

Processing No.: 15.2126.9-001.00
Agradecimentos
A Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ, agradece aos

titulares da Empresa de Pesquisa Energética e do Operador do Sistema Elétrico
Nacional, aos pontos focais das respectivas instituições, Juarez Castrillon Lopes,
Renata Carvalho e Marcelo Prais e a todos os membros dos grupos de trabalho que
durante a realização do estudo disponibilizaram seu tempo e conhecimento no sentido
de alcançarmos um estudo de excelência técnica. Por fim, não menos importante,
agradecemos ao Consórcio Consultor contratado, Lahmeyer International, Tractebel e
PSR, pelo excelente trabalho executado e pela forma em que as tratativas sempre
foram conduzidas. Agradecimento especial registramos aos consultores Rafael Kelman
(PSR) e Leonardo Rese (Tractebel), pela disponibilidade, atenção dispensada e
qualidade técnica fornecida ao trabalho.
Um muito obrigado a todos.
Agradecimento especial ao amigo e colega Juarez Castrillon Lopes
Na conclusão deste estudo, a equipe não poderia deixar de registrar

uma homenagem especial ao nosso amigo e colega Juarez
Castrillon Lopes, que nos brindou com sua presença, alegria,
amizade e conhecimento durante a execução do estudo, mas que
infelizmente nos deixou em 15 de abril de 2020.
Desde as primeiras conversas na concepção deste estudo, até
mesmo nas informais, Juarez sempre se mostrou como um
idealizador e incentivador do trabalho. As primeiras ideias foram por
ele escritas em conversas durante cafés, em guardanapos, que
depois foram sendo refinadas até a elaboração de um termo de referência detalhando
o conteúdo do estudo. Defendeu, desde do começo, uma maior interação entre
operação e planejamento, motivando a participação conjunta da EPE e do ONS em
todas as discussões.
Já durante sua execução, Juarez sempre manteve a condução dos trabalhos no
sentido que o objetivo final fosse alcançado, participando de todos os grupos de
trabalho do estudo sempre de forma ativa, enriquecendo as discussões com seu alto
conhecimento técnico e criando um ambiente fraterno de trabalho dentro da equipe.
Sua participação sempre ativa foi um dos fatores que propiciaram ao final entregar um
estudo de excelência técnica. Juarez sem dúvida vai deixar muitas saudades entre
seus amigos e colegas que tiveram a oportunidade de conviver e trabalhar com ele.
Este agradecimento não pretende refletir tudo que este engenheiro eletricista,
incentivador da energia eólica e Botafoguense contribuiu para o setor elétrico nestes
quase 45 anos de dedicação, mas sim, deixar uma simples e sincera homenagem
daqueles que tiveram a oportunidade de desfrutar de sua presença na execução deste
estudo.
Muito obrigado de toda a equipe.

Energy systems of the future:
Integrating variable renewable
energy sources in Brazil's energy
matrix
Product 2:
Energy Studies
Final Report
Gesellschaft für Internationale

Zusammenarbeit
Brazil
RESTRICTED
May 2019
20-26-00173
Final Report
Transaction 81212141
number:
Project Number 15.2126.9-001.00
Client Deutsche Gesellschaft für Internationale Zusammenarbeit
Country Brazil
Project title Energy systems of the future:

Services Consultancy Services
Consultant: Lahmeyer International GmbH

Friedberger Straße 173
61118 Bad Vilbel, Germany
Tractebel Engineering
Avenue Simon Bolivar 34-36,
1000 Brussels, Belgium
PSR Soluções e Consultoria em Energia

Ltda
Praia de Botafogo 370 / 1o andar - Botafogo
22250-040 - Rio de Janeiro, Brasil
Date May 2019
Revision Date Status Author Verified Approved

02 01. May. 2019 Final R. Kelman (PSR) L. Rese (TE)
May 2019
20-26-00173
© Lahmeyer International GmbH, 2020
The information contained in this document is proprietary, protected and solely for the use of the Client iden-
tified on the cover sheet for the purpose for which it has been prepared. Lahmeyer International GmbH and
its consortium partners Tractebel Engineering S.A. and PSR Soluções e Consultoria em Energia Ltda. un-
dertake no duty, nor accept any responsibility, to any third party who may wish to rely upon this document.
Save to the extent agreed otherwise with the Client all rights are reserved and no section or element of this
document may be removed from this document, reproduced, electronically stored or transmitted in any form
without written permission of Lahmeyer International GmbH and Tractebel Engineering S.A. and PSR
Soluções e Consultoria em Energia Ltda.
May 2019
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TABLE OF CONTENTS
1 INTRODUCTION 10
2 CONTEXT 11
2.1 Variable renewable electricity 11
2.2 Global trend 11
2.3 VRE in Brazil 14
2.4 The renewable transition 16
2.5 Objectives of this product 18
3 OVERVIEW OF THE METHODOLOGY 20
3.1 Step 1 – Design of VRE candidate projects 20
3.2 Step 2 – Stochastic modelling of renewables and inflows 21
3.3 Step 3 – Co-optimize new electricity and gas investments 22
3.4 Step 4 – Optimal stochastic operation 26
3.5 Step 5 – Optimal network planning under uncertainty 27
4 CASE STUDY DATA ASSUMPTIONS 28
4.1 Market size 28
4.2 Supply options 28
4.3 Decommissioning of existing power plants 36
4.4 Regional grid modelling 36
4.5 Distributed Generation 38
4.6 Automatic generation control 39
4.7 Minimum water outflow for Sobradinho 39
5 VRE MODELLING 40
5.1 Characterization of renewable energy resources 40
5.2 Production of integrated hydro, wind and solar scenarios 44
5.3 Capacity factor 46
6 CASE STUDY 52
6.1 Methodology 52
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6.2 Expansion planning problem size 53
6.3 Capacity expansion and operation results 54
6.4 Reservoir operation 59
6.5 Daily operation 60
6.6 Marginal costs 61
6.7 Regional energy transfers 62
6.8 VRE production curtailment 66
6.9 Allocation of reserves 66
7 SENSITIVITY CASES 69
7.1 Objectives 69
7.2 Sensitivity 1: VRE investment costs 69
7.3 Sensitivity 2: Open cycle generation 70
7.4 Sensitivity 3: Minimum storage for Li-Ion BESS 70
7.5 Sensitivity 4: VRE uncorrelated with hydrology 70
7.6 Sensitivity 5: VRE forecasting error 73
7.7 Sensitivity 6: Capacity expansion timing 74
8 TRANSMISSION EXPANSION 76
8.1 Transmission candidate costing 78
8.2 OptNet execution 79
8.3 Transmission reinforcement results 79
9 DETAILED SIMULATIONS OF THE HOURLY OPERATION 83
9.1 Methodology 83
9.2 Production 83
9.3 Start-ups of thermal power plants 85
9.4 Wind power variability 86
9.5 Nodal marginal costs 86
9.6 VRE curtailment 88
9.7 North-Northeast power exchanges 88
9.8 Belo Monte’s DC link 88
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10 CONCLUSIONS 90
10.1 Candidate projects 91
10.2 Renewables and inflows scenarios 91
10.3 Expansion planning study 91
10.4 Main insights from the expansion planning study 91
10.5 Stakeholder engagement 92
11 ANNEX: OPTGEN METHODOLOGY 94
11.1 Problem formulation 94
11.2 Project investment cost calculation 96
12 ANNEX: AGC POWER PLANTS 98
13 ANNEX: ASSUMPTIONS BOOK 99
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LIST OF FIGURES
Figure 1: Wind power variability observed in the Northeast during June 26th, 2016. Source: ONS .............. 11
Figure 2: Global solar photovoltaic capacity (source: IRENA, 2017)............................................................ 12
Figure 3: Virtuous cycle of VRE deployment ............................................................................................... 12
Figure 4: Wind power advances in Brazil. Source: EPE, 2018 .................................................................... 13
Figure 5: Global investments in renewable energy. Source: Bloomberg NEF .............................................. 13
Figure 6: VRE capacity procured per auction since 2009, adapted from Casa dos Ventos, 2018 ................ 14
Figure 7: Short-term variability of wind power in Southern Brazil for 17 days. Source: ONS, 2017............... 14
Figure 8: Share of total electricity production per source in Brazil. Source: ONS ......................................... 15
Figure 9: Wind and solar PV production (TWh/year) in Brazil. Source: ONS ............................................... 15
Figure 10: Furnas hydropower reservoir - an example of large regulation capacity ..................................... 16
Figure 11: From wagons to cars - 5th Ave., NY. Source: Casa dos Ventos (Windpower, 2018) ................... 17
Figure 12: Transmission reinforcement need .............................................................................................. 18
Figure 13: Overview of the study methodology ........................................................................................... 20
Figure 14: RPD – Regionalization of existing wind power plants ................................................................. 21
Figure 15: RPD – Correction of MERRA data based on Info Mercado......................................................... 21
Figure 16: TSL – Bayesian network for inflows and wind in Brazil ............................................................... 22
Figure 17: Optimal capacity expansion – iterative solution of investment and operation modules ................ 22
Figure 18: Dynamic probabilistic reserve (DPR) calculation methodology ................................................... 23
Figure 19: Dynamic probabilistic reserves (DPR) for the Brazilian system (GW) ......................................... 25
Figure 20: Optimal capacity expansion with dynamic probabilistic reserve (DPR) constraints...................... 25
Figure 21: Regional representation of Brazil’s transmission network used in optimal capacity planning ....... 26
Figure 22: Simplified version of the system operator’s decision problem ..................................................... 26
Figure 23: Application of SDDP to the Brazilian system .............................................................................. 27
Figure 24: NetPlan – Optimal transmission network planning...................................................................... 27
Figure 25: Wind power projects from auction “A-4” of 2018......................................................................... 32
Figure 26: Wind projects from auction “A-4” of 2018 ................................................................................... 32
Figure 27: Classification of the clusters based on IEC61400-1: 2005 .......................................................... 33
Figure 28: Solar PV projects from auction “A-4” of 2018 ............................................................................. 34
Figure 29: Regional grid modelling ............................................................................................................. 36
Figure 30: High voltage transmission network ............................................................................................ 38
Figure 31: Representation of distributed generation.................................................................................... 39
Figure 32: Annual variability of production .................................................................................................. 40
Figure 33: Renewable seasonal complementarity – source: PSR ............................................................... 41
Figure 34: Wind-solar daily operational synergy in Bahia ............................................................................ 41
Figure 35: Selection of project locations ..................................................................................................... 42
Figure 36: Wind x Wind correlations in April ............................................................................................... 43
Figure 37: Wind x Hydro correlations in April .............................................................................................. 43
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Figure 38: Wind x Wind correlations in September ..................................................................................... 43

Figure 39: Wind x Hydro correlations in September .................................................................................... 44
Figure 40: A Bayesian network for monthly wind and solar scenarios production ........................................ 44
Figure 41: Wind power distribution conditioned to hydrology x marginal distribution (January/2014)............ 45
Figure 42: Confidence interval for the forecasted monthly production x actual production ........................... 45
Figure 43: Wind clusters in Brazil (left) and a detail of the Northeast region (right) ...................................... 47
Figure 44: Spatial correlation and vertical extrapolation of MERRA-2 velocities .......................................... 48
Figure 45: Single turbine curve (blue) x park curve after Gaussian smoothing (orange) .............................. 48
Figure 46: MERRA-simulated production factor x observed ........................................................................ 49
Figure 47: Final parameters after calibration............................................................................................... 49
Figure 48: MERRA original velocity versus corrected.................................................................................. 50
Figure 49: Overview of the PV model methodology .................................................................................... 50
Figure 50: Regionalization of solar PV power plants ................................................................................... 51
Figure 51: Distributed generation capacity factor (source: EPE) ................................................................. 51
Figure 52: Diagram of the process flow of computational model.................................................................. 52
Figure 53: Capacity additions per source from 2026 to end of horizon ........................................................ 54
Figure 54: Capacity additions per source and region (GW) ......................................................................... 55
Figure 55: Spatial distribution of VRE capacity additions ............................................................................ 55
Figure 55: Installed capacity (GW) and capacity share (%) in 2016 ............................................................. 57
Figure 57:Installed capacity (GW) and capacity share (%) in 2026 (final year of PDE’s configuration) ......... 57
Figure 55: Installed capacity (GW) and capacity share (%) in the end-of-horizon of this study ..................... 58
Figure 59: Operation by Source for end of horizon...................................................................................... 58
Figure 60: International comparison of unit emission per energy consumption ............................................ 59
Figure 61: Sobradinho reservoir seasonal operation ................................................................................... 59
Figure 62: Sobradinho hydropower production ........................................................................................... 60
Figure 63: Total system generation by source – weekday, third quarter, average hydrological year ............ 61
Figure 64: Average monthly marginal costs ................................................................................................ 61
Figure 65: Mean marginal costs and percentiles (P10 and P90) ................................................................. 62
Figure 66: Main energy transfers ................................................................................................................ 62
Figure 67: Northeast exports to remaining indicated regions ....................................................................... 63
Figure 68: North hydro-related exports and wind-related imports from Northeast ........................................ 63
Figure 69: Southeast total imports vary from 20 GWavg (November) to 25 GWavg (March)........................ 64
Figure 70: Northeast imports (negative imports): smaller in March (4 GWm), larger in Sept. (23 GWm) ...... 64
Figure 71: South imports from Itaipu and seasonally exchange with the Southeast ..................................... 65
Figure 72: Centre-West imports from N, NE and AR and seasonally exchanges with the SE region ............ 65
Figure 73: North imports from NE follow the wind power seasonality .......................................................... 66
Figure 74: Allocated reserves for first quarter ............................................................................................. 67
Figure 75: Battery hourly operation (orange) vs. marginal cost (blue) for the 4th quarter ............................. 67
Figure 76: Sensitivity 1 - results for different projected VRE cost decreases ............................................... 69
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Figure 77: Sensitivity 4 - VRE scenarios uncorrelated with inflows .............................................................. 71

Figure 78: Sensitivity 4 –VRE scenarios uncorrelated with inflows: total costs ............................................ 71
Figure 79: VRE seasonal production for reference and uncorrelated cases ................................................ 72
Figure 80: VRE uncorrelated with inflows and illimited wind developments in the South .............................. 72
Figure 81: Sensitivity 6: improved forecasting of the VRE production .......................................................... 73
Figure 82: Overview of the cut years for the planning exercise ................................................................... 74
Figure 83: Timing of investment decisions .................................................................................................. 74
Figure 84: Transmission network study procedure ...................................................................................... 76
Figure 85: PDE 2026 transmission network configuration ........................................................................... 76
Figure 86: Mascarenhas de Moraes hydro plant connected to two substations ........................................... 77
Figure 87: SDDP run with full transmission and no flow monitoring identifies reinforcement candidates ...... 78
Figure 88: Solution method for OptNet ....................................................................................................... 79
Figure 89: Transmission reinforcements ..................................................................................................... 80
Figure 90: Northeast transmission reinforcements ...................................................................................... 81
Figure 91: Southeast transmission reinforcements ..................................................................................... 81
Figure 92: Bi-pole DC Link ......................................................................................................................... 81
Figure 93: South transmission reinforcements ............................................................................................ 82
Figure 94: Total production for a week in August ........................................................................................ 83
Figure 95: Hourly production (GW). From the top: hydro, wind, solar, biomass, thermal and BESS ............. 84
Figure 96: Illustrative dispatch for a day in January per source ................................................................... 85
Figure 97: Number of OCGT start-ups per month for different hydrology years ........................................... 85
Figure 98: Northeast wind power histogram. Sample: 8760 hourly values for hydrology year 1994 ............. 86
Figure 99: Northeast wind power variability histogram. Sample: 8760 values for hydrology year 1994 ........ 86
Figure 100: Hourly marginal costs for August 18th for Albras 230kV busbar (North region) ......................... 87
Figure 101: Hourly marginal costs for August 18th for Milagres 500kV busbar (Northeast region) ............... 87
Figure 102: Hourly Marginal costs for August 18th for Bandeirantes 88kV busbar (Southeast region) ......... 87
Figure 103: Mean Northeast VRE curtailment (% of capacity) ..................................................................... 88
Figure 104: North>Northeast energy exchanges for a normal hydrological year (GW)................................. 88
Figure 105: Heatmap of total Xingu DC link flow (GW)................................................................................ 89
Figure 106: Power flow distribution of DC Link for Xingu->Estreito .............................................................. 89
Figure 107: Power flow distribution of DC Link for Xingu ->Terminal Rio ..................................................... 89
Figure 108: Analytical tools used in the planning study ............................................................................... 90
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LIST OF TABLES
Table 1:Mapping of wind turbine models per IEC class ............................................................................... 33
Table 2: Technical characteristics and costs of BESS................................................................................. 35
Table 3: Wind and hydro correlations ......................................................................................................... 42
Table 4: Sensitivity 1 - main assumptions ................................................................................................... 69
Table 5: Installations for VRE uncorrelated with inflows and illimited wind additions in the South ................ 73
Table 6: Sensitivity 7 – results per region (GW) .......................................................................................... 75
Table 7: Synthesis of transmission expansion results per region................................................................. 79
Table 8: Number of lines built in each region per voltage level .................................................................... 80
Table 9: Investments in intra-regional transmission lines per voltage level .................................................. 80
Table 10: AGC power plants ...................................................................................................................... 98
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List of Acronyms
Acronym Definition
AC Alternating Current
ANEEL Agência Nacional de Energia Elétrica
CAPEX Capital Expenditure
CEMIG “Companhia Energética de Minas Gerais”
CEPEL Electrical Energy Research Center (“Centro de Pesquisas de Energia Elétrica”)
COELBA “Companhia de Eletricidade do Estado da Bahia”
COP United Nations Climate Change Conference
COPEL “Companhia Paranaense de Energia”
CRESESB Reference Center of Solar and Wind Energy Sérgio Brito
CSC Current Source Converter
DC Direct Current
DIN German Institute for Standardization
DNI Direct Normal Irradiance
DSM Demand-Side Management
EENS Expected Energy Not Supplied
EMT Electromagnetic Transient
EPE Empresa de Pesquisa Energética
ESS Energy Storage System
FACTS Flexible AC Transmission System
FRT Fault Ride Through
GHI Global Horizontal Irradiance
GIS Geographical Information System
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit
GPS Global Positioning System
G&T Generation and Transmission
HPP Hydro Power Plant
HV High Voltage
HVDC High-Voltage, Direct Current
HVRT High Voltage Ride Through
INDC Intended Nationally Determined Contribution
INMET “Instituto Nacional de Meteorologia”
LCC Line-Commutated Converter
LI Lahmeyer International
LILO Line-In-Line-Out
LOLP Loss of Load Probability
LVRT Low Voltage Ride Through
MERRA-2 Climate reanalysis database from NASA
MME Ministry of Mines and Energy
MoM Minutes of Meeting
NDA Non-Disclosure Agreement
NETPLAN Network planning software developed by PSR
NTC Net Transfer Capacity
OLTC On-Load Tap Changer
ONS Operador Nacional do Sistema Elétrico
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Acronym Definition
OPEX Operational Expenditure
OPF Optimal Power Flow
OPTGEN Optimum expansion planning model developed by PSR
OPTFOLIO Physical and Financial portfolio optimization model developed by PSR
O&M Operation and Maintenance
PDE Plano Decenal de Energia
PSP Pumped Storage Power Plant
PPA Power purchase agreement contract
PV Photovoltaic
RES Renewable Energy Sources
RfP Request for Proposal
RMS Root Mean Square
SCADA Supervisory Control and Data Acquisition
SCOPF Security-Constrained Optimal Power Flow
SCR Short-Circuit Ratio
SDDP Stochastic Dual Dynamic Programming
SIN Sistema Interligado Nacional (National Interconnected System of Brazil)
SPOC Single Point of Contact
SPS Special Protection Scheme
SVC Static VAR Compensator
SWERA Solar and Wind Energy Resource Assessment
TE Tractebel Engineering
ToR Terms of Reference
TPP Thermal Power Plant
UFLS Under-Frequency Load Shedding
UNFCCC United Nations Framework Convention on Climate Change
VRE Variable Renewable Energy
WAMPAC Wide-Area Measurement, Protection and Control
WS Workshop
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Energy systems of the future: Draft Report
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1 INTRODUCTION
The project “Energy systems of the future: Integrating variable renewable energy sources in Brazil's
energy matrix” aims at studying the impact of the integration renewable energy sources to the Brazilian
interconnected system (SIN) in both expansion and operation planning standpoints.
The general objective of the project, as specified in the ToR, is “to improve the prerequisites for systematic
integration of renewable energy and energy efficiency into the Brazilian Energy System”.
In this assignment, a pilot study on integrating renewable energies into the Brazilian energy system will be
performed. It will cover both operation and expansion planning aspects. More specifically, the objectives of
the project are:
· Perform an assessment of the current practices on RES integration in Brazil;
· Perform an assessment of the international practices on RES integration;
· Carry out a gap analysis between the international and the National practices in RES integration;
· Carry out an expansion planning exercise composed by energetic and power system analyses con-
sidering power system operation aspects;
· Propose upgrades to the current practices in Brazil based on the results of the gap analysis and the
detailed energy and power system studies.
In order to accomplish the aforementioned objectives, the project is organized in eight (8) products, as fol-
lows:
· Product 0: Work Methodology
· Product 1: Technical Regulation Studies
· Product 2: Energy Studies
· Product 3: Power System Studies
· Product 4: Methodology Studies
· Product 5: Technology Studies
· Product 6: Final Report
· Product 7: Workshops
This report comprises the Product 2 of the project (“Energy Studies”) and is structured as follows:
Chapter 2 covers the context of this study, related to a fast development of variable renewable energy
sources and how this demand new requirements and practices in energy planning activities. Chapter 3
presents the Methodology aspects proposed for the study for generation and transmission expansion plan-
ning and operation. Chapter 4 presents the main assumptions of the case study that is used with the pro-
posed methodology. An important aspect - the modelling of VRE sources - is the subject of Chapter 5.
Chapter 6 describes the case study and discusses the main results. Chapter 7 carries out sensitivity stud-
ies with respect to key variables and assumptions that were made in the reference case. Some of these
derived from discussions with EPE and ONS regarding the results of the reference case. Chapter 8 pre-
sents the transmission study compatible with the generation study, including both the proposed methodol-
ogy and the results. Chapter 9 presents key results of the hourly dispatch of the system, such as produc-
tion, circuit flows, bus marginal costs, start-up decisions in thermal stations and others. Finally, Chapter 10
presents the main conclusions of the study and recommendations.
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2 CONTEXT
A radical change is occurring in the energy sector globally. Driven by the need to move away from fossil
fuels to low carbon systems that, in turn, triggered technological advances, a rapid expansion is taking
place in intermittent, or variable, renewable energy sources such as wind and photovoltaic solar. This is
good news as far as reducing greenhouse gas emissions, but because of the variable nature of these
sources, integrating them into the energy system brings along some complicating issues. This report will
examine those issues and suggest methodological approaches for the rational planning of those re-
sources.
2.1 Variable renewable electricity

The term “Variable Renewable Electricity” (VRE) will be used throughout this report as generation technol-
ogies that, to a large extent, cannot be controlled, such as wind speed or solar radiation. Figure 1shows
large fluctuations (increase of 1385 MW in less than two hours, followed by a sharp decrease starting
15:30h and lasting about 1 hour).
Figure 1: Wind power variability observed in the Northeast during June 26th, 2016. Source: ONS
2.2 Global trend

The rapid expansion of VRE sources such as wind power and solar photovoltaic is a global phenomenon.
Initially, VRE was heavily subsidized by government policies, mostly in developed nations such as Ger-
many. Today, VRE is competitive in several countries without any subsidies. In the United States, for ex-
ample, the public subsidies decreased by 80% between 2013 and 2016, but the number of new wind farms
increased eight-fold during the same period1.
Figure 2 shows the global installed capacity of solar photovoltaic. In 2007, global installed capacity was
only 8 GW. In only five years, by 2012, it reached 100 GW, with Europe (especially Germany) leading the
way. In the following five years, by 2017, the global capacity quadrupled to 400 GW, with a market shift
towards China (the new global leader), USA, Japan and a dramatic increase in new markets. In summary,
solar photovoltaic grew 50-fold in just a decade.
1
Source: https://www.swissre.com/risk-knowledge/mitigating-climate-risk/how-risk-transfer-keeps-wind-farms-going-
when-the-wind-doesnt-blow.html
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Figure 2: Global solar photovoltaic capacity (source: IRENA, 2017)
Wind power growth in the last 10 years is equally impressive. According to IRENA Renewable Capacity
Statistics 20182, global wind capacity increased 4.5 times, from 115 GW in 2008 to 514 GW in 2017.
In the first five years of the 2008-2017decade, Feed-in tariffs were the basic incentive mechanism: VRE
purchase was mandatory at premium (higher than average) prices, and the corresponding costs were
passed on to the consumers through tariff increases.
In the following five years, new incentive mechanisms have been adopted, such as least-price auctions for
new VRE, offering long-term (>15 years) Power Purchase Agreement (PPA) contracts signed with distribu-
tion utilities or large consumers (free market).
In a few years, these auctions resulted in dramatic reductions of VRE prices in many countries, Brazil in-
cluded. Recent long-term PPA auction prices have fallen below the thirty US dollars per MWh mark for
both wind and solar power.
Those lower prices increase the appetite of both governments and the free (unregulated) market offtakes
to invest in VREs, thus creating the virtuous cycle depicted in Figure 3.
Figure 3: Virtuous cycle of VRE deployment
2
Source: https://www.irena.org/publications/2018/Mar/Renewable-Capacity-Statistics-2018
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To illustrate the consequences of this virtuous cycle, we present some figures:

· The price of PV modules decreased from USD 1.00/Watt to USD 0.30/Watt in 8 years (-70%)
· Wind blade diameters of new projects: 90% were smaller than 80m in 2007, whereas in 2018 almost
all of them were above 110 m.
· The median capacity factor of wind power plants in Brazil has increased from 38% to 56% from 2008
to 2018 (+47%) according to Casa dos Ventos (Windpower, 2018).
Figure 4: Wind power advances in Brazil. Source: EPE, 20183
Perhaps the most direct indication of this trend is the fact that VRE sources account for the majority invest-
ments in new generation capacity worldwide, exceeding 300 billion USD for five consecutive years4.
Figure 5: Global investments in renewable energy. Source: Bloomberg NEF
Solar PV installations in 2018 alone exceeded 100 GW, more than all the capacity installed until 2012. So-
lar is now by far the largest source of global capacity investments, around twice that for wind power, which
has stabilized a little above 50 GW in the last three years.
3
Adapted from Casa dos Ventos presentation and Brazil Wind Power 2018 Conference
4
Source: Bloomberg NEF (BNEF), available at https://about.bnef.com/clean-energy-investment/
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2.3 VRE in Brazil

Brazil was an exception in the global arena because since 2004, procured new capacity through contract
auctions for both conventional and VRE sources. The country was an early adopter of the auction mecha-
nism to negotiate PPA’s because projects with economies of scale, including very large hydropower plants,
were favoured by aggregating the demand requirements of several distribution companies of the country in
a single auction for the supply of new capacity. The seller would then sign bilateral contracts of firm energy
with each of the distribution companies in proportion to its share of their load requirements. With few adap-
tations, the same basic auction mechanism in Brazil was applied to VRE, which accounted for most of the
wind and (more recently) solar power installation in the country.
Figure 6: VRE capacity procured per auction since 2009, adapted from Casa dos Ventos, 2018
The VRE short-term variability as shown in data from actual Brazilian system operation. Figure 7 shows a
sharp variability of the wind power (1500 MW in a single hour, a considerable share of the capacity) in the
Southern system for both power increase and decrease in June 2016. While power increase may be posi-
tive if it displaces expensive generation, an abrupt decrease of production poses a challenge to the Brazil-
ian system operator - ONS, which needs to provide a continuous operation of the power system.
Figure 7: Short-term variability of wind power in Southern Brazil for 17 days. Source: ONS, 2017
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In terms of VRE production share evolution in the country, it is worth observing the production data from
the National Interconnected System (SIN) as shown in Figure 8 5.
Figure 8: Share of total electricity production per source in Brazil. Source: ONS
As seen, hydropower is still the dominant supply source, though its relative participation in production is
decreasing from 80% in 2010 to about 70% in the last few years 6. The remaining 30% of the production
comes from a mix of thermal power and VRE, with the relative participation of these two sources rapidly
changing. In 2015 VRE accounted for less than 4%, while thermal power from fossil fuel, biomass and nu-
clear responded for 27%. In 2018 the VRE reached 9% and thermal power participation was 20%.
Figure 9: Wind and solar PV production (TWh/year) in Brazil. Source: ONS
Hydropower plants were installed in different river basins with diverse hydrological regimes that work as a
“weather portfolio”, with long transmission lines connecting seasonally “wet” areas and seasonally “dry”
areas to the load centres. Reservoirs, in turn, carry water (in effect, electricity) from “wet” period to “dry”
periods with multi-year regulation capacity.
5
Source: http://ons.org.br/Paginas/resultados-da-operacao/historico-da-operacao/geracao_energia.aspx
6
It is worth noting that hydropower was impacted due to the recent “dry years”, particularly in the Northeast region.
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Figure 10: Furnas hydropower reservoir - an example of large regulation capacity
The energy benefit of reservoirs becomes apparent when we consider that in the entire Southeast region -
where most reservoirs are located - the inflow energy in the wet periods is three times larger than in the
dry period. Annual variability is also large: there is roughly three times more inflow energy in wet years
than in dry years. Reservoirs, thus, are important to transfer energy in time (from the wet period to the dry
period) and spatially, in conjunction with the transmission networks (from “wet basins” to “dry basins”).
Other energy sources, such as sugar cane biomass or wind power, can also be used to complement hy-
dropower.
A portfolio of hydropower, biomass, wind and solar power can combine economies of scale and flexibility in
Brazil. VRE sources are smaller projects, less capital intensive, require less construction time and attract a
wider range of investors (local capital and foreign investment funds). The shorter construction time miti-
gates load growth uncertainty, for example. A larger number of players installing less-complex projects
than mega hydropower plants reduces the risk exposure to cost overruns and delays due to problems dur-
ing construction or before (for instance, related to a long environmental licensing process).
Hydropower is a critical source for supporting the growth of VRE in Brazil given its fast response capability
which facilitates compensating the variability of the renewables. As seen, reservoirs of the hydro plants are
also important to transfer energy from moments of surplus energy to others. Given the high share of hydro-
power with reservoirs in Brazil, the introduction of VRE is facilitated with respect to other markets where
the “backup” source is more expensive, such as open cycle gas power plant.
2.4 The renewable transition

During the 2018 edition of Brazil Wind Power conference, the wind power developer Casa dos Ventos
made a presentation comparing the historic transition of several technologies. One remarkable example
was the shift from wagons, based on horse traction, in New York City in 1900 to automotive vehicles, that
by 1913 (13 years) already had 99% of market share.
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Figure 11: From wagons to cars - 5th Ave., NY. Source: Casa dos Ventos (Windpower, 2018)
The comparison of the transition experienced in the transportation sector by the turn of the twentieth cen-
tury is perhaps an exaggeration: wagons could be easily replaced by the novel cars, proving enjoyable
rides to drives and cleaner streets to pedestrians that would no longer have to avoid the tremendous
amount of horse excrements.
Power sector transition will certainly be slower, as repeatedly stated by scientist Vaclav Smil7. A natural
gas power plant will serve until retirement, some 25-30 years later. Hydropower plants may run for over a
century, with electromechanical equipment updates every 25 years or so if the structures (dams, channels,
power houses, etc.) are well maintained.
The wagon to car analogy, however, is helpful in supporting the assertion that power sector is experiencing
a transition, with long lasting consequences in several dimensions:
I. Impacts of short-term electricity market prices, the effect on the competitiveness, and market
share of the so-called conventional power sources, such as coal, oil, natural gas fired power
plants, nuclear power and hydropower;
II. Impact on the dispatch of these sources, especially flexible generation to accommodate short-term
(e.g. less than one hour) fluctuation of VRE production;
III. Increased demand of different types of energy reserves to cope with variability of VRE production
thus assuring a reliable and continuous power supply;
IV. Commercial impacts on generators related, for instance, to the increased number of start-ups and
shutdowns of conventional thermal power plants.
V. The reduced prices of electricity in hours of high uncontrolled VRE production, which pushes the
development of new market rules and products (based mostly on energy production and power
availability) that value flexibility to support the insertion of the VRE;
VI. The need to reinforce transmission networks and develop new corridors (a big challenge in
densely occupied Europe, for instance) to integrate VRE sources from resource-rich areas some-
times located far away from the existing grid;
7
See, for instance, Energy and Civilization: A History, 2017.
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Figure 12: Transmission reinforcement need
VII. The need to understand if there are synergies of the production of VRE with the conventional
sources in different time scales (i.e. seasonal correlation) or daily synergies, such as higher wind
speed in some places at night-time, when solar power is zero;
VIII. Spatial synergies that may take place among with VRE sources as in the case of wind speed cor-
relation of the parks in coastal areas of Ceará or Rio Grande do Norte, with those in the interior of
Bahia, as well as between VRE and conventional electricity sources, such as if the wind speed in a
park in Bahia correlates with the water inflows to a dam in Piauí, for example;
IX. The integration of distributed generation (DG) and the need to understand how it will affect the net
load profile that needs to be supplied by dispatchable generation and to understand its effects on
generation and transmission expansion.
As the list shows, the fast insertion of VRE has many implications. It is thus critical to adapt power system
expansion and operation planning practices.
2.5 Objectives of this product

The objective of this report (Product 2 – Energy Studies) is to present expansion planning methodologies
and best practices related to the integration of VRE sources in Brazil’s energy matrix. This scope, there-
fore, encompasses several, but not all the presented issues described above. For instance, we will not dis-
cuss regulatory changes to the current market rules to remunerate ancillary services or the recovery of
fixed costs by thermal generators.
The report also identifies improvements to current energy planning practices in Brazil to prepare for a
sharp increase in the insertion of variable renewable sources in the coming years. The focus of this project
is not the numerical results of the case study but methodological, computational and data management
issues related to the system expansion planning and operation in a large penetration of renewables in the
grid by both utility scale projects and distributed generation.
One of the key objectives of this study is to provide insights to the planning and operation of the system by
an exercise of planning for a sufficiently distant future of the power system in Brazil, with a VRE market
share in the power matrix considerably higher than the present.
Secondary objectives of this study include the following methodological issues:
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· Evolution of VRE technologies and how they affect the operation of the power system;
· Modelling of VRE scenarios, including seasonality, short and long-term variability and correlations;
· Modelling of reserve requirements;
· Transmission network reinforcements required to accommodate VRE growth;
· Integration of energy and electrical planning studies;
· Modelling of distributed generation in the low voltage grid.
The preparation of this report benefited from a strong collaboration among Working Group 2 members
from EPE and ONS, as well as guidance by GIZ. Throughout 2018 several meetings were held to discuss
methodological issues and assumptions, such as the considerations about the renewable projects model-
ling (including scenarios of wind and solar power production), economic and financial considerations for
the study, sources of possible databases for consideration, operational issues, reserve requirements and
many others.
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3 OVERVIEW OF THE METHODOLOGY

The methodological steps and corresponding computational tools proposed in this study are shown in Fig-
ure 13. Each step is described in the next sections.
Figure 13: Overview of the study methodology
3.1 Step 1 – Design of VRE candidate projects

We start with the identification of candidate projects for wind and solar generation. In the case of countries
such as Brazil and Chile, which already carry out auctions for renewable generation, a set of candidate lo-
cations (geographical coordinates) is extracted from projects that participated in those auctions but were
not selected. The rationale is that these projects are likely to be competitive in terms of their levelized cost
of energy (LCOE) and connection costs to the grid. PSR’s RPD (“Renewable System Development”) sys-
tem starts from global databases such as MERRA-28 to obtain about 30 years of historic hourly wind
speed and solar radiation for the set of candidate locations.
This historical information is then refined/calibrated based on the actual energy production records (usually
2-3 years) of existing plants that are in the same region as the candidate projects9.
Finally, the calibrated 30-year records of wind speed and solar radiation are used to estimate energy pro-
duction using wind turbine and solar panel characteristics of the candidate projects. The figures below il-
lustrate the application of RPD to the identification of wind power candidates in Brazil.
8
MERRA stands for The Modern-Era Retrospective analysis for Research and Applications.
9
In the case of wind, this calibration is carried out as follows: (i) the MERRA wind speed measures at 2m, 10, and
50m are adjusted to the height of the existing local installed wind turbines; and (ii) the adjusted wind measures are
then transformed into energy production using the same turbine model as the existing plant, thus producing MERRA
records which are compatible to the recorded energy production of the existing plants; (iii) after the MERRA energy
records are calibrated, the wind-to-energy transformation process is reversed to produce wind speed records at the
height of the candidate project.
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Figure 14: RPD – Regionalization of existing wind power plants
Figure 15: RPD – Correction of MERRA data based on Info Mercado
Following the flow of Figure 13, projects considered in the PDE 2026 and other candidates prepared by
RPD are considered by the expansion planning module OptGen, which will be discussed in step 3.
3.2 Step 2 – Stochastic modelling of renewables and inflows

This expected operational cost is calculated over a set of inflow/renewable scenarios. Due to the spatial
correlation of wind and solar production in different regions, as well as the spatial correlation between in-
flows and wind in some regions, it is not adequate to model each scenario independently; it is necessary to
represent the joint probability distribution of all the renewable and hydro resources, both for existing plants
and candidate projects. In addition, this joint representation must be multiscale, that is, wind and solar are
represented with hourly resolution, whereas inflows are typically represent on a monthly or weekly basis.
PSR’s TSL (“Time Series Lab”) uses a Bayesian Network to produce those integrated, multiscale wind, so-
lar and inflow scenarios. Bayesian Network is a statistical model that represents a set of variables and their
conditional dependencies via a graph.
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Figure 16: TSL – Bayesian network for inflows and wind in Brazil
As shown in Figure 16, the joint renewable and inflow scenarios produced by TSL are then sent to the sto-
chastic operational simulation model SDDP, which will be discussed in step 5. Naturally it is also possible
to “turn off” the option to use the Bayesian network, thus producing independent scenarios of VRE produc-
tion.
3.3 Step 3 – Co-optimize new electricity and gas investments

In a simplified way, the power system expansion planning objective is to determine the set of generation
and transmission reinforcements along the planning period that minimizes the present value of investment
costs plus the expected value of operation costs (basically fuel costs for the thermal plants plus penalties
for load supply shortages).
The power system planning was done using PSR’s OptGen model. It determines the optimal set of genera-
tion and transmission, reinforcements. Reinforcements in both the gas transportation network and gas pro-
duction sources (land and offshore fields, plus LNG) can also be determined (though not the case of the
present study) along the study period, which typically ranges from ten to thirty years.
As mentioned previously, the optimality criterion is to minimize the present value of the sum of investment
costs and the expected value of the thermal plant operation costs plus penalties for load supply shortages.
As shown in the Figure 17 Figure 17, this optimal plan is obtained through the iterative solution of two opti-
mization models: the investment decision and the operation planning.
Figure 17: Optimal capacity expansion – iterative solution of investment and operation modules
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The investment module determines a trial expansion plan (represented by the vector ) and its associated
investment cost, represented as ( ). This trial plan results from the solution of a mixed integer program-
ming (MIP) optimization problem. In turn, the operation module determines the expected operation cost
( ) associated with the trial plan sent by the investment module. This expected cost is obtained through
the solution of a multistage stochastic optimization problem, solved by the SDDP algorithm (“Stochastic
Dual Dynamic Programming”) developed by PSR and widely used around the world. The SDDP operation
module will be discussed in Step 4.
In addition to calculating the expected operation cost ( ), the operation module produces a linear con-
straint whose coefficients are the derivatives of the operation cost with respect to each investment deci-
sion, ( )⁄ , = 1, … . , of the trial plan vector . This constraint, known as an optimality cut, is sent to
the investment module. The augmented MIP problem is then re-solved and produces a new trial plan,
which is again sent to the operation module, and so on. This iterative process, known as Benders decom-
position, ensures convergence to the global optimal plan.
3.3.1 Expansion planning with probabilistic reserve constraints

Two reserve components are considered in the capacity planning model. The first component is defined
ex-ante as a percentage of the hourly demand to compensate for forecasting errors and natural fluctua-
tions throughout the day. The objective is that flexible resources, such as hydro plants, fast response units
and batteries will respond to the short demand variability. The second component is a Dynamic Probabilis-
tic Reserve (DPR), which is related to the variability of VRE and it is meant to secure the system operation
against deviations between the forecasted VRE production and the verified one.
As illustrated in Figure 18, DPR calculations are based on renewable generation (VRE) scenarios pro-
duced by PSR’s Time Series Lab (TSL), described in Step 3.
Figure 18: Dynamic probabilistic reserve (DPR) calculation methodology 10
As mentioned, the reserve must be (i) Probabilistic, that is, it must consider the stochastic process of varia-
tion of VRE production in consecutive hours; and (ii) Dynamic, that is, it must consider that VRE production
varies throughout the hours of the day and throughout the months of the year. In practical terms, this
means that the operating reserve due to VRE is represented as an hourly profile (24 hours) that varies per
10
The methodology proposed by PSR is different from the one used by ONS. In this later, the component related to
VRE is a percentage of the generation (6% in the Northeast and 15% in the South). It includes variations of production
in time intervals smaller than one hour, as given by technical report EPE-DEE-NT-067/2018. The time step used in this
study is conditioned to VRE data availability (hourly time steps). Thus, intra-hour variability was not considered.
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month (due to the seasonal pattern of production of the VRE) and per year (due to the entry of new VRE
capacity).
The calculation of the reserve for each month and region (e.g. Northeast) has four steps:
1. Determine the Forecast Generation of the VRE – in this step, the average hourly generation profile
will be assumed to be the forecast generation. This calculation is done using VRE generation sce-
narios produced by TSL. For example, if there are 50 scenarios, and that each one is composed of
30 days × 24 hours/day = 720 hours of VRE production, we will have 50 × 30 = 1500 samples for
the first hour; the same for the second hour; and so on. The hourly generation profile is the aver-
age of these 1500 values for each hour.
2. Determine the Forecast Error – for example, suppose that the VRE generation at hour 1, for a spe-
cific scenario, is 9200 MW, and that the forecast for hour 1 is 9000 MW. In this case, we will have
a forecast error of 9200 – 9000 = 200 MW. These 200 MW correspond to the "stochastic" (unpre-
dictable) component of VRE generation, and therefore requires reserve. The calculation of the de-
viations is repeated for each of the 1500 scenarios for hour 1; then for hour 2; etc. The result is a
matrix with 1500 lines (scenarios) and 24 columns (hours of the day). Each element of this matrix
contains an error in MW, positive or negative, with respect to the average time profile.
3. Determine the Forecast Error Variations of VRE production between consecutive hours – for ex-
ample, suppose the error for hour 1, scenario 1 is 200 MW; and that for the next hour (hour 2, sce-
nario 1), is -300 MW (negative value). This means that there is an error variation of 200-(-300) =
500 MW of VRE generation between hours 1 and 2. In turn, this points to the need of an increase
in the generation to compensate 500 MW for time 1, scenario 1. This process is repeated for the
1500 scenarios of hours 1 and 2, and the result is a vector for the reserve requirement.
∗
4. Determine the probabilistic reserve value for each hour, , as the following expression:
∗
= (1 − ) ( ) + ( )
Where ( ) in the expression is the average of the absolute values of the reserve for each hour, and
( ) the maximum value of the vector. Finally, the weight represents the Risk Criterion of the Plan-
ner. In the experience of the PSR with this type of criterion, = 0.3 represents a reasonable compromise.
Using this value, 70% of the reserve value is based on the expected value when all scenarios are consid-
ered and 30% based on the maximum required reserve, amongst all scenarios.
The DPR calculation method has some interesting aspects:
· It may jointly represent the hourly demand and VRE generation, thus the net load. This is useful if the
two processes are correlated. In cold-climate countries electric demand increases during very cold
days for heating, when wind power may be reduced in case of frosting11.
· The methodology dynamically adjusts the reserve in a “rolling horizon” scheme, where it is possible to
select the “look ahead period”;
· Different risk criteria may be used, such as CVaR or others measured along stages and scenarios;
· It can also be used to measure the value of forecast accuracy, which would be given by a set of
weights measuring the probability of each VRE scenario. If there is perfect forecast, the weight would
be 1 for the known scenario and zero for the remaining. If there is no forecasting ability, all probabili-
ties are the same, thus 1/S.
Figure 19 shows Dynamic Probabilistic Reserves results for cases simulated in this work. The orange
curve is related to the demand uncertainty component (in the case of Brazil around 5% of the hourly de-
mand) and the green curve shows the reserve component related to VRE.
11
See Lamraoui, F., Fortin, G., Benoit, R., Perron, J., and Masson, C. Atmospheric icing impact on wind turbine pro-
duction. Cold Regions Science and Technology 100:36– 49, 2014.
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Figure 19: Dynamic probabilistic reserves (DPR) for the Brazilian system (GW)
Finally, Figure 20 illustrates the integration of DPR constraints into the capacity planning methodology.
Figure 20: Optimal capacity expansion with dynamic probabilistic reserve (DPR) constraints
3.3.2 Transmission model in the capacity expansion planning

One important feature of renewables is the diversity of seasonal and geographical patterns. This allows the
planner to take advantage of “portfolio effects” to reduce the variability of renewable production and, thus,
reduce the need for fast generation reserve. On the other hand, the incorporation of geographically diverse
production requires investments on transmission capacity. Although the capacity planning methodology
seen above can, in principle, handle the detailed joint optimization of both generation and transmission
systems, the resulting computation effort can be very high. Therefore, the integrated planning of regional
interchange capacities and generation provides a more adequate trade-off between accuracy and compu-
tational effort. Figure 21 shows the regionalization of the Brazilian grid.
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Figure 21: Regional representation of Brazil’s transmission network used in optimal capacity planning
Again, following Figure 13, the optimal expansion of the transmission network is carried out in Step 6.
3.4 Step 4 – Optimal stochastic operation

It was seen above that the optimal capacity expansion results from the iterative solution of two modules: (i)
an investment module (OptGen) that produces a trial plan of generation and regional interconnection rein-
forcements; and (ii) an operation module (SDDP) which calculates the expected operation cost associated
with the trial plan produced by the investment module, discussed below.
3.4.1 SDDP
SDDP calculates the optimal operation policy of a system composed of storage (usually hydro plants), re-
newables, thermal generation and transmission network. Because of uncertainties on future inflows and
renewable production, the optimal operation must be modelled as a multistage stochastic optimization
problem. Figure 22 shows an extremely simplified version of the operator’s decision problem, in which the
stochastic optimization is represented by a decision tree.
Figure 22: Simplified version of the system operator’s decision problem
The challenge is that the decision tree for a real-life scheduling problem with a five-year horizon (60
monthly steps) would have 10100 nodes, which is much larger than, for example, the number of particles in
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the universe. For this reason, it is necessary to develop techniques that allow the solution of this problem
in a reasonable time.
The SDDP operation model uses a technique called “stochastic dual dynamic programming” (hence the
model’s name) which was developed by PSR and has been adopted worldwide to solve this type of sched-
uling problems. The figure below illustrates the application of SDDP to the Brazilian system.
Figure 23: Application of SDDP to the Brazilian system
3.5 Step 5 – Optimal network planning under uncertainty

OptGen carries out a joint optimization of investments on new generation and regional interchange capac-
ity. In this step, NetPlan uses an AC power flow model determines the optimal transmission reinforcements
in each region, as illustrated in Figure 24.
Figure 24: NetPlan – Optimal transmission network planning
As shown in Figure 24, NetPlan carries out a robust optimization, i.e. determines the least-cost set of
transmission reinforcements that eliminates overloads for a set of operating scenarios, represented by vec-
tors of bus generation and loads.
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4 CASE STUDY DATA ASSUMPTIONS
4.1 Market size

The study consists in a prospective analysis of the Brazilian power system considering a massive insertion
of VRE in a future configuration.
The departing point is the system configuration expected for 2026, as defined by the Ten-Year Brazilian
Expansion Plan 2017-2026 prepared by EPE (PDE 2026). All new generation and transmission capacity
planned up to this horizon were assumed to be in full operation.
The end of horizon yearly demand will be assumed as twice the observed in 2017 (~600 TWh), thus 1200
TWh. The study does not aim to carry out an energy planning, for the short, medium or long term, as this is
a mission for EPE. It is necessary, however, to have a significant load increase to be supplied by new pro-
jects that need to be decided by the model for the study to show a structural shift in the power matrix. De-
liberately, nothing is said about when this demand will happen. Furthermore, the study uses a “snapshot”
configuration for the end-of-horizon, meaning that all new supply is decided “at once”. This approach was
selected after discussions with EPE, ONS and GIZ with the purpose of avoiding direct comparisons with
government plans, such as the PDE and the National Energy Plan for year 2030 or 2050. In a sensitivity
run two intermediate years were used between 2026 and the end of horizon with, respectively 1/3 and 2/3
of the demand growth considered in the study (600 TWh between 2026 and the end of the horizon).
The approach also avoids the need for an assumption on economic growth to forecast energy consump-
tion, which is essential in traditional planning studies. To illustrate this point, the market of 1200 TWh/year
in 2040 implies in a demand grows of 3% per year, whereas if this growth is higher, such as 3.5% per year,
then this market would happen earlier, by year 2036.
For the objectives of this study, when this market will happen is not of relevance. What matters is that it is
sufficiently different from current conditions to provide space for an evolution of the supply towards an in-
creased participation of VRE. The modifications are thus sufficiently large to provide insights for the plan-
ning and operation of the Brazilian power system.
ONS hourly demand data for year 2015 is used as a profile for future years12. The 2015 hourly profile per
region will be used to disaggregate monthly load block values into hourly values. As it happened, this year
is “well behaved”, in contrast with recent years that experienced load shedding that distort typical data.
4.2 Supply options

To determine the candidate projects for the capacity expansion to meet the 1200 TWh/year market depart-
ing from the configuration of last year of the PDE 2026, we resort to different sources of information.
The use of PDE 2026 is justified on the grounds that we need a realistic electrical matrix configuration as a
starting point, since the PDE already contemplates generation and transmission projects in operation and,
in principle, and indicative projects that could be developed. Actual projects that participated in electricity
auctions in Brazil over the course of the years, are interesting sources; these projects indicate entrepre-
neurs’ investing strategies, even if they were not ultimately awarded a PPA in the auction. The use of such
“market-based” examples is a good way to filter out projects that make little economic sense.
12
This assumption was made given the lack of a methodology that can project hourly demand values for future years.
A “bottom up” approach, where individual equipment and load patterns are informed is possible, in principle. It allows
one to define consumer behaviour, which is related to social development trend, energy efficiency programs that can
incorporate evolution of equipment energy consumption and others. The difficulty, however, is that this alternative re-
quires an intense collection of consumer-related data (consumer habits and equipment) for all segments (i.e. industrial,
commercial, residential, public, etc.). Unfortunately, such data is unavailable for recent years in of Brazil and a cam-
paign would need to be launched to survey consumer habits.
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Projects that participated in the auctions reveal additional information, such as the installed capacities, ca-
pacity factor and location in the network based on the connecting substation (source: CCEE).
Other sources used in the preparation of candidate projects include international references and Product 5
of this project13, which provides the evolution of technologies and CAPEX to be considered in the planning
horizon for VRE and storage solutions.
Candidate projects included coal, open cycle and combined cycle natural gas, nuclear, biomass cogenera-
tion, wind farms, solar PV farms and storage devices. Hydropower was assumed to expand as in PDE
2026 but not after that. Hydroelectric power plants with a large capacity, such as the case of Tapajós with
more than 6,000 MW can replace much of the energy that can be supplied by the penetration of wind and
solar energy resources, which ultimately is the objective of this study. For this reason, they will not be con-
sidered after 2026.
The study seeks the composition of an electric matrix for Brazil with predominance of renewable sources,
specifically wind and solar, to maintain greenhouse gases low. The study does not rule out the participa-
tion of other energy sources to provide specific requirements of controllable dispatch to mitigate energy
and electric effects from variability of wind and solar sources.
The next sections present the technical and economic parameters of the candidates considered in the ex-
pansion planning process.
4.2.1 Open cycle gas-fired power plants

Gas open cycle candidate plants are modules of 200 MW of capacity, with a minimum generation of 20%
of the nominal power capacity and full operational flexibility. The specific fuel consumption is assumed to
be 9.5 MMBTU / MWh, which reflects a more flexible fuel cost. Because gas fired plants can ramp up from
zero to full power in less than one-hour (the time step used in the study) no ramping constraints were con-
sidered for this resource. The economic data are as follows14:
· Investment Cost: USD 582/kW
· Fuel variable cost: [USD 9.00/MMBTU (natural gas price) + USD 0.50/MMBTU (gas distribution mar-
gin)] ´ 1.10 (taxes) = USD 10.45/MMBTU
· Fixed O&M cost: USD 10.50/kW per year
· Variable O&M cost USD 4.00/MWh
· Variable production cost = USD 104/MWh (10.45 ´ 9.50 + 4.00)
· Start-up cost15: 0.5 hour of fuel consumption at rated capacity
· Lifetime: 25 years
4.2.2 Combined-cycle gas-fired power plants

Gas combined turbine cycle candidate plants are modules of 500 MW of capacity, with 50% minimum
technical generation (i.e. 250 MW). Dispatch flexibility between half and full power depends on natural gas
contract. Specific fuel consumption is 6.5 MMBTU/MWh. We assume this technology can also ramp up
from zero to full power in less than one hour. Because the time step used in the model is one hour, no
ramping constraints had to be considered for them.
Their economic data are as follows:
13
Product 5 covers technological evolution of renewable energy sources and technical solutions to mitigate variability.
14
An exchange rate of 3.30 R$/USD is used throughout the study
15
Start-up cost is determined based on the number of hours of fuel consumption at nominal capacity to enable a direct
comparison of the technologies regardless of the project capacity.
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· Investment cost: USD 800/kW

· Fuel variable cost: depends on gas contract option
· Fixed O&M cost: USD 10.50/kW per year
· Variable O&M cost USD 2.75/MWh
· Start-up cost: 1.5 hours of fuel consumption at rated capacity
· Lifetime: 25 years
As can be seen, this technology has higher investment costs, in comparison to the open cycle, but, on the
other hand, has more efficiency on its production. Besides, its start-up cost is equivalent to 1.5 hours of
fuel consumption at its maximum reference capacity whilst the open cycle is only half-hour.
Fuel variable costs for the combined cycle power plants depend on the selected natural gas contract (one
candidate project for OptGen is generated for each type of contract). These options reflect market mecha-
nism, which provides discounts for contracts with little flexibility (e.g. high take or pay amount) and re-
quests premiums for contracts with higher flexibility, that can be sourced on a shorter notice, based on
market conditions (high prices). In all cases a natural gas distribution margin of USD 0.5/MMBTU is used
and then 10% for taxes.
Three contract options considered are listed next:
· Model 1: Low price, gas inflexibility:
· Base loaded dispatch (70% minimum take or pay)
· Variable production cost: USD 42/MWh ([(5.00+0.50) ´ 6.50 + 2.75] ´ 1.10)
· Model 2: Standard price, semi-flexible: USD 7/MMBTU
· Inflexible for six months and flexible for six months.
· Dispatch: offline or connected at rated capacity throughout the month
· Model 3: High price, flexible: USD 9/MMBTU
· Inflexible for six months and flexible for six months.
· Dispatch: either offline or running from minimum to maximum capacity throughout the month
· Minimum running time of 4h
4.2.3 Coal-fired power plants

Coal power generation candidate projects are represented in modules of 500 MW, with 250 MW minimum
power dispatch. Specific fuel consumption is of 400 kg of coal/MWh. The decision to commit the plant is
supposed daily. The projects assume a four-hour period for ramping up / down to reach maximum / mini-
mum capacity.
The economic data used is listed below:
· Fuel variable cost: USD 33/MWh
· Fixed O&M cost: USD 15/kW per year
· Variable O&M cost USD 2/MWh
· Start-up cost: 8 hours of fuel consumption at rated capacity
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As seen, this technology has a higher investment costs with respect to natural gas projects but runs at a
lower variable production cost. It has comparatively higher start-up cost, equivalent to 8 hours of fuel con-
sumption at maximum capacity, when compared with combined cycle gas plants (1.5 hours) or open cycle
gas plants (half hour). The economic lifetime of the project was of 25 years.
4.2.4 Nuclear power plants

Nuclear power plants are also considered. Candidate projects are modules of 1000 MW running “base
loaded” (i.e. completely inflexible). For these projects, international references were used to determine
technical and economic characteristics because the last nuclear project installed in Brazil (Angra II) started
operation 20 years ago. The economic data used is listed below:
· Fuel variable cost: USD 10/MWh
As seen, investment cost is the highest among all alternatives whilst variable production cost is the lowest.
The lifetime of the project is assumed to be of 40 years.
4.2.5 Sugarcane biomass power plants

Sugarcane biomass cogeneration plants are also considered as candidate project in the Southeast and
Centre-West regions of Brazil, where there are large plantations associate to the ethanol and sugar busi-
ness. A biomass cogeneration power plant is represented as a regular thermal plant with the peculiar fact
that generation is restricted to the harvest season, from May to November, which coincides with the dry
season. It is not dispatched based on variable production cost, but on resource availability. Although a re-
newable resource, differently from the solar and wind power, sugar cane is not a VRE source, since its
production is rather stable during the harvest season.
The economic data used is listed below:
· Variable cost: zero
As seen, in comparison to the other thermal sources presented in the previous sections, this technology
has a relatively high investment cost. On the other hand, the variable production cost is the opportunity
cost of biomass residue from sugarcane harvest, which is zero16. The economic lifetime of the project is
also assumed to be 25 years.
4.2.6 Wind power plants

Candidate wind power projects considered in this study are based on the projects authorized to participate
in the energy auctions after considering enabled by EPE requirements. Altogether, a list of 800 candidates
were considered in the simulations, considering the projects data for the “A-4” auction of 2018, which in-
cludes location, connecting substation and reliable yearly production estimated by the vendors. Their loca-
tions are indicated by black dots in the map shown in Figure 25.
16
In the future, when the ethanol production from sugar cane bagasse technology becomes economically attractive,
the opportunity cost would not be zero for power generation.
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Figure 25: Wind power projects from auction “A-4” of 2018
Technical data, such as the turbine power curve and the project hub height were suggested in Product 5 of
this study, based the forecasted evolution of wind power technologies. Models of turbines were selected
for each candidate projects for 22 regions in Brazil based on the wind class according to IEC61400-1:
2005, as shown below:
Region 1 2 3 4 5 6 7 8 9 10 11
Class III I III III III II III III II III III
Region 12 13 14 15 16 17 18 19 20 21 22
Class I II III III III I III II III III III
Figure 26: Wind projects from auction “A-4” of 2018
The detailed calculation of the Class for each cluster is presented next:
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Va ri a bl e C01 C02 C03 C04 C05 C06 C07 C08 C09 C10 C11 C12 C13 C14 C15 C16 C17 C18 C19 C20 C21 C22
Mea sureme nt height (m) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Mean wind speed (m/s) 5.02 8.56 6.17 7.49 6.56 7.59 6.05 6.07 7.60 5.90 6.55 8.80 7.59 6.93 6.95 7.22 8.71 7.01 8.04 7.44 5.60 5.18
MoMM wi nd s peed (m/s) 5.02 8.56 6.17 7.49 6.57 7.59 6.05 6.07 7.60 5.90 6.55 8.80 7.59 6.93 6.95 7.22 8.71 7.01 8.04 7.44 5.60 5.18
Media n win d s peed (m/s) 5 8.6 6.2 7.5 6.5 7.6 6.2 6.3 7.5 5.9 6.7 8.7 7.6 6.8 7 7.3 8.6 7.3 8.4 7.4 5.5 5
Min wind s peed (m/s) 0 0 0 0 0.2 0 0 0 0.2 0 0 0.1 0 0 0 0 0.7 0 0 0.4 0 0
Max wind speed (m/s) 16.60 14.60 12.60 15.40 14.70 17.00 17.80 14.20 15.60 19.10 17.70 16.30 27.10 12.30 24.40 14.60 16.20 14.10 16.40 13.40 18.30 17.10
CRMC wind speed (m/s ) 5.74 8.99 6.59 7.89 7.13 8.34 6.80 6.92 8.15 6.86 7.33 9.19 8.83 7.24 7.90 7.66 9.03 7.75 8.68 7.78 6.51 6.07
Weibull k 2.67 4.95 4.12 4.68 3.61 3.36 2.91 2.68 3.92 2.48 2.98 5.05 2.49 5.02 2.74 4.38 5.47 3.23 3.86 5.06 2.49 2.46
Weibull A (m/s) 5.63 9.34 6.79 8.17 7.28 8.45 6.77 6.81 8.38 6.64 7.32 9.56 8.54 7.53 7.78 7.91 9.41 7.81 8.89 8.09 6.30 5.83
Mea n power dens ity (W/m²) 116 444 174 300 221 354 192 202 331 197 240 474 420 232 301 274 450 284 399 288 168 136
MoMM power d ensity (W/m²) 116 444 174 300 221 354 192 202 331 197 240 474 420 232 301 274 450 284 399 288 168 136
Mea n energy content (kWh/m²/yr) 1,013 3,890 1,527 2,624 1,935 3,098 1,680 1,771 2,897 1,730 2,106 4,151 3,681 2,030 2,633 2,401 3,941 2,487 3,496 2,519 1,473 1,194
MoMM energy content (kWh/m²/yr) 1,013 3,890 1,528 2,624 1,935 3,098 1,680 1,771 2,897 1,730 2,106 4,151 3,681 2,030 2,633 2,401 3,941 2,487 3,497 2,519 1,473 1,194
Energy pa ttern fa ctor 1.496 1.158 1.213 1.166 1.279 1.325 1.416 1.48 1.232 1.574 1.399 1.14 1.574 1.141 1.469 1.193 1.116 1.348 1.257 1.142 1.569 1.604
Frequency o f ca lms (%) 0.05 0.01 0 0.01 0 0.03 0.03 0.13 0 0.23 0.08 0 0.07 0 0.16 0.01 0 0.1 0.03 0 0.11 0.32
Pos si ble da ta poi nts 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848
Va li d da ta points 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848 43,848
Miss ing d a ta points 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Da ta recovery ra te (%) 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
V weibull 5.01 8.57 6.16 7.48 6.56 7.58 6.04 6.05 7.59 5.89 6.54 8.78 7.58 6.91 6.92 7.21 8.68 7.00 8.04 7.43 5.59 5.17
extreme wi nds from WG

Vref (50 yr)
Method (m/s )
Periodic Maxima 17.59 15.24 15.5 16.68 15.49 18.14 19.26 16.24 16.67 23.73 19.5 16.86 30.28 12.75 26.95 15.72 17.63 14.85 18.45 14.16 23.27 23.48
Method of Inde pendent Storms 19.41 15.56 13.69 16.96 15.66 18.31 20.46 16.29 16.45 23.4 19.34 17.73 30.76 13.14 28.56 15.68 17.68 14.72 18.54 14.29 22.01 19.69
EWTS I I (Exa ct) 15.14 15.9 12.89 14.39 15.12 18.53 16.81 18.24 16.44 19.24 17.79 16.14 24.64 12.76 20.45 14.47 15.27 17.72 17.6 13.63 18.17 17.07
EWTS I I (Gumbel) 15.34 16.05 13.02 14.52 15.3 18.75 17.02 18.47 16.62 19.5 18.01 16.29 24.96 12.88 20.72 14.61 15.4 17.93 17.79 13.75 18.41 17.29
EWTS I I (Da venport) 16.72 17.25 14.08 15.64 16.59 20.38 18.54 20.13 17.99 21.24 19.61 17.5 27.2 13.83 22.57 15.77 16.5 19.5 19.27 14.77 20.06 18.84
ma x 19.41 17.25 15.5 16.96 16.59 20.38 20.46 20.13 17.99 23.73 19.61 17.73 30.76 13.83 28.56 15.77 17.68 19.5 19.27 14.77 23.27 23.48
ma x + 10% 21.35 18.98 17.05 18.66 18.25 22.41 22.5 22.14 19.79 26.11 21.57 19.5 33.83 15.22 31.42 17.35 19.45 21.45 21.19 16.25 25.59 25.82
5 x v ave 25.11 42.82 30.87 37.47 32.82 37.95 30.27 30.35 38.02 29.51 32.77 43.99 37.95 34.65 34.73 36.1 43.53 35.07 40.21 37.21 28 25.92
Cl a ss ifi ca ti on a ccoedin g to IEC61400-1: 2005

consi dering Va ve I II I III II I I II II III III II I II III I II I II I II III I II I II III III II I
consi dering Vref(ma x) IV IV IV IV IV IV IV IV IV IV IV IV II I IV IV IV IV IV IV IV IV IV
consi dering Vref(ma x + 10% IV IV IV IV IV IV IV IV IV IV IV IV II I IV I II IV IV IV IV IV IV IV
consi dering 5xVa ve IV I III II I I II II III III II IV III I II I II I II III I II I II III IV IV
Result (min) III I III III III II III III II III III I II III III III I III II III III III
Figure 27: Classification of the clusters based on IEC61400-1: 2005
Subsequently, for each class, a turbine model was assigned from Table 1.
Table 1:Mapping of wind turbine models per IEC class
MANUFACTURER CLASS I CLASS II CLASS III
Siemens Gamesa SG 3.4/132 SG 2.7/129; SG 4.5/145 SG 2.6/126
GE Wind GE 3.2/103 GE 3.8/130 GE 3.6/137
Vestas V117/3.45 V136/3.45 V120/2.2; V150/4.2
Nordex N100/3.3 N117/3.6 N131/3.0
The classification determines the turbine models for all candidate projects considered in the simulations.
All regions with the same class received the same turbine model. In all cases the same hub height of 125m
was considered.
The capacity expansion model OptGen considered the wind power candidate projects of 22 regions men-
tioned above. After the candidate selection, the capacity expansion determined by OptGen is disaggre-
gated within the region using data from the individual projects located in the region from the complete list
of 800 projects for the both transmission reinforcement and grid operation studies that use a more detailed
network.
The same procedure was considered for wind farms already in operation (classification in each region),
during the regionalization. The capacity factor of existing and future projects is not the same because there
may be differences with respect to the hub height (higher in new projects, which requires an adjustment in
the wind shear) and turbine rating curve, which were determined by Working Group 5 (for the wind farms in
operation, the information is known).
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Although there is plenty of information from the energy auction documents, wind speed time series for the
registered projects locations are not public17. For this reason, reanalysis data from NASA’s MERRA-2 da-
tabase was used, with data records since 1980. Details on modelling of scenarios of VRE are described in
Chapter 5. The economic data used is listed below:
The investment cost considered is a reference price projected in Product 5. This cost represents a reduc-
tion of 30% with respect to the current reference cost. For wind power, the economic lifetime is assumed to
be of 25 years.
4.2.7 Utility-scale solar PV power plants

As in the case of wind power, PV solar projects considered as candidates to the generation expansion
model were also based on information from the energy auctions. In this case, around 400 candidates were
considered from the A-4 auction of 2018, as shown in Figure 28.
Figure 28: Solar PV projects from auction “A-4” of 2018
For the 400 registered projects in this auction, information was obtained to the substation to which they
would be connected and their physical guarantee, related to an annual production with high reliability.
In terms of costs, the numbers are the following:
· Lifetime of 25 years.
17
For the permitting process of the auction, the candidate projects provide measurements of the wind velocity of their
locations to EPE, so they can be qualified for the auction. However, this information is not public.
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The considered investment cost projected for the end of the horizon of this study was based on Working
Group 5 assumption of a reduction of 40% with respect to current values by 203518. As in the case of wind
power projects, there are no public time series of irradiation for the solar projects that participate in the
auctions. Thus, once again, NASA’s MERRA-2 reanalysis database since 1980 until today was used.
Centralized solar PV candidate projects use single axis trackers to maximize energy production, collecting
efficiency gains of 28% with respect to fixed axis. The use of single axis tracker has become a standard in
Brazil; thus, the assumption is merely reproducing a market practice. Furthermore, in Product 5 of this pro-
ject it is concluded that the solar radiation profile in Brazil would not justify the use of double axis trackers
for the small production gain that would not compensate the higher investment, operation and mainte-
nance costs.
A DC to AC output factor of 1.3 was used in the preparation of candidate projects based on values used by
projects in recent auctions. This factor has been increasing in recent years due to the sharp cost reduction
of solar modules.
4.2.8 Energy storage

There are several available technologies for the energy storage, with different response times, storage vol-
umes and costs. In this study we have considered Lithium-Ion and Sodium-Sulphur (NaS) batteries to pro-
vide short-term energy storage and transfer power from low to high demand hours in order to reduce oper-
ational costs. Technical characteristics and costs determined in Product 5 are shown in Table 2.
Table 2: Technical characteristics and costs of BESS
Li-Ion BESS NaS BESS
Rated capacity (MW) 2 2
Minimum and maximum storage capacity (MWh) 2 12
Round-trip efficiency (%) 95% 82%
Ramping rate limits (% of rated capacity/min) 100% 100%
CAPEX 2018 (USD/kW) 600 2400
Estimated CAPEX 2035 (USD/kW) 250 1080
CAPEX 2018 (USD/kWh) 600 400
Estimated CAPEX 2035 (USD/kWh) 250 180
Fixed O&M cost 2018 (USD/kW-year) 10 10
Estimated Fixed O&M cost 2035 (USD/kW-year) 6 7
Calendar lifetime (years) 12 16
Cycle lifetime 5000 7000
The table shows that by 2035 the investment cost of Lithium-ion and NaS batteries will be USD 250/kWh
and USD 180/kWh of storage, respectively - reduction of 60% from current costs.
The NaS battery technology has the lowest cost of all technologies considered for the Automatic Genera-
tion Control (AGC) and can be used for storing a larger amount of energy from the two options considered
in this study. Fixed O&M costs are also smaller than the natural gas alternative, and there is no variable
cost or start-up costs, except for “variable” cost related to the batteries charging (marginal production cost
18
Results presented in Product 5 of this project indicate a reduction from 30% to 50 %. In this Product, the value of
40% of reduction has been selected.
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during charging hours) minus the marginal cost of discharging (marginal benefit during discharge hours).
The economic lifetime of Lithium-ion and NaS batteries is of 5000 and 7000 discharge cycles, respectively
In principle, pumped storage hydropower could serve a similar purpose as batteries. However, even
though EPE has already started the investigation of pumped storage projects, there are currently no pro-
jects in operation and the specific location of candidate sites is yet unknown. For this reason, only Li-Ion
and NaS batteries were the only considered energy storage resources, as they can be located anywhere.
4.3 Decommissioning of existing power plants

The PDE 2026 decommissioning plan for the existing generation was also assumed in this study. There-
fore, 2000 MW of fuel oil and 900 MW of diesel will be decommissioned until 2026, according to the end of
their contracts (page 102 of the PDE). This study also considered the decommissioning of additional 762
MW of fuel oil (Igarape, Pernambuco III, Suape II and Termocabo) and of 25 MW of diesel (R.Silveira) af-
ter 2026. Inefficient gas fired plants totaling 646 MW (Tres Lagoas, FAFEN and Termobahia) and 54
PROINFA wind projects totaling 1310 MW are also decommissioned (Elebras Cidreira 1, Indios, Sangra-
douro, Osorio, Púlpito, Rio do Ouro, Bom Jardim, Amparo, Cruz Alta, Salto, Aquibatã, Gargaú, Ventos de
Santo Antônio, Rio do Fogo, Alegria II, Alegria I, Enacel, Canoa Quebrada, Bons Ventos, Praias de Para-
juru, Beberibe, Foz do Rio Choró, Paracuru, Icaraizinho, Praia Formosa, Volta do Rio, Praia do Morgado,
Água Doce, Pirauá, Campo Belo, Millenium, Albatroz, Coelhos II, Camurim, Coelhos IV, Presidente, Coe-
lhos III, Mataraca, Coelhos I, Caravela, Pedra do Sal, Mandacaru, Xavante, Gravatá Fruitrade, Vitória,
Santa Maria, Cascata, Palmares, Taíba Albatroz, Lagoa do Mato, Atlântica).
4.4 Regional grid modelling

For the portfolio selection purposes, the grid was modelled considering seven regions 19 as shown in Figure
29, with the following power flow capacities between them (table below).
Figure 29: Regional grid modelling
Since the objective at this stage is to model the trade-offs related to where the projects should be built, it
was decided to represent only the main transmission limits, capturing the bottlenecks in the grid. In this
19
PDE uses 14 regions.
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sense, the simulations considered the regional transfer capacities of the 2026 configuration of PDE and
Figure 29, with an addition of 9 GW between the Northeast and the Southeast and a few changes, as ex-
plained below in this section.
For instance, consider the situation where two candidate projects have the same technical characteristics,
costs and the same energy production, but one is in the Southeast and the other in the Northeast. If the
load is in the SE, the OptGen model would choose to build the one located near the load, which is, the one
in the Southeast. In this case, the “tie breaker” would be the interconnection cost between the Northeast
and the Southeast, which is the cost of its capacity expansion, necessary for generation production to
reach the load. Therefore, in the model, interchange capacities simulated in this phase are also treated as
expansion candidates, with the associated costs considered as in the case of generation candidate selec-
tion process. The objective is only to signal that to build projects distant from the load, there will be some
costs of building the necessary infrastructure to transport the electricity.
The Brazilian power system is reliable in energetic and electrical aspects. A new matrix configuration must
maintain this characteristic. To ensure a reliable system operation, in the generation expansion process,
existing interchange capacities between regions are based on stability studies considering the system op-
eration under any single (N-1) contingency, instead of the nominal capacities. Currently (2017), the ratio of
stability limit and nominal limit for transmission lines connecting substations between regions may be as
low as 40%. We assume that for each interchange the current ratio will be the same in this study horizon.
The unit cost (USD /kW) of an interchange is based on the circuit length L and technology (AC or DC), as
follows:
· AC 500 kV: USD 24/kW + USD 0.50/kW/km ´ L (for L < 400 km)
· AC 500 kV: USD 54/kW + USD 0.50/kW/km ´ L (for 400 km < L < 800 km)
· DC-links: USD 218/kW + USD 0.16/kW/km ´ L
where the length L considered in each interchange is the mean value of the existing circuits which connect
substations of the neighbouring regions. Therefore, for distances less than 400 km, the unit cost is given
by the first equation. If distance is between 400 km and 800 km, the second equation is applied. Above
800 km, DC-link unit cost is applied.
The actual grid has about 9000 buses and 13000 circuits. It will be considered with this level of detail only
in the transmission reinforcement stage, described in Chapter 8. As mentioned before, the goal in this
stage is to consider the trade-off between constructing projects close to the load, with no extra costs, and
cheaper projects, but far away, with larger transmission costs.
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Figure 30: High voltage transmission network
4.5 Distributed Generation

Rooftop solar photovoltaic was explicitly considered as a source of Distributed Generation (DG) in this
study. Biomass cogeneration and small hydropower connected to the distribution concession are included
indirectly through the load profile, considered by ONS on monthly operation planning.
The total DG capacity forecast provided by EPE for the end of horizon was 30 GW, with a breakdown per
state is shown on the next table. The schematic map on the left of figure shows distribution utilities of each
state (areas in light blue), which are connected to the corresponding region (dark blue). In contrast with
other sources, DG is informed as a scenario to the model20.
Although the DG capacity is given, the production is variable and modelled by scenarios using the same
approach as for utility scale VRE, using MERRA2/NASA solar hourly radiation time series. However, unlike
centralized solar projects, DG projects will not assume solar trackers21 and (due to space limitations com-
mon) assumes a smaller DC to AC factor of 1.1. As a result, the 30 GW capacity forecast has a corre-
sponding average production of 4.8 GW, which amounts to 3.5% of the total consumption, considering the
capacity factor of 16%, also provided by EPE. The process of producing electricity scenarios from
MERRA2 is slightly adjusted to match the reference production factors provided by EPE for each state.
20
DG is also considered in the transmission reinforcement phase, in Chapter 8.
21
In utility scale projects, trackers are used to maximize energy production. With these technologies, efficiency gains
can be around 28%.
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Figure 31: Representation of distributed generation
4.6 Automatic generation control

The automatic generation control (AGC) is a system for adjusting the power output of generators, in re-
sponse to changes in the load so that total generation and load are matched in real time in order to main-
tain the electric system at the rated frequency (60 Hz). In Brazil, the AGC considers only hydropower
plants from 400 MW. The following assumptions were assumed for the AGC requirement:
· Primary and secondary reserves shall be respected within each control area. As a criterion we will not
allow reserves in one region to be provided by power plants in another region, which would, in turn,
also require a reserve to be allocated in the transmission lines (e.g. an idle capacity is maintained in
the transmission lines to accommodate variability in one region to be compensated by generators in
another).
· New AGC participants (in addition to the 2018 list) include all hydro plants with capacity greater than
400 MW (as in the grid code) and with a water head higher than Estreito hydropower plant (18.94m).
The AGC list increased from 23 (current selection) to 45 plants 22. Differently from the current grid
code, this study assumed that natural gas fired plants are also included in the AGC (existing and can-
didates).
· The allocated reserve must be less than 40% of the available capacity of each hydro power plant.
· Allocated reserves must meet, in each hour, the sum of the reserve associated with demand variabil-
ity (1% primary + 4% secondary) plus the probabilistic dynamic reserve, related to uncontrolled VRE.
4.7 Minimum water outflow for Sobradinho

The minimum outflow downstream of the Sobradinho reservoir, in the São Francisco river, considered in
the simulations, was 650 m3/s. This outflow is lower than the current constraint defined by ANA/ONS, alt-
hough it is higher than the value that was used during several months of a drought in the São Francisco
river without any consequences to other uses of water (i.e it is adequate). However, given the small share
of hydropower in the end-of-horizon, impacts of this alteration in the results are minor.
22
The AGC power plants considered in the simulations are listed in Annex 12.
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5 VRE MODELLING
There are several aspects regarding the modelling of renewables in expansion planning and operation
planning studies. As real-time production data is incomplete and there are confidentiality issues, this study
will use reanalysis data to generate scenarios of electricity production at hourly steps. Fortunately, there
are monthly production values for wind power plants that can be used to calibrate the model based on rea-
nalysis data such that the actual mean production is reproduced by the model, thus avoiding any bias.
Furthermore, statistical properties of the hourly time series, such as spatial correlation and correlations in
different time scales, must be reproduced by the model. Seasonal behaviour of wind and solar power must
also be well represented in addition to the daily wind and solar power profile for different times of the year.
Finally, correlations between VRE and hydropower plants can be represented in the synthetic scenarios.
The next section characterizes VRE in Brazil.
5.1 Characterization of renewable energy resources

5.1.1 Annual variability
In the Brazil power system, VRE production has less annual variability than hydropower. In the next exam-
ple the yearly mean hydropower production of the North & Northeast region is referenced as 100%. As
seen by the range in Figure 32, the wet/dry years have a typical variability of +/- 50% of the mean produc-
tion. In the case of VRE, again for the North and Northeast, the yearly variability considering solar and
wind is much smaller, around +/- 10% of the mean yearly production. It is important to emphasize that the
variability of the renewable sources may be high in the short term (minutes or hours), but relatively small
on a yearly basis.
Figure 32: Annual variability of production
5.1.2 Seasonal complementarity

Figure 33 shows typical monthly available energy as a fraction of installed capacity (vertical axis). It shows
the complementarity between hydropower and sugarcane bagasse cogeneration, which is not a coinci-
dence; the harvest season takes place in the dry season, when there is no rain, which explains its season-
ality. Also noticeable is the seasonal complementarity between wind power and hydropower. The highest
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wind production, for instance, occurs in October, which is the month of smallest hydro availability. The so-
lar resource is somewhat constant.
Figure 33: Renewable seasonal complementarity – source: PSR
5.1.3 Intraday complementarity

Another important characteristic of renewables, observed in some regions of Brazil, is the wind-solar intra-
day complementarity. Figure 34 shows the mean hourly power production of wind (orange) and solar (blue)
of a cell in Brazil for the 1980-2017 period based on MERRA-2 database. As seen, in this case, wind
speed reduces during daytime and increases at night-time.
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Figure 34: Wind-solar daily operational synergy in Bahia
5.1.4 Spatial complementarity

During the analysis of the MERRA-2 database, it was noticed that, on a monthly basis, there is a high spa-
tial correlation of the speed of the wind farms if their distance is small and the wind pattern similar. These
correlations reduce as the distance between the farms increases and the wind patterns deviate. Correla-
tions between the wind speed of some farms and the natural water inflow to some hydro plants were also
observed in the data. To illustrate these correlations, a few wind farms were selected in diverse regions of
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Brazil, namely in Rio Grande do Sul, Bahia, Rio Grande do Norte and Ceará (green dots on the map of
Figure 35)
Figure 35: Selection of project locations
The following hydro power plants were selected given the magnitude of the correlations. These correla-
tions will be analysed for the months of April and September, which represent the months with low and
high wind speeds, respectively.
Table 3: Wind and hydro correlations
POSITIVE CORRELATIONS NEGATIVE CORRELATIONS
Plant Region State Plant Region State
Rosana SE SP Boa Esperança NE PI
Barra Grande S RS Curua-Una N PA
Machadinho S SC Manso CW MT
Taquarucu SE SP Espora CW GO
Capivara SE SP Jirau CW RO
Ourinhos SE SP Sto Antônio CW RO
Chavantes SE SP Belo Monte N PA
Campos Novos S SC Dardanelos CW MT
Garibaldi S SC Estreito TOC CW MT
Ita S RS São Manoel CW MT
Quebra Queixo S SC Teles Pires CW MT
LN Garcez SE SP Salto do Rio CW GO
Canoas II S PR Salto CW GO
Canoas I SE SP Jauru CW MT
Foz Chapecó S RS Tucurui N PA
Sta Clara PR S PR Samuel CW RO
Jordao S PR Colider CW MT
Fundao S PR Sinop CW MT
Ernestina S RS Rondon II CW RO
Passo Fundo S RS Rosal SE ES
Neighbouring wind parks have very high monthly velocity correlations. For example, the w136 and w124
have a 0.99 correlation in April. Considering park w282 (Bahia) versus others in the far away Northeast
coast, the correlations (0.41, 0.26, 0.39 and 0.35) are smaller for the same month, though (except for the
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r=0.26 case) significantly different from zero23 with 95% confidence. There are no correlations statistically
different from zero between farms in the Northeast coast and the South, for example.
W110 W175 W124 W136 W282 W426 W458

W110 1.00
W175 0.93 1.00
W124 1.00 0.95 1.00
W136 0.98 0.97 0.99 1.00
W282 0.41 0.26 0.39 0.35 1.00
W426 0.25 0.17 0.24 0.24 0.54 1.00
W458 0.17 0.20 0.18 0.19 0.35 0.65 1.00
Figure 36: Wind x Wind correlations in April
For the wind and hydro24 comparison, in April, high correlations are green cells, and most negative correla-
tions in red. An interesting example is the correlation of -0.66 between hydro plant Boa Esperança (Piauí)
and wind parks in the Northeast. Negative correlations are also seen between wind speed in some wind
farms and inflows to some hydro plants. A good example are wind parks in Bahia and hydro plants in Cen-
tre-West states, such as Teles Pires hydro plant. April is a month with low wind velocity in the Northeast.
W110 W175 W124 W136 W282 W426 W458 W110 W175 W124 W136 W282 W426 W458
ROSANA 0.34 0.40 0.35 0.38 0.20 0.48 0.43 B. ESPERANCA -0.66 -0.58 -0.66 -0.65 -0.32 -0.32 -0.24
BARRA GRANDE 0.32 0.34 0.32 0.35 0.36 0.35 0.13 CURUA-UNA -0.56 -0.56 -0.55 -0.55 -0.37 -0.26 -0.26
MACHADINHO 0.32 0.33 0.32 0.34 0.41 0.40 0.18 MANSO -0.52 -0.41 -0.52 -0.49 -0.57 -0.39 -0.13
TAQUARUCU 0.31 0.38 0.32 0.36 0.16 0.47 0.43 ESPORA -0.45 -0.42 -0.45 -0.44 -0.33 -0.35 -0.14
CAPIVARA 0.31 0.38 0.31 0.35 0.15 0.45 0.41 JIRAU -0.40 -0.41 -0.40 -0.39 -0.33 -0.03 0.00
OURINHOS 0.30 0.37 0.31 0.34 0.02 0.35 0.31 STO ANTONIO -0.40 -0.41 -0.40 -0.38 -0.33 -0.03 0.00
CHAVANTES 0.30 0.36 0.31 0.34 0.02 0.35 0.30 BELO MONTE A -0.40 -0.43 -0.40 -0.41 -0.48 -0.46 -0.44
CAMPOS NOVOS 0.30 0.29 0.30 0.31 0.43 0.41 0.24 DARDANELOS -0.38 -0.35 -0.39 -0.37 -0.41 -0.29 -0.29
GARIBALDI 0.30 0.29 0.30 0.31 0.44 0.42 0.25 ESTREITO TOC -0.38 -0.36 -0.39 -0.40 -0.55 -0.47 -0.40
ITA 0.29 0.29 0.29 0.31 0.40 0.37 0.14 SAO MANOEL -0.37 -0.38 -0.37 -0.38 -0.64 -0.37 -0.38
QUEBRA QUEIX 0.29 0.30 0.30 0.31 0.31 0.41 0.28 TELES PIRES -0.37 -0.38 -0.37 -0.38 -0.64 -0.37 -0.38
L.N. GARCEZ 0.28 0.34 0.28 0.32 0.06 0.37 0.33 SALTO DO RIO -0.37 -0.38 -0.38 -0.39 -0.18 -0.21 -0.10
CANOAS II 0.28 0.34 0.28 0.32 0.06 0.37 0.33 SALTO -0.35 -0.38 -0.37 -0.38 -0.16 -0.20 -0.09
CANOAS I 0.28 0.33 0.28 0.32 0.07 0.37 0.34 JAURU -0.35 -0.42 -0.38 -0.38 0.12 0.14 0.14
FOZ CHAPECO 0.27 0.26 0.27 0.28 0.38 0.36 0.10 TUCURUI -0.35 -0.41 -0.36 -0.39 -0.37 -0.32 -0.35
STA CLARA PR 0.27 0.31 0.27 0.30 0.32 0.37 0.40 SAMUEL -0.34 -0.35 -0.36 -0.35 -0.35 -0.30 -0.41
JORDAO 0.27 0.30 0.27 0.29 0.32 0.37 0.39 COLIDER -0.33 -0.32 -0.33 -0.34 -0.62 -0.41 -0.33
FUNDAO 0.27 0.31 0.27 0.29 0.32 0.37 0.40 SINOP -0.33 -0.32 -0.33 -0.34 -0.61 -0.37 -0.30
ERNESTINA 0.26 0.26 0.25 0.25 0.40 0.43 0.21 RONDON II -0.31 -0.26 -0.32 -0.30 -0.39 -0.45 -0.56
PASSO FUNDO 0.26 0.25 0.25 0.26 0.40 0.43 0.09 ROSAL -0.31 -0.26 -0.30 -0.30 -0.25 -0.37 -0.41
Figure 37: Wind x Hydro correlations in April
The same analysis is made for September, a month with high wind speed. As seen, there are significant
correlations and patterns like those of April. Correlations between w282 and w175 grew from 0.26 to 0.75.
W110 W175 W124 W136 W282 W426 W458

W110 1.00
W175 0.88 1.00
W124 0.99 0.90 1.00
W136 0.92 0.95 0.95 1.00
W282 0.71 0.78 0.72 0.82 1.00
W426 0.36 0.33 0.33 0.31 0.38 1.00
W458 0.08 0.04 0.07 0.02 -0.03 0.36 1.00
Figure 38: Wind x Wind correlations in September
23
Given the null hypothesis that correlation is zero we test the alternative hypothesis that they are not. For a sample of
38 observations (36 degrees of freedom) the test value is t = r[(n-2)/(1-r2)]0.5. We will reject the null hypothesis if t falls
in the critical region for a=0.05, thus if t > 2.02, which imposes a minimum r =± 0.32. If a=0.01 is used, the condition
holds for t > 2.72, which imposes a minimum r = ± 0.42.
24
These correlations were first noticed in a 2017 PSR study for the Asociación de Generadoras de Chile (AG). The
highest correlation found between hydro and wind was +0.6 and the lowest - 0.6. No relation with the present study.
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As it can be seen in the next table, September shows patterns like April. For example, correlations of Boa
Esperança and wind parks in the Northeast range from -0.5 to -0.4. September shows more negative cor-
relations than positive ones.
W110 W175 W124 W136 W282 W426 W458 W110 W175 W124 W136 W282 W426 W458
STO ANT JARI 0.19 0.13 0.18 0.18 0.21 0.36 0.15 SALTO -0.65 -0.56 -0.62 -0.54 -0.45 -0.41 0.05
CACH.CALDEIR 0.15 0.01 0.12 0.12 0.20 0.34 0.17 SALTO DO RIO -0.64 -0.57 -0.61 -0.54 -0.45 -0.41 0.05
COARACY NUNE 0.15 0.01 0.12 0.12 0.20 0.34 0.17 NILO PECANHA -0.61 -0.44 -0.56 -0.42 -0.31 -0.45 0.11
FERREIRA GOM 0.15 0.01 0.12 0.12 0.20 0.34 0.17 B. ESPERANCA -0.58 -0.53 -0.61 -0.51 -0.34 -0.26 -0.02
BALBINA 0.02 -0.10 -0.02 -0.02 0.08 0.27 0.16 SA CARVALHO -0.56 -0.48 -0.55 -0.49 -0.33 -0.31 0.03
RONDON II -0.05 0.03 -0.06 -0.11 -0.03 0.06 0.01 GUILMAN-AMOR -0.56 -0.48 -0.55 -0.49 -0.33 -0.33 0.01
FONTES -0.06 0.04 -0.04 0.07 0.13 -0.22 0.10 CORUMBA I -0.55 -0.44 -0.53 -0.45 -0.43 -0.34 0.01
LAJES -0.09 0.03 -0.07 0.03 0.07 -0.27 0.14 BELO MONTE A -0.54 -0.35 -0.52 -0.38 -0.24 0.07 0.01
PONTE PEDRA -0.12 -0.05 -0.10 -0.05 -0.13 -0.10 -0.14 SAO SIMAO -0.54 -0.46 -0.51 -0.41 -0.36 -0.39 0.01
SINOP -0.15 -0.01 -0.14 -0.11 -0.16 0.20 0.11 PASSO FUNDO -0.54 -0.34 -0.49 -0.39 -0.19 -0.36 -0.18
COLIDER -0.16 -0.02 -0.15 -0.11 -0.17 0.19 0.11 TUCURUI -0.53 -0.41 -0.53 -0.41 -0.36 -0.21 -0.07
SALTO PILAO -0.16 -0.01 -0.11 -0.08 -0.05 -0.15 0.07 RETIRO BAIXO -0.53 -0.46 -0.52 -0.43 -0.32 -0.42 0.08
GUARAPIRANGA -0.17 -0.13 -0.18 -0.20 -0.14 -0.31 -0.03 P. PASSOS -0.52 -0.35 -0.48 -0.33 -0.22 -0.43 0.12
PIMENTAL ART -0.18 0.01 -0.16 -0.03 0.01 -0.08 -0.01 P. ESTRELA -0.52 -0.41 -0.51 -0.44 -0.39 -0.41 -0.01
CAMARGOS -0.18 -0.10 -0.18 -0.09 0.02 -0.45 -0.03 BAGUARI -0.51 -0.41 -0.50 -0.43 -0.32 -0.28 0.05
ITUTINGA -0.18 -0.10 -0.18 -0.09 0.02 -0.45 -0.03 BARRA DOS CO -0.51 -0.48 -0.51 -0.48 -0.42 -0.45 0.04
CURUA-UNA -0.19 -0.12 -0.18 -0.13 0.06 0.29 -0.02 SALTO GRANDE -0.51 -0.41 -0.50 -0.44 -0.39 -0.40 -0.01
PICADA -0.20 -0.12 -0.19 -0.10 0.04 -0.43 -0.07 CACU -0.51 -0.47 -0.50 -0.47 -0.42 -0.45 0.04
FUNIL-GRANDE -0.23 -0.15 -0.22 -0.13 -0.02 -0.46 -0.01 FOZ DO RIO C -0.51 -0.47 -0.50 -0.47 -0.42 -0.45 0.04
SOBRAGI -0.23 -0.16 -0.23 -0.14 -0.01 -0.44 -0.06 PEIXE ANGIC -0.49 -0.39 -0.48 -0.37 -0.36 -0.27 0.00
Figure 39: Wind x Hydro correlations in September
Two caveats should be made considering the magnitude of the monthly spatial correlations presented
above, especially in the case of wind velocity versus water inflows to the hydro plants:
· Mean monthly velocity of each park is calculated from an hourly reanalysis database (MERRA2),
whereas inflows are mostly based on actual measurements. It is possible that the reanalysis method
introduces an artefact in the data which creates spurious correlations.
· We are not aware of any scientific evidence that dynamic climatic or atmospheric processes support
the mathematical relationships shown here.
However, the reference case uses TSL to produce correlated scenarios based on the results shown next.
5.2 Production of integrated hydro, wind and solar scenarios

Time Series Lab (TSL) – a computational model developed by PSR - was used to produce scenarios of
water inflows to the dams, wind power and solar power. It uses a stochastic process to generate monthly
water inflows to hydroelectric dams and then applies a Bayesian network to determine corresponding wind
power and solar PV power to reproduce spatial correlations that were shown in the previous session. TSL
manages this complex set of spatial dependencies with the Bayesian network, as shown in Figure 40. The
model determines a set of nodes which may represent wind power, water flows, loads, etc. and the set of
dependent nodes. The analogy is to identify stocks that respond to the overall variation of the exchange.
Figure 40: A Bayesian network for monthly wind and solar scenarios production
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In Figure 41the dashed lined curve in black presents the marginal distribution of wind power (MW) in Jan-
uary 2014 based on historical data (without the Bayesian network). The probability distribution in blue is
obtained from TSL when a Bayesian network is constructed for wind power only, that is, without correlating
with water inflows. The green distribution function is obtained by repeatedly sampling from the conditional
probability function of TSL for all hydrology years. As expected, the green curve resembles the blue
curve25. The red distribution of wind power however is calculated by TSL conditioned to the observed in-
flows to the hydro plants of January 2014. The narrower shape shows that the conditional variance is re-
duced, which suggests that working with Bayesian networks to combine hydrologic data with VRE may be
beneficial, as the actual observed wind power of January 2014, indicated by the black vertical line, is well
cantered around the red curve.
Figure 41: Wind power distribution conditioned to hydrology x marginal distribution (January/2014)
The narrower confidence interval and the fact that the actual observation is inside this interval do not by
themselves constitute proof that this methodology should be used. The conditioned confidence interval for
expected wind power - based on inflow forecast - is reduced with respect to the uncorrelated case, as
shown in the following figure. In blue the unconditioned confidence interval is shown. The red curve shows
the conditioned confidence interval (smaller). Finally, the black curve shows the observed value of 2014
(capacity factor). It was seen that this result was systematically reproduced in different wind plants and
years, with the observed inside the narrower confidence interval.
Figure 42: Confidence interval for the forecasted monthly production x actual production
25
All curves of Figure 41 are based on kernel distribution functions that were normalized for the maximum value for
easy of comparison. Hence, they are not actual distribution density functions, as the area below curve is not 1.
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Given that the use of the Bayesian network appears to be advantageous - we decided to use as part of the
expansion planning methodology in the reference case shown later in this report. The general methodol-
ogy for producing scenarios is the following:
1. A stochastic model for monthly water inflows to dams is used based on time series modelling,
more specifically a period multivariate autoregressive model (PAR);
2. A Bayesian network produces monthly wind and solar power scenarios, conditioned to the inflows
generated in step 1 using the monthly Bayesian network.
3. Hourly production results are obtained by disaggregating the monthly mean values with the
MERRA-2 hourly data profiles.
Therefore, the first step in the TSL scenario generation is to produce monthly synthetic inflows with the pe-
riodic autoregressive model (PAR model), preserving the current modelling. Since PAR is the standard sto-
chastic inflow model in SDDP, this ensures that the same set of probabilistic inflow scenarios is used to
generate VRE scenarios. Next, the Bayesian network is used to produce wind and solar series conditioned
to inflows nodes on a monthly basis (and on other nodes for VRE). The result is a set of coherent probabil-
istic inflow/renewable, which can be used both for the calculation of the stochastic operation policy and for
the final detailed hourly simulations. For the execution of the Step 2, it is necessary to know the historical
wind, solar and hydro series. In the case of wind and solar, the following procedure is adopted:
· The basic data source (wind and solar radiation) comes from MERRA-2 reanalysis data for the 1980-
2017 period, the same used for hydro series period. Historical data was not actually measured directly
but inferred from atmospheric circulation models (i.e. “reanalysis” data). Note that with the Bayesian
network, estimates of wind and solar resources can be inferred for years before 1980, given that in-
flows are available.
· After the MERRA-2 data for wind velocity and solar radiation is retrieved, they are transformed into
energy by the methods “Virtual Wind Farm” and “Global Solar Energy Estimator” of the “Renewable
Ninja” library;
· Simulated energy is corrected for eventual bias with the use of actual production data.
Finally, Step 3 performs an hourly disaggregation by using MERRA-2 database.
5.3 Capacity factor

Wind and solar PV hourly production of parks is not public information in Brazil. As an alternative, hourly
values for solar irradiance, temperature and wind speed data obtained from MERRA-2 - a global atmos-
pheric reanalysis data from NASA from 1980 with spatial (cells) with resolution of 50 km by 65 km.
MERRA-2 may have systematic errors related to the weather forecast model and the spatial resolution
may be too coarse for several applications. Thus, it is often complemented with topographic data for
downscaling the coarse data into finer spatial resolution. Finally, wind speed data is given for heights lower
than the hub of the wind generators simulated in this study. MERRA-2 reanalysis data when applied to
wind power applications often need to be corrected (or calibrated) with observed data to remove bias.
MERRA-2 is used to prepare VRE candidate projects for the Brazilian territory, as seen below.
· Step 1: An adequate spatial representation of the data is determined from MERRA-2, balancing the
need to capture spatial variability with computational cost. A regionalization procedure is thus per-
formed to aggregate MERRA-2 cells into clusters of similar patterns (22 clusters are denoted by the
colour in the map, Figure 43). Investment wind power decisions for the expansion planning model
OptGen are made at the cluster level.
· Step 2: For each renewable candidate, MERRA data (wind and solar) is transformed into energy by
using the methods “Virtual Wind Farm” and “Global Solar Energy Estimator”.
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· Step 3: Finally, MERRA-2’s low spatial resolution and the fact that it is inferred from reanalysis of cli-
matic models, may introduce bias. Therefore, a calibration of the data was done to remove this bias
by using actual measurements. The cells were selected based on existence of registered projects that
participated in the energy auctions as shown next.
Figure 43: Wind clusters in Brazil (left) and a detail of the Northeast region (right)
As mentioned, clusters of wind data are needed to make a spatial representation more adequate to the
energy planning, considering the necessity to capture spatial variability at low computational cost. The
Grouping Analysis tool of ArcMap was used to reduce the number of cells by classifying groups of “homo-
geneous” regions. The algorithm of the GIS tool 26 uses a connected graph (minimum spanning tree) and a
method called SKATER to find natural clusters in the data, evaluating the probability of participation of the
elements in the cluster.
This classification is done according to the following attributes: (i) seasonality, through a “photograph” of
the lowest and highest wind months (April and September, respectively); (ii) intraday wind pattern through
mean hourly production. Therefore, the clustering model classified the regions according to 48 attributes
(two months x 24 hours) resulting in 22 clusters.
So, at this study point, the wind candidate projects modelled in OptGen are not the individual projects
(around 800 candidates) but 22 projects, one for each cluster. The individualized representation will be
used in a later stage, in the transmission reinforcement phase, through the disaggregation of the bulk ca-
pacity of each cluster into the individualized projects.
The next step of the process uses 310 parks in operation with known monthly energy generation, disclosed
by the market operator (CCEE) to calibrate the speeds of the clusters where they are located. The follow-
ing procedure 27 matches the monthly capacity factors simulated with the MERRA2 data for winds velocities
after a conversion of wind to energy with the observed monthly capacity factor of the CCEE data28.
26
A reference of the algorithm can be found in http://pro.arcgis.com/en/pro-app/tool-reference/spatial-statistics/how-
spatially-constrained-multivariate-clustering-works.htm
27
References:
• S. Pfenninger and I. Staffell, 2016. Long-term patterns of European PV output using 30 years of validated hourly rea-
nalysis and satellite data. Energy, 114, 1251–1265.
• Staffell and S. Pfenninger, 2016. Using Bias-Corrected Reanalysis to Simulate Current and Future Wind Power Out-
put.Energy, 114, 1224–1239.
• J. Olauson, M Bergkvist. Modelling the Swedish wind power production using MERRA reanalysis data - Renewable
Energy, 2015 - Elsevier
28
Average CF information for the period 2015-2017 comes from Infomercado report of CCEE.
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The VWF methodology29 - Virtual Wind Farm - was used to transform wind velocity series extracted from
MERRA into energy series and follows the steps:
· Step 1: The MERRA base has wind speed data at heights 2 m, 10 m and 50 m. The time series with
the velocity of MERRA-2 winds for the project site is obtained by spatially interpolating wind series of
the neighbouring cells for these heights. From these data, a vertical profile is generated by which the
wind speed at the turbine height is calculated by extrapolation to the height of the turbines with a func-
tion v(h) = a.ln(h) + b, where a,b are parameters, v(h) is the wind speed at height h.
Figure 44: Spatial correlation and vertical extrapolation of MERRA-2 velocities
· Step 2: The wind velocity series of step a is transformed by a linear regression v’(h,m) =a(m) + b(m)
v(h,m), where h indexes the hours and m the month.
· Step 3: Modified velocities v’(h,m) are then converted to energy by the power curve of the wind tur-
bine. Although not used in this work, the obtained energy series could be modified by a Gaussian fil-
ter, as shown in the next figure, to incorporate the production variability within each park. A single pa-
rameter (s) would be used for the smoothing process30 (the dispersion around the blue curve in-
creases with s which can be tuned to represent the reality of the local wind park. For s = 0 the orange
curve is the same as the blue curve).
Figure 45: Single turbine curve (blue) x park curve after Gaussian smoothing (orange)
29
Virtual Wind Farm (Staffell, I.; Pfenninger, S., 2016)
30
The wind speed of the turbines in a given park are variable. Therefore, MERRA would ideally correct the power
curve nor for a single turbine (blue curve) but for a function of this variability (orange curve) which has a smoothing
effect on the total production of the park. Actual hourly production for the park would be needed for this calibration.
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· Step 4: The simulated monthly capacity factor is noted. If it exceeds the observed value, am is re-
duced, otherwise am is increased (binary search). The bm value is calculated as bm = 0.2 + 0.6
FCobs/FCsim (Observed Capacity Factor / Simulated Capacity Factor)
As seen, a linear adjustment of the MERRA velocities is made for a specific height and location. As an ex-
ample, the methodology is applied to the park Santa Joana VI (although broadly it is meant to be applied
to a cluster, as defined above). This park uses Turbine GE 1.7-100 with rotor diameter of 100 m and the
hub height of 80m.
Considering the specifications above and the velocities of MERRA, with the VWF methodology the Capac-
ity factor of the park (blue curve) is determined and can be compared with the verified Capacity factor from
the public CCEE database (orange curve). The differences are corrected with the procedure described
above.
Figure 46: MERRA-simulated production factor x observed
Then, the bias correction is performed for this park. It took nine iterations for the simulated capacity factor
to match the simulated one in January. From the next table, it is seen that bm (the factor that multiplies the
wind velocity) is smaller than one and there is a fixed small term (am). Through this procedure, we remove
any bias in the process, and, at the end, the actual production that comes out of the velocity of the MERRA
is the actual production observed.
Figure 47: Final parameters after calibration
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Figure 48 shows the modified (or corrected) MERRA-2 velocity in orange after the linear transformation in
comparison with the original data in blue for this park.
MERRA velocity (m/s) Corrected velocity (m/s)

12
10
8
Velocity (m/s)
0
1 25 49 73 97 121 145 169 193 217 241 265 289 313 337 361 385 409 433 457 481 505 529 553 577 601 625 649 673 697 721
Figure 48: MERRA original velocity versus corrected
The mechanism to determine the solar PV historical series for either existing or candidate projects, is anal-
ogous to the wind power procedure described above. It encompasses the steps shown below31:
As in the case of wind, the first step is to use irradiance and temperature data from MERRA, both of which
are required for the conversion of hourly electricity energy production. The diffuse radiation at the project
location uses a computational model. PV individual projects (nearly 400) that were qualified to participate
in the energy auction are marked as black dots.
Radiation data (Merra) Temperature (Merra)
Spatial Interpolation
Radiation at project site Temperature at project site
Diffuse radiation model
Diffuse and direct radiation
Energy conversion (1-axis tracker, 1.3 MWp to MW ratio)
Bias correction
Figure 49: Overview of the PV model methodology
The next map shows the cells of interest, coloured according to the classification cluster, determined from
the intraday solar irradiation profile (in total 9 clusters are used).
31
Source: Pfenninger Stefan; Staffell Iain (2016). Long-term patterns of European PV output using 30 years of vali-
dated reanalysis and satellite data hourly. Energy114, pp. 1251-1265.It hurts: 10.1016 / j.energy.2016.08.060
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Figure 50: Regionalization of solar PV power plants
Solar PV candidate projects are modelled through 9 projects, one for each cluster. The individualized rep-
resentation is used in a later phase of the planning, when transmission reinforcements are determined.
The 400 projects are then used to disaggregate the expansion of each cluster into capacities connected to
the bus bars. Ideally, we would calibrate the PV data of each cluster so that, after converting MERRA-2
data into energy production, the resulting capacity factor matched the observed one. However, due to lack
of public data of solar PV production for a sufficiently long period of observations, this calibration was not
performed.
Single axis trackers are considered in the energy conversion process of utility scale plants, because this is
the standard practice of the projects in Brazil as the yearly production increase (higher than 20% with re-
spect to fixed axis) more than compensates the additional costs.
For utility scales, the assumed DC to AC ratio is 1.3. The same conversion process is assumed for DG so-
lar PV projects, but in this case without a tracker and with a DC to AC ratio of 1.1.
For DG, an adjustment to the MERRA-2 simulated capacity factor was linearly adjusted to match the val-
ues per state provided by EPE.
Figure 51: Distributed generation capacity factor (source: EPE)
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6 CASE STUDY
6.1 Methodology
Figure 52 illustrates the execution flow of the energy planning study.
Figure 52: Diagram of the process flow of computational model
The project starts with the preparation of candidate projects for renewables from resources such as solar
radiation, temperature, wind velocity and transmission network maps. In the present study a hybrid ap-
proach was used because the location of the projects and their basic technical parameters were taken
from the database of projects that were authorized to participate in the electricity auctions. Thus, the infor-
mation of individual projects was used only in the detail simulation of the power system operation, but not
during the capacity expansion study, which used a much more aggregate spatial distribution of 22 wind
clusters and 9 solar clusters.
The preparation of generation candidates, representation of regional energy transfers limits, modelling of
distributed generation and demand considered for the end of horizon were presented in Chapter 4.
Time Series Lab was used to produce scenarios of VRE correlated to water inflows to the hydro plants.
The preparation of VRE resources and corresponding scenario generation for the probabilistic analysis
(two yellow boxes on the left side of the figure) were described in detail in the Chapter 5.
Given these inputs the first model executed is OptGen, which determines the expansion of generation ca-
pacity considering projects of different technologies located in the different regions. The model jointly de-
termines expansion of regional interchange capacities, which contributes to spatial selection of capacity
reinforcements as the model is free to decide between a “cheaper, but far” source of generation and a
“more expensive, but near” alternative. OptGen determines the least cost portfolio of generation projects
considering investment and operation costs. The next step is to simulate the operation of the Brazilian in-
terconnected system for this portfolio. SDDP is initially executed with the set of projects (existing plus new
projects decided by OptGen) using the same spatial distribution (seven regions). A monthly time step is
used in the first run and demand is given by a discrete load duration curve (blocks).
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Because the SDDP model is more detailed than the operation module of OptGen, the initial objective of
this SDDP execution is verify if the system operation is reliable for all scenarios of hydrological flows, VRE
production and seasonal demand. If there are occasional energy deficits or marginal costs that are too
high, it is necessary to return to OptGen to reinforce the generation expansion, for example, by including
firm capacity constraints (the sum of the firm capacity of the generators must exceed the peak demand by
a given margin) and/or firm energy constraints (the sum of the firm energy of the generators must exceed
the average demand by a given margin). If, on the other hand, the operation reveals a “healthy” operation
then it is possible to move on to the next step which consists in reinforcing the transmission system, which
must be consistent with the expansion of regional interchanges made by OptGen. They are passed on to
OptNet/Netplan. This “static” simulation uses 11 years, with 3 buffer years in the beginning (to avoid the
effect of initial storage/flows) and end (to avoid the reservoir depletion) and uses the “steady state” results
for the five years in the middle.
Chapter 8 details the transmission planning study, which can briefly be described as follows: the initial step
of this process is to modify the database to move from the seven-region configuration used so far to a con-
figuration of thousands of buses and circuits of the Brazilian high voltage (>138 kV) network. This step in-
volves (i) disaggregating VRE aggregate projects per region into individualized projects; (ii) disaggregating
the regional demand into bus bars; (iii) detailing the representation of a few conventional power plants with
generating groups connected to different bus bars; (iv) adding constraints for transmission lines that con-
nect buses in different regions so that the sum of their flows is bounded by the regional transfer limit; (v)
importing generation-demand SDDP scenarios to the linear power flow model.
After data preparation the transmission planning study includes two other steps before optimizing transmis-
sion reinforcement requirements. Initially SDDP is executed considering a full representation of the high
voltage transmission network (all data considerations mentioned above included) without monitoring the
circuit flows, that is, the linear power flow model “accepts” circuit flows greater than the rating capacity.
The objective is to identify the list of circuits that are candidates for expansion (by adding one or more cir-
cuits parallel to the existing one with the same technical parameters). The second step consists of estimat-
ing the investment cost of each candidate circuit or transformer from its technical parameters. For that pur-
pose, a comprehensive database of circuit costs that resulted from new transmission auctions compiled by
ANEEL is used. OptNet can now be executed to find the list of necessary transmission reinforcements at
least cost.
Chapter 9 describes the next process, which consists in running a detailed model of the SIN operation us-
ing hourly times steps. SDDP optimizes the grid-constrained operation of the power system, determines
hourly circuit flows, calculates the corresponding losses, adding half of each circuit loss between the initial
and final bus bars and reiterates until convergence (i.e. the results of two successive iterations is similar).
6.2 Expansion planning problem size

Capacity expansion model OptGen uses seasons, daily load profiles and scenarios of VRE production and
hydrology to decide on optimal expansion considering energy interchanges among regions, reserves re-
quirements, and integrating investment (binary variables). Operative decision variables, such as hydro-
power, thermal power, reservoir storage, water flow through the turbines, energy exchanges among re-
gions and several others are defined accordingly. The planning model has the following dimensions:
· 84 inflow/wind/solar/DG scenarios
· 33 renewable candidates
· 404 thermal candidates
· 10 battery candidates
· 9 interchanges (SE-S, SE-NE, SE-N, NE-N, AR-CW, AR-SE, N-CW, NE-CW, SE-CW)
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· The year is divided into four quarters with two daily profiles (workdays and weekend/holidays) and
historic hydrological inflow scenarios
· Unit commitment and hourly representation of load and VRE scenarios
· Hourly representation of energy exchanges between tie-lines
· The planning problem was modelled as a mixed integer programming (MIP) optimization with 3.5 mil-
lion variables (1 million integer) and 3.2 million constraints
Solving the problem of this dimension is computationally challenging and requires an adequate infrastruc-
ture to run the model in the Cloud and then post-process detailed results (in the order of several gigabytes)
to provide insights for power system expansion and operation activities.
6.3 Capacity expansion and operation results

Capacity additions at the end of the horizon (when the load is twice that of 2017) are now presented for
both (i) a hierarchical case, where capacity additions are optimized first, and a second problem is solved to
determine the adequate amount of reserve for the plan; and (ii) a co-optimization case, with capacity and
reserves decided jointly in the same optimization model.
50
45
40
35
30
GW
25
20
15
10
5
0
Wind Solar PV Interconection OCGT CCGT - Model 1 Li-Ion BES
Hierarchical 41.2 20.1 9.0 2.2 8.0 2.3
Co-optimization 41.7 19.6 9.0 1.4 8.0 2.4
Figure 53: Capacity additions per source from 2026 to end of horizon
As seen, results for the reference case indicate that the selection of portfolio is only slightly modified if
OptGen is executed with the option to jointly optimize capacity and reserves with respect to the hierar-
chical approach.
The leading technology in terms of capacity addition is wind power, which exceeds 41 GW in both runs,
mostly installed in the Northeast region, with smaller amount in the South-region.
Solar photovoltaic expansion amounts to around 20 GW in both cases. In addition to the centralized solar,
the model considers 30 GW of solar distributed generation (DG) by the end of the study horizon. There-
fore, the total solar PV capacity addition (utility scale + DG) amounts to nearly 50 GW.
An additional 2.2 GW was installed for OCGT (1.4 GW in the case of hierarchical optimization) because of
its higher dispatch flexibility and capacity to provide reserves. A total of 8 GW of CCGT was added in both
cases, with the selection of the cheaper, and less flexible (70% take or pay gas) contract throughout. A lit-
tle over 2 GW of battery capacity (2 GWh of energy) was selected for battery storage due to reserve con-
straints in the Northeast.
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For technical reasons, such as little dispatch flexibility, strong ramping constraints, etc. and/or economic
reasons, some technologies were not selected in the reference case, including coal, biomass and nuclear.
Given the similarity of the results, from now on all presented results are associated to the co-optimization
run of OptGen.
The following graph shows the allocation of the new capacity in each region, where S=South, SE=South-
east, N=North, NE=Northeast and CW=Centre-West.
Wind Solar PV OCGT CCGT Li-Ion BES
CW 0.4
S 8.0 1.4
0.4
SE 12.6 8.0
NE 33.3 5.6 2.4
N 1.0
0 5 10 15 20 25 30 35 40 45
Figure 54: Capacity additions per source and region (GW)
As seen, wind is mainly located in the Northeast region (33 GW) with 8 GW in the South system. The allo-
cation of new capacity per technology was also similar in both runs (co-optimization and hierarchical).
On the other hand, Solar PV is more concentrated in the Southeast, with 12.6 GW of the 19.5 GW con-
structed in this region, while 5.6 GW are in the Northeast. This decision makes sense since the intercon-
nexion reinforcements from NE to the SE (where most of the demand is located) would increase invest-
ment costs and the difference of capacity factors is small. Thus, a few parks with favourable solar re-
source, such as in Ceará, were discarded for other options in the Northeast or in the Southeast region,
where most load is concentrated. Figure 55 shows the location of the VRE capacity additions. The candi-
date projects built are the regions coloured from green (smaller) to red (higher) capacities.
Figure 55: Spatial distribution of VRE capacity additions
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Some results require explanation: the wind power investment decisions in the state of Minas Gerais, where
there are currently no parks in operation can be attributed to the fact that observed generation in Bahia
windy parks were used due (to proximity) to adjust MERRA2 wind speed data, thus probably artificially im-
proving the performance of these parks.
Regarding energy storage, it is worth mentioning that Lithium-ion batteries were selected in the Northeast
by the model, driven by the requirement to meet secondary reserves related to the variability of VRE and
electricity demand uncertainty. Perhaps if the regional reserve criterion was relaxed and reserves were al-
lowed to be provided by resources outside the region, the results could have been different. If pump stor-
age projects in the Northeast were also considered, perhaps they would also be selected, given their cost
levels, that tend to be more favourable than batteries or other energy storage technologies.
As shown, Lithium-Ion battery candidates of 1 hour of storage capacity were considered, with a cost pro-
jected for the end of the horizon. A 60% reduction was assumed with respect to current cost by the end of
horizon. It turns out that, under this assumption, Li-Ion batteries were preferred over the alternative to in-
crease the capacity of other, fast response, technologies such as open cycle and combined cycle plants,
with CAPEX of USD 582/kW and USD 800/kW, respectively. Therefore, following the economic criteria, the
model chose to build batteries.
The annuity of the new capacity investments after 2026 amounts to USD 7.4 billion.
The yearly power system operation cost amounts to USD 5.6 billion for the whole system (existing pro-
jects in 2026 and projects included later) and the total cost USD 13 billion.
In this work we assumed that all hydro plants larger than 1000 MW had a ramping rate such that it takes
four hours for them to reach full capacity from zero or to shut down from full capacity. Moreover, minimum
water outflows motivated by environmental constraints or multiple uses of water were included for each
plant. For run of river (RoR) plants we assumed that there was flexibility, subject, of course, to eventual
ramping constraints for those larger than 1000 MW. For RoR plants the requirement was that the daily wa-
ter outflows equalled the water inflows. Under these assumptions, the results showed that the strong share
of hydropower in the system supports the growth of VRE in the Brazilian grid, to a large extent, mitigating
short term resource variability together with other fast response resources (e.g. open cycle gas plants). A
detailed analysis should be made in the future regarding the actual hydraulic constraints downstream of
each dam, including those driven by social and environmental demands and for all plants, even RoR with
small capacity. Considering actual operating constraints in the river cascades, the need for other fast re-
sponse sources may increase.
Considering the co-optimization run, reference case, the PDE 2026 and the energy matrix in 2016, the
evolution of the energy matrix over the time, is shown in the next three figures.
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Figure 56: Installed capacity (GW) and capacity share (%) in 2016
Figure 57:Installed capacity (GW) and capacity share (%) in 2026 (final year of PDE’s configuration)
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Figure 58: Installed capacity (GW) and capacity share (%) in the end-of-horizon of this study
In terms of capacity, hydropower currently accounts for 69% of total installed capacity. It decreases to 56%
by 2026 and 38% by the end of the horizon. On the other hand, wind power increases from 7% to 22% and
solar power from nearly zero to 19% (centralized, utility scale + Distributed Generation). These results indi-
cated a substantial growth of the participation of the VRE in the Brazilian power matrix for economic and
technical reasons, with no subsidies. Hydropower reduces market share but is the key source that sup-
ports the VRE growth given the flexibility to accommodate the dispatch.
Seasonal operation results in terms of monthly energy production for the end of study horizon are pre-
sented in Figure 59.
Coal Nuclear Solar DG Gas Hydro Biomass Wind
160
Coal
140 Gas DG
Nuclear 8% 1% 4%
120 2%
100 Solar
GWavg
80 6%
60 Hydro
40 50%
20
Wind
0 26% Biomass
1 2 3 4 5 6 7 8 9 10 11 12 3%
Month
Figure 59: Operation by Source for end of horizon
As seen, half of the production is hydroelectric, although as seen, hydropower provides 39% of the capac-
ity. Wind, biomass, solar PV and DG, contribute respectively with 26%, 3%, 6% and 4% of the generation.
Hence, the Brazilian electricity matrix would be 90% renewable and nuclear. Fossil fuel generation would
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be 10%. Since renewables contribute with 90% of the total energy production, the associated CO2 emis-
sion related to fossil fuel production with respect to the total consumption is very low. In fact, emissions per
unit of electricity consumption, for the co-optimization run of the reference case, is 51 gCO2 per kWh,
which is roughly one tenth of the world average for the electricity sector based on EIA online database
(www.iea.org/statistic), as shown in Figure 60.
India 900
China 800
UK 500
USA 500
Brazil 51
0 200 400 600 800 1000

gCO2 per kWh emission
Figure 60: International comparison of unit emission per energy consumption
In summary, the strong share of non-fossil generation foreseen for the end-of-horizon contributes to a very
“clean” electricity matrix.
6.4 Reservoir operation

The large expected growth of wind power with a seasonal pattern opposite to hydro power modifies the
way reservoirs are operated. Figure 61 shows the impact on the operation of Sobradinho, the largest res-
ervoir in the Northeast region. It compares the seasonal pattern of year 2022 32 with the one expected for
the end-of-horizon.
PMO 2022 GIZ Min MAX

40,000
35,000
30,000
25,000
hm³
20,000
15,000
10,000
5,000
0
1 2 3 4 5 6 7 8 9 10 11 12
Month
Figure 61: Sobradinho reservoir seasonal operation
32
The fifth year of the ONS Monthly Operation Plan (Nov/2018) was used in this case. A static run was made consid-
ering the final configuration of supply of the PMO. The electricity demand was then increased by 3% to remove an
oversupply expected for this year. This factor was adjusted such that the average marginal cost of the PMO for this
static run matches marginal costs of the GIZ study for the end of horizon the Southeast region (with highest demand).
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The graph shows that wind penetration in the Northeast, with higher production during the end of the dry
season, “flattens out” the hydro storage of Sobradinho. The reason is that less hydropower is required to
supply the load during low flow months given the higher wind power. Thus, less water needs to be trans-
ferred from the wet period to the dry.
Another way of visualizing the effect of wind power in the dry period is by comparing the electricity produc-
tion of Sobradinho, shown next, which clearly shows the increased production in the wet period. The low
production in May in the PMO study reflects the supply of Belo Monte and other large hydro plants in the
Northern region, which contribute to storing more the water in Sobradinho. By the end of the horizon (GIZ
study) this effect is reduced by the increased demand during the period.
PMO (2022) GIZ (End of horizon)

800
700
600
500
MWavg
400
300
200
100
0
1 2 3 4 5 6 7 8 9 10 11 12
Figure 62: Sobradinho hydropower production
6.5 Daily operation

The result presented in this section is the system operation by source, in an average hydrological year, in
a weekday of the third quarter of the year. They consider the simplified representation of the regional
transmission modelling. Results more closely related to real life operation will only available in Chapter 8,
after SDDP execution (which includes a stochastic process, chronology, hourly time steps, with full-net-
work representation, and with the configuration of generation and transmission based on OptGen and
OptNet results, respectively).
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160
140
120
Hydro
100 Gas
Solar
80 DG
GW
Wind
60 Biomass
Coal
40 Nuclear
Li-Ion Battery
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
-20
Figure 63: Total system generation by source – weekday, third quarter, average hydrological year
Solar PV generation from both utility scale projects and distributed are easily identified during daytime op-
eration. Notice also from the graph the orange bars that show the operation of Li-Ion batteries to provide
reserves. For example, at 14h batteries are charged and at 19h discharged, releasing energy to the sys-
tem. There are other similar charges/discharges cycles during the day.
6.6 Marginal costs

The system marginal cost is presented in the next figure.
Northeast Other
60
50
US$ / MWh
40
30
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12
Northeast 39 43 48 36 24 25 13 23 10 24 38 36
Other 41 44 48 36 30 34 38 41 43 45 45 39
Figure 64: Average monthly marginal costs
Marginal costs of the Northeast region, where most of the VRE is installed, especially wind power, di-
verges from the marginal cost of the remaining regions. In the “low hydrology” months from April to Octo-
ber, the increased wind production in this region means that Northeast exports an amount that reaches the
interconnexion capacity limits, despite the reinforcement between the tie-line between Northeast and
Southeast.
During these months, the marginal cost of the Northeast is lower than in the remaining subsystems be-
cause of the excessive VRE production that cannot be exported. It can also be noted that due to the mas-
sive installation of wind power in the Northeast, from October to April, the marginal costs are lower than
during the “wet period”, which is a striking result.
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Figure 65: Mean marginal costs and percentiles (P10 and P90)
6.7 Regional energy transfers

The main energy transfers (average GW) are shown in Figure 66. Northeast is the main exporter while the
Southeast region is the main importer. March is the month of smallest wind production, thus of smallest
exports form the Northeast region. September has the highest wind resource, thus the largest export. Sea-
sonal wind pattern clearly dictates energy exports.
Figure 66: Main energy transfers
A breakdown of the Northeast exports per region is shown next. Southeast and North are the main import-
ers. The North region retains the largest amount of this energy to supply its need and sends a small
amount to the Southeast during the wind-rich period. Therefore, during these period energy flows follow
Northeast > North > Southeast.
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Figure 67: Northeast exports to remaining indicated regions
The North region exports to the Southeast following the North high-water inflow months and reduces dur-
ing the dry period (the exports are zero in September). Imports from the Northeast increase from March to
September and decrease from October to March.
Figure 68: North hydro-related exports and wind-related imports from Northeast
As seen, in the wet period, the North is exporting energy to Southeast whereas in the dry period, it imports
from the Northeast. However, in the dry season, it can be observed that part of this imported energy is ex-
ported to the Southeast. We now present the energy transfers per region.
The Southeast region is the largest importer, as seen below, which makes sense, given that it concen-
trates most of the electric demand. The imports from North and Acre-Rondonia (AR) follow the seasonal
behaviour of the hydropower production in these regions. The seasonal import from the Northeast, on the
other hand, is concentrated in the dry period, because of the higher wind production.
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Figure 69: Southeast total imports vary from 20 GWavg (November) to 25 GWavg (March)
The Northeast system is the largest exporter, with energy flowing to the Southeast, Centre-West and North
regions following the wind seasonal pattern and basically no imports observed.
Figure 70: Northeast imports (negative imports): smaller in March (4 GWm), larger in Sept. (23 GWm)
The South system is a basic importer from Itaipu dam power throughout the year and from the Southeast
until July with an inversion of the flow direction occurring in the drier months of August to October in the
Southeast system, which are not as marked in the South due to the well know smaller hydro seasonality of
this region.
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Figure 71: South imports from Itaipu and seasonally exchange with the Southeast
The Centre-West is a basic importer from the North and Northeast regions following the hydro and wind
seasonality, respectively.
Figure 72: Centre-West imports from N, NE and AR and seasonally exchanges with the SE region
The North is a large exporter of hydropower to the Southeast system (with flows following the hydropower
seasonality of the region, based on tributaries of the Amazon, which experience peak flows 2 months later
than in the Southeast (April, instead of February). On the other hand, as clearly seen, the North region im-
ports wind power from the Northeast, following the wind seasonality.
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Figure 73: North imports from NE follow the wind power seasonality
6.8 VRE production curtailment

With this high penetration of renewables, specially the wind plants, a small expected curtailment (1.35%) of
renewable production occurs in September, the high wind period in the Northeast. In order to minimize the
curtailment in such situations, different operational practices may be applied. For instance, minimum water
outflows from dams during high wind hours could be reduced, storing that water in the reservoirs and then
releasing an increased outflow in other hours to maintain the target mean flow during the daily cycle, as
long as it does not violate social or environmental limits. Demand Response may be a market instrument
(not in place in Brazil) to trigger flexible demand increase during surplus hours. In any case, it will be nec-
essary to define a criterion for the allocation of curtailment between VRE and hydropower, which poses
questions (beyond the scope of this project) regarding the commercial implications of the decision to the
plants.
6.9 Allocation of reserves

The result presented in this section is the allocated reserve (MW) for the first and last quarters of the year,
for a typical working day and for the hydrology year of 1934 (which was a dry year, with only 76% of the
natural average inflow energy). The first graph shows reserves are provided33 mostly by hydropower and
batteries (constant throughout the day), with a smaller participation of thermal (from 16 to 24h). The reason
is that during this first trimester load marginal cost is constant (all hours) at USD 160/MWh. Thus, it is not
of interest to charge/discharge the batteries during this period and they remain available to provide re-
serves.
Hydro availability in this first quarter is higher due to the favourable hydrologic period. Thus, it is possible
to provide most of the reserves with this source. Thermal plant reserve is only providing reserves during a
few hours of high demand (it is worth noting that reserves requirements have two components: the first is a
fraction of the hour load; the second is related to the forecasting error of the VRE).
33
Demand Response could also be considered as a resource. For a given reward, consumers would agree to modify
their loads to compensate VRE variability for instance, such as reducing consumption during hours of low reserves.
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Figure 74: Allocated reserves for first quarter (MW)
As seen, fast response thermal plants, hydro plants and Lithium-Ion battery contribute to the provision of
reserves throughout the day. The reserve allocation per technology varies depending on the time of the
year and hour of the day. Reserve allocations also depend on hydrological years (not shown).
It is worth emphasizing that the reserve requirements are directly related to the forecasting capability of the
VRE production. In this study, for simplicity, we used the mean value of each hour of each month as a (na-
ïve) forecast, using all available information of the MERRA2 data. This selection, therefore, overestimates
the reserve requirements, as in the day-ahead pre-dispatch the system operator will obviously have better
forecasts.
In the fourth quarter, there is a much higher variation of the marginal production cost within the day for this
scenario. In the low demand hours, it reaches zero and during high demand hours the marginal cost
reaches USD 160 per MWh. Given this variation, batteries are charged/discharged more frequently, as the
next figure shows. The Li-Ion battery injects up to 1500 MW in the grid and charges up to 2300 MW.
Battery Generation Load Marginal Cost
2,000 200
1,000
150
USD/MWh
0
MW
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 100
-1,000
50
-2,000
-3,000 0
Axis Title
Figure 75: Battery hourly operation (orange) vs. marginal cost (blue) for the 4th quarter
This study examined two options for energy storage. Perhaps results would be different if more options of
energy storage had been given to OptGen as candidate projects. For instance, Eletrobras studied pump
hydro storage alternatives in end of 1980s by simple filters, such as distance from large city, topography
and ratio of head x length for hydraulic circuit (tunnel or penstock). The final number was 1 TW of pump
hydro storage capacity. Naturally, it is necessary to further investigate this menu to understand which can-
didate projects make economic sense. The proposed approach includes:
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· A model to estimate costs based on a good approximation of the engineering solution applicable to
the specific location.
· A study to measure the economic benefit of the candidate pump-storage projects with OptGen tool, by
explicitly modelling their operation in the power grid.
The approach has the advantage of allowing planners evaluate multiple energy storage projects, with dif-
ferent attributes, such as the connecting point to the grid, installed capacity, energy storage (MWh) and
response time.
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7 SENSITIVITY CASES
7.1 Objectives
The objective of this session is to analyse how the capacity expansion is affected by changes in certain
key factors and assumptions that are intrinsically uncertain, such as the cost of VRE in the future. They
were selected by the Working Group 2 during the meetings that discussed the presentation of results and
during the training sessions and workshops with the Consultants.
7.2 Sensitivity 1: VRE investment costs

The strong VRE expansion assumes that wind power costs decrease an additional 30% with respect to
current reference (2018) whereas solar PV costs decrease an additional 40%. The motivation by this initial
sensitivity during the discussion of results, was to evaluate what happens to the portfolio of projects if the
decrease of VRE investments costs is lower or higher than the assumption. To answer this question addi-
tional OptGen runs were made, as shown:
Table 4: Sensitivity 1 - main assumptions
CASE WIND SOLAR PV
Reference case 30% 40%
Lower VRE cost decrease 20% 30%
Higher VRE cost decrease 40% 50%
The next figure shows the results of this exercise.

50
45
40
35
30
25
GW
20
15
10
5
0
S1-Low 40.9 16.2 1.0 9.0 2.2
Reference 41.7 19.6 1.4 8.0 2.4
S1-High 42.8 21.8 2.2 7.0 2.2
Figure 76: Sensitivity 1 - results for different projected VRE cost decreases
As seen, there is a small capacity change in the of wind power addition with respect to the reference case
for the lower and higher VRE cost decrease, respectively (-0.8 GW, +1.1 GW) and a higher variation for
solar PV (-3.4 GW, +2.2 GW). Associate impacts to reserves have OCGT respond in the same direction as
the VRE (-0.4 GW, +1.2 GW), whereas CCGT responds in the opposite because the total energy con-
sumption is the same (+1.0 GW, -1.0 GW). This is because as VRE cost is reduced, more is selected by
OPTGEN. More VRE energy implies in less requirements by inflexible CCGT. Additional reserve required
by the system is then economically provided by an increase of open cycle gas turbine (OCGT) in the port-
folio.
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7.3 Sensitivity 2: Open cycle generation

OCGT plants were considered with a minimum technical generation equal to 25% of the nominal capacity
and during the discussions within Working Group 2 it was requested a sensitivity to evaluate the impacts if
these plants were considered fully flexible (no minimum generation if committed). The results of this run
did not show differences with respect to the reference case.
7.4 Sensitivity 3: Minimum storage for Li-Ion BESS

Another request originated in the discussions in Working Group 2 was to utilize a minimum storage for
Lithium-Ion Batteries of 20% of the maximum capacity. It was zero in the reference case, which is not rec-
ommendable by many manufacturers considering today’s technologies. It is worth noting that the unit cost
(USD /kW) in the end-of-horizon assumes a strong reduction with respect to current cost. By reducing the
kWh usable amount and maintaining the CAPEX (USD), in practice this sensitivity basically increases the
USD /kWh value. In this case the results were only marginally impacted: there was a decrease of 0.6 GW
of BESS construction with respect to the reference case (from 2.4 to 1.8 GW) due to lower competitive-
ness.
An important observation should be made regarding Sensitivities 2, 3 and 4: the difference of the objective
function value of the optimum solution of these cases with respect to the objective function value of the ref-
erence case is comparable (i.e. in the order of magnitude) of the convergence error of OPTGEN. All cases
were run with a relative cost criterion (difference between upper and lower costs of the solution method
when solving OPTGEN’s Mixed Integer Programming - MIP problem) of 0.1%.
7.5 Sensitivity 4: VRE uncorrelated with hydrology
Case A
In this sensitivity case we evaluate impacts to the generation portfolio selection if scenarios of VRE pro-
duction are uncorrelated with inflows to the hydro power plants. The motivation is the possibility that such
correlations seen in the data from MERRA2 are spurious, thus should be discarded. For this sensitivity, the
monthly Bayesian network of TSL - that seeks to reproduce the monthly correlations of different projects -
was prepared from the MERRA2 database only (i.e. inflows were not inputted to the Bayesian network).
The elimination of the monthly correlations between wind farms production and hydropower plants reduces
the portfolio effect between these sources because, in general, correlations between wind and hydro
power are negative. OptGen selected a portfolio with more wind power (+7.3 GW) and less solar PV (-2.7
GW) because additional energy is necessary in the dry hydrology scenarios. Interestingly biomass and
coal power, that had not been selected in the reference case, entered the portfolio with +7.1 GW and 1.5
GW, respectively. On the other hand, OCGT increased participation (+1.6 GW) due to a higher variability
of the wind production. The amount of CCGT was reduced (-6 GW) while Li-Ion additions were discarded
altogether (-2.4 GW).
Case B
As seen, the resulting portfolio of Case A differs substantially from the reference case. Let us examine
what happens if biomass and coal projects (the “newcomers”) are no longer considered as candidates pro-
jects in OptGen. The results of this Case are similar to the reference case, despite an overall increase in
investments in the portfolio. Figure 77: Sensitivity 4 - VRE scenarios uncorrelated compares results for
Cases A and B with the Reference Case.
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60
50
40
30
GW
20
10
0
CCGT -
Wind Solar PV Biomass Coal OCGT Li-Ion BES
Model 1
Reference 41.7 19.6 0.0 0.0 1.4 8.0 2.4
Case A 49.0 16.9 7.1 1.5 3.0 2.0 0.0
Case B 47.8 18.3 0.0 0.0 2.0 8.0 0.0
Figure 77: Sensitivity 4 - VRE scenarios uncorrelated with inflows
Figure 78 shows that total annual costs for Case B are remarkably similar to Case A (less than 0.5% differ-
ence) despite a significant alteration in the portfolio and an alteration in the cost breakdown: Case B has
lower investment costs and higher operation costs. It is clear from this exercise that multiple portfolios are
possible with similar economic performance (i.e. there is no “absolute winner”).
Investment Cost Operation Cost
50,000
45,000
40,000
millions of USD/year
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Case A Case B
Figure 78: Sensitivity 4 –VRE scenarios uncorrelated with inflows: total costs
Li-Ion batteries are not selected in cases A or B, despite being part of the portfolio of the Reference Case.
A close examination reveals that when scenarios of VRE are uncorrelated with water inflows there is a
slight increase in VRE production during months where reserves requirements are maximum (because
VRE production is minimum). This happens in the first four months of the year, as shown in Figure 79. Be-
cause cases A and B have slightly higher VRE production during these months, reserves are alleviated,
and the Li-Ion batteries are no longer selected in the portfolio. The same figure shows that in the remaining
months of the year the VRE production in the uncorrelated case is smaller. Thus, the yearly VRE amount
is roughly the same in all cases, just the seasonal distribution is changed.
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Reference Sensitivity
0.7
0.6
0.5
0.4
p.u.
0.3
0.2
0.1
0.0
1 2 3 4 5 6 7 8 9 10 11 12
Figure 79: VRE seasonal production for reference and uncorrelated cases
Case C
During the discussions of the results of this case it was suggested that the maximum constructed wind
power of the South system (limited to 3x the stock of projects that participated in auctions) should be re-
laxed as there is enough space for new additions. It was also suggested that the natural gas for thermal
power generation should not be considered in the North region and were for this reason withdrawn. In this
case OptGen reacted by selecting a significantly higher amount of wind power - with the increase concen-
trated in the South region - while reducing CCGT from 8 GW to zero and solar PV from 20 to 15 GW (-5
GW). Biomass was now selected with 2 GW. OCGT and Li-Ion suffered slight changes.
Figure 80 shows the results for this case. As seen, this assumption had a stronger impact than previous
sensitivities, the most important of which being a surge of wind power additions in the South, because the
expansion model had the chance to build more capacity with the highest possible capacity factor in the re-
gion than in the reference case.
60
50
40
30
GW
20
10
0
CCGT - Model
Wind Solar PV Biomass OCGT Li-Ion BES
1
Reference 41.7 19.6 0.0 1.4 8.0 2.4
Case C 62.8 15.2 2.0 1.2 0.0 2.0
Figure 80: VRE uncorrelated with inflows and illimited wind developments in the South
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The spatial distribution of the capacity additions for this sensitivity are shown next. It appears that the need
for dispatchable generation, such as OCGT or CCGT34 has decreased with installation of wind power in
the South system. There is a synergy with Northeast wind power due to low correlation of wind speeds.
Table 5: Installations for VRE uncorrelated with inflows and illimited wind additions in the South
N NE SE S CW TOTAL
Wind 41.4 0.4 21.0 62.8
Solar PV 1.0 1.3 12.6 0.4 15.3
Biomass 2.0 2.0
OCGT 1.2 1.2
Li-Ion BES 2.0 2.0
The increase of wind power in the South may be too optimistic because all new parks use the highest ca-
pacity factor of the region, given that there are no limitations on the size of the projects. This result indi-
cates the need to use better criteria to limit the capacity of candidate projects that can be selected in each
region. A process should ideally combine layers of relevant information, such as the wind speed, available
area, distance to roads, terrain slope, existence of conservation and indigenous areas, and others, to per-
form a “screening” with GIS related tool of the potential that could be explored in each cluster. With such
process, the preparation of candidates for the system expansion is improved, thus limiting the available
resources, including those with high capacity factors.
7.6 Sensitivity 5: VRE forecasting error

The motivation for this sensitivity was that MAPE of the naïve forecast (based on the average value of all
MERRA scenarios in each hour of each month) was well above the value reported by ONS and EPE
based on actual day-ahead pre-dispatch experience. In this sensitivity we examine the effect of improving
VRE forecasting ability, which would reduce forecasting error by half with respect to the reference case,
with in a Mean Absolute Percentage Error (MAPE) of 10% in the Northeast region.
45
40
35
30
25
20
15
GW
10
5
0
Interconectio
n
Reference 41.7 19.6 9.0 1.4 8.0 2.4
Better forecast 41.5 19.6 9.0 1.4 8.0 0.4
Figure 81: Sensitivity 6: improved forecasting of the VRE production
OPTGEN in this case chose almost the same portfolio of projects, except for 2.4 GW of Li-Ion battery,
which were reduced to 0.4 GW.
34
Remember that 30% of CCGT capacity is considered flexible and 70% is inflexible due to the take or pay clause of
the natural gas contract that was selected by the model.
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7.7 Sensitivity 6: Capacity expansion timing

After validating the results of the end of horizon Reference Case, an additional exercise was made to eval-
uate when these investments would be made. Two intermediate points (P1 and P2), were used between
2026 – the last year of the PDE - and the end of horizon, when demand is twice that of 2017: the first (P1)
has 1/3 of the demand growth of the complete period and the second (P2), with 2/3 of the demand growth.
The NE-SE regional 9 GW interchange addition was assumed to be available from the beginning due to
the difficulty of a priori designing a realistic scale-up of the necessary reinforcement of the transmission
between these regions, which could also impact the generation portfolio for intermediate stages.
2026 (last year of PDE) P1 P2 End of Horizon

Figure 82: Overview of the cut years for the planning exercise
The following procedure was used:

· Step 1: Preparation of yearly VRE and storage CAPEX estimates based on assumptions of the refer-
ence case and the expected cost reduction applied for P1 and P2. Given the initial CAPEX (C 1) and
end of horizon CAPEX (Ct), a function was adjusted to interpolate for intermediate points, such that
Ct=C1.e-k.t, where k is a parameter.
· Step 2: Preparation of DG penetration provided by EPE for these two intermediate years.
Period PDE 2026 P1 P2 End of Horizon

DG Capacity (GW) 9 11 22 30
· Step 3: Each case (P1, P2 and end-of-horizon), shown in the timeline of Figure 82, is simulated indi-
vidually considering all the capacity built in the previous cases as given. For example, the simulation
performed for the intermediate point P1 takes into consideration the technologies determined for the
last year of PDE; the intermediate point P2, in turn, considers fixed all investments decisions made at
point P1 and in PDE 2026. Finally, the end of horizon simulation considers all the constructed projects
at PDE 2026, P1 and P2 stages.
OptGen was executed for these two intermediate years for the reference case. Results of capacity expan-
sions for the intermediate years are shown next:
Figure 83: Timing of investment decisions (GW)
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The next table shows results per region, in installed GW.
Table 6: Sensitivity 7 – results per region (GW)

PERIOD PERIOD PERIOD
REGION SOURCE
2026->1/3 1/3-2/3 2/3-END
CCGT 8.0
SE Solar PV 7.2 5.4
Wind 0.4
Wind 14.9 9.2 9.2
NE BESS Li-Ion 2.4
Solar PV 5.6
CW Solar PV 0.4
N Solar PV 1.0
OCGT 1.4
S
Wind 3.3 4.7
As the Table 6 shows:

· Wind power is the technology of choice since the beginning of the horizon in the Northeast and South.
It is competitive to utilize the high capacity-factor clusters to expand this power production with the
use of transmission capacity.
· Solar PV is selected in the years in the middle of the horizon in the Southeast and Centre-West. De-
spite a slightly lower capacity factor in these regions with respect to the best areas of the Northeast,
this selection has the advantage of not requiring investments in new energy transfer capacities. In the
final period, as electricity demand increases, including in the Northeast, it becomes possible once
again to install new solar projects in this region.
· CCGT plants are selected in the end-of-horizon in the Southeast, and Lithium-Ion storage is selected
in the end-of-horizon in the Northeast. By then, reserve requirements are higher, due to an increased
participation of VRE production and a larger consumption of electricity. With the assumption that all
hydropower plants greater than 400 MW and with a minimum water head will join the Automatic Gen-
eration Control, results show that only in the end of the horizon will it be necessary to secure more
reserves though both natural gas plants (OCGT and CCGT) and Li-Ion batteries.
It is important to make clear that results were based on OptGen capacity expansion planning mode. No
detailed hourly simulations were carried out for P1 and P2 intermediate cases, nor was a detailed trans-
mission network considered in these cases. Such analysis could have an impact on the portfolio selection
in each period. For example, additional resources such as OCGT, could have been anticipated from the
end of horizon to P2 if detailed operating hourly reserves were not adequate.
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8 TRANSMISSION EXPANSION
In Chapter 6 it was seen that more than 41 GW of wind power and 20 GW of utility scale solar PV were
selected by the expansion planning model, as well as new thermal capacity.
The objective of this chapter is to evaluate the reinforcements required by the national power grid to ac-
commodate all this new capacity for the reference expansion case.
A three-step procedure was adopted, as shown below:
Figure 84: Transmission network study procedure
Figure 85 shows the map of the high voltage transmission network for the configuration of 2026 of EPE
with nearly 10,000 buses and 14,000 circuits.
Figure 85: PDE 2026 transmission network configuration
Admitted transmission investments include the duplication of existing lines, with the same technical param-
eters. The set of substations (nodes) of the PDE 2026 configuration is maintained in the end of horizon.
Nearly 800 wind projects and 400 solar projects that participated in new energy auctions in Brazil are used
to disaggregate the expansion of each region (OptGen decision variable) into individual projects that sum
up to the same capacity. These projects are connected to known bus bars (it is a public information ob-
tained from the auction authorization documents).
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Initially, an incremental transmission network was created using PSR format for period 2018-2026, sup-
ported by the Anarede35 database for PDE 2017 -2026. A verification of the internal coherence of the data-
bases was also done.
The generation data that was considered in the energy study needs to be adjusted to the transmission
data for a coherent transmission expansion. For this reason, the first step of the procedure separates gen-
erating groups of a given power plant if they are connected to different substations, as Figure 86 shows for
the case of Mascarenhas de Moraes hydro power plant.
Figure 86: Mascarenhas de Moraes hydro plant connected to two substations
The procedure illustrated for Mascarenhas de Moraes was repeated for the following hydro plants: Henry
Borden, Itaipu, and Santo Antônio, as well as for the Juiz de Fora thermal power plant, which also has
generating groups connected to different buses.
The next step was to allocate to the high voltage grid, plants not dispatched by ONS, such as wind farms,
PV plants, small hydro and sugar cane biomass plants that start operation before 2026. Then, the new ca-
pacity determined by OptGen per region is connected to the busbars.
This step uses data of projects that participated in the energy auctions. The criterion for this selection is to
prioritize projects in the region based on their capacity factor. Therefore, OptGen results of selected solar
PV and wind capacity of projects per cluster are broken into individual projects from a list of roughly 400
solar and 800 wind projects, based on a merit order per region related to each project physical guarantee.
Distributed Generation (Solar PV) was treated similarly: additions per state of the federation are added to
nodes that connect the high voltage grid to the distribution utility network in proportion to the load of the
busbar.
35
Anarede is used by EPE and ONS for electrical studies.
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As done for the interregional exchange limits, constraints were added to the transmission network repre-
sentation such that the sum of flows between transmission lines that connect buses of different regions
was limited to the regional transfer amount of OptGen. These interconnections capacities, in turn, are
based on PDE data. The mapping of the transfer capacity between the seven regions was extensively dis-
cussed between EPE and PSR. The circuits that make part of each interregional exchange are listed in NT
ONS 0130/2017.
The next step is to run a SDDP with full transmission. Generation capacity comes from OptGen, the indi-
vidual representation is made as described, as well as the allocation of DG. The first objective of this step
is to remove the gap between the energy study and the electrical studies. The second objective is to iden-
tify circuits whose flows for different months, load blocks and hydrologic scenarios may approach or even
exceed their nominal capacity, thus signalling which are the natural candidates for reinforcements. More
specifically the process consists in observing the linear power flows for simulated SDDP conditions (i.e. for
all months, load blocks and scenarios) without monitoring intra-subsystem circuit flows and then selecting
the circuits with loading above 70% of nominal capacity as candidates for expansion.
The number of parallel circuit candidates is proportional to the ratio between the maximum flow for all sim-
ulated conditions and the actual circuit capacity.
Figure 87: SDDP run with full transmission and no flow monitoring identifies reinforcement candidates
8.1 Transmission candidate costing

The next procedure automatically estimates the cost of each candidate circuit for transmission reinforce-
ments (not only equipment, but also connection bays in substations, protection and control equipment).
The procedure is as follows:
· Step 1: Define the line voltage, R%, X% and systems natural electrical frequency
· Step 2: Define a list of conductor types and their technical parameters: MCM, GMR, Radius, R%/km,
X%/km and Maximum Ampacity
· Step 3: Assume a line configuration of number of conductors per phase and distance between
phases.
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· Step 4: For every type of conductor and line configuration, estimate line’s length according to the
original R% and X% parameters.
· Step 5: Chose the conductor type and line configuration to minimize the error of the estimated length
· Step 6: Based on the determined distance and line characteristics estimate the cost from ANEEL da-
tabase.
· Step 7: For transformers, non-linear curves are used, which relate the estimated cost with respect to
the capacity for a given combination of voltage levels (to / from) voltage levels. A quadratic regression
is performed.
8.2 OptNet execution

OptNet execution uses a full representation of the high voltage network (>138 kV) through a linearized
power flow model with nearly 10 thousand buses and 14 thousand circuits. Nominal capacity flow con-
straints of 2788 circuits are considered, in addition to the interregional interchange (circuit sum of flow con-
straints). The solution method is concisely shown below:
Phase 1: Feasibility problem

Determines the infeasible scenarios: Load curtailment > 0
Phase 2: Investment problem ( scenarios)

Solves the expansion problem for critical scenarios within scenarios and finds
an investment decision common to all of them, until all scenarios are solved
Phase 3: Solution feasibility (ℵ scenarios)

Solves ℵ OPF problems: minimize load shedding. If there are no infeasibilities the
solution is suitable for all scenarios.
Phase 4: Eliminating redundancies
Each circuit is tentatively removed in descending cost order and the feasibility is
verified for all scenarios
Figure 88: Solution method for OptNet
8.3 Transmission reinforcement results

Table 7 shows the number of circuits added in each of the region, the total distance and investment. As
seen, total investments are estimated at almost USD 10 billion.
Table 7: Synthesis of transmission expansion results per region
NUMBER OF LINES / LENGTH INVESTMENT

REGION
TRANSFORMERS [KM] [USD BILLION]
S 5/2 112 0.26
SE 26 / 15 2,063 0.64
CW 3/5 242 0.05
NE 128 / 12 14,397 3.14
N 23 / 10 1,748 1.79
HVAC Tie Line 4 1,10036 1.39
HVDC Tie Line 1 bipole 1,800 2.18
SIN 234 23,262 9.45
36
The 1100 km of the HVAC represent the sum of the distances of the circuits connecting the NE to SE regions.
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Table 8 shows the number of lines built in each region per voltage level.
Table 8: Number of lines built in each region per voltage level
REGION 230 KV 345 KV 440 KV 500 KV TOTAL

S 3 2 5
SE 3 16 2 5 26
CW 3 3
NE 110 18 128
N 5 18 23
Total 124 16 2 43 185
The next table shows the investments in intra-regional transmission lines per voltage level (transformers
are not included). The values are expressed in millions of US dollars.
Table 9: Investments in intra-regional transmission lines per voltage level
INVESTMENT (MUSD) 230 KV 345 KV 440 KV 500 KV TOTAL

S 23 235 258
SE 14 374 31 113 532
CW 34 35
NE 1811 1263 3073
N 96 1677 1774
Total 1978 374 31 3288 5671
The next map shows in black where the reinforcements were made.
Figure 89: Transmission reinforcements
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The next figures detail reinforcements in the following order: (a) the Northeast region, where most of the
wind power is located, (b) the Southeast region, where most of the solar PV and thermal capacity is lo-
cated, (c) the DC Link bi-pole from Milagres to Silvânia; (d) the South region with important wind additions.
Figure 90: Northeast transmission reinforcements
Figure 91: Southeast transmission reinforcements
Figure 92: Bi-pole DC Link
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Figure 93: South transmission reinforcements
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9 DETAILED SIMULATIONS OF THE HOURLY OPERATION
9.1 Methodology
The last step of the energy planning process in to run a detailed model of the SIN transmission constrained
network operation using hourly times steps. New generators (selected by OptGen) and new transmission
elements (selected by OptNet) are included in the system configuration of PDE 2026. SDDP model runs is
executed twice.
· First SDDP run for policy calculation using monthly time steps and load blocks. Preparation of the Fu-
ture Cost Functions (FCFs) with a simplified regional interchange representation (7 regions).
· Second SDDP run: chronological 21-blocks/week (3 blocks/day x 7 days/week) considering the entire
high-voltage network and bus demands that include an estimate of the transmission losses. Weekly
FCF will be used based on the first run.
· Third run: includes full linear power flow model with losses (thousands of buses and circuits). SDDP
optimizes the grid-constrained operation of the system, calculates hourly circuit flows and correspond-
ing losses, adding half of the Joule loss of each circuit between the initial and final bus bars and reit-
erates until convergence (when the results of two successive iterations are sufficiently similar).
We now present a sample of some of hourly operation results of the Brazilian power grid for the end-of-
horizon, including transmission constraints. The study considers the expansion of generation and transmis-
sion projects decided in the previous steps of the process.
9.2 Production
Figure 94 illustrates the total production of the Brazilian power system for a week in august for an average
hydrologic year (1994) for the end of horizon.
Thermal Biomass Wind Solar Hydro Batteries
180
160
140
120
100
GW
80
60
40
20
0
1 25 49 73 97 121 145
Figure 94: Total production for a week in August
As seen, thermal generation in this week is based on inflexible CCGT and biomass generation. Wind
power has a daily variability, with the tendency to increase production in the night-time. Solar PV from util-
ity scale and distributed generation is clearly seen from the picture and hydropower (on the top) responds
for most of the flexibility – in this case – required to meet demand in real time.
Figure 95 shows the yearly hourly production for a mean hydrology (1994) per source.
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120
80
40
60
40
20
50
40
30
20
10
0
50
40
30
20
10
0
-2
-4
Figure 95: Hourly production (GW). From the top: hydro, wind, solar, biomass, thermal and BESS
It is interesting to notice the seasonal behaviour of each source and how lower hydropower in the dry sea-
son (from May to October) is nicely compensated by the increase of wind power and the biomass produc-
tion, mostly associated with sugar cane bagasse. It is no coincidence that this happens, as the sugar cane
harvest takes place in the dry period. It is also interesting to notice how hydropower will remain the single
most important source of production despite all growth expected by the VRE sources in the period. It can
also be seen from the graph that the March has a larger thermal power variability whereas June or July
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seem to be more stable (dry period). Figure 96 shows an example of a daily production for the month of
January.
Hydro Thermal Wind Solar Demand

160
140
120
100
GW
80
60
40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Figure 96: Illustrative dispatch for a day in January per source
The example shows the solar PV production during daytime, how hydropower is utilized to meet the hourly
demand by reducing output in the morning when sun rises and increasing output at dawn. The graph also
shows that from 8-9pm thermal plants are dispatched to fulfil the higher total electricity demand.
9.3 Start-ups of thermal power plants

Figure 97 illustrates the number of start-ups per month of an OCGT plant for three hydrologic years. It is
clear from the picture that the attributed of flexibility that is provided by the open cycle gas turbines is
mostly utilized during March, with just under one start-up per day on average. Thermal power is more sta-
ble in June or July. CCGT basically has a minimum (inflexible) generation equivalent to 70% of the capac-
ity. OCGT, which has a higher variable production cost, is usually not required to produce electricity in this
period, thus start-ups become less frequent.
Dry Wet Mean

30
Number of srart-ups per month
25
20
15
10
5
0
1 2 3 4 5 6 7 8 9 10 11 12
Figure 97: Number of OCGT start-ups per month for different hydrology years
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9.4 Wind power variability

Figure 98 shows the histogram of the aggregate wind power of the Northeast region for the end horizon.
As seen, there is a somewhat flat area in the middle of the histogram showing that there is roughly the
same likelihood that production is between 15 and 34 GW. There is a transition to the “tails” of the histo-
gram and production smaller than 10 GW or higher than 35 GW are much infrequent events.
Figure 98: Northeast wind power histogram. Sample: 8760 hourly values for hydrology year 1994
Figure 99 shows how wind production varies between successive hours by registering the frequency of the
production difference (positive or negative) of different intervals (histogram). The left tail of the histogram is
related to events that pose a challenge to maintaining the operation of the system, as they account for a
large loss of wind power production in successive hours, for instance, 6 GW or more of reduction, which
need to be compensated by an increase of the production of another flexible source, such as hydropower,
OCGT or batteries.
Figure 99: Northeast wind power variability histogram. Sample: 8760 values for hydrology year 1994
9.5 Nodal marginal costs

Figure 100 illustrates hourly marginal costs of three substations of Brazil for a day in August. Each graph
has three curves which relate to dry, average and wet years. Notice how hydrologic conditions are key to
determining the level of marginal cost and that hourly variation is usually not very large, which is typical of
systems with a large amount of hydropower.
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Average Wet Dry
120
100
80
USD/MWh
60
40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Figure 100: Hourly marginal costs for August 18th for Albras 230kV busbar (North region)
It is also possible to notice how dramatically different the marginal costs can be for the hour and day,
purely dependent on the busbar location. It can be seen for the dry hydrology that the Northeast region
presented a low marginal cost because wind power in August was enough to compensate lower hydrology,
whereas in the North and Southeast hydro-dependent regions, marginal is higher, from USD 80 to USD
100 per MWh versus less than USD 20 per MWh in the Northeast.
Average Wet Dry
120
100
80
USD/MWh
60
40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Figure 101: Hourly marginal costs for August 18th for Milagres 500kV busbar (Northeast region)
Average Wet Dry
120
100
80
USD/MWh
60
40
20
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Figure 102: Hourly Marginal costs for August 18th for Bandeirantes 88kV busbar (Southeast region)
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9.6 VRE curtailment

Figure 103 shows the monthly mean VRE curtailment for the Northeast region. Notice how this curtailment
increases in the windy season.
Figure 103: Mean Northeast VRE curtailment (% of capacity)
9.7 North-Northeast power exchanges

We now examine the use of the North>Northeast energy exchange, given by the total flows on circuits
connecting these regions. Notice the reddish from March to May, which show that the flow reaches maxi-
mum capacity in these months of higher water inflows in the region. Notice also that there is an inversion
of flows in the second semester of the year, with the Northeast becoming an exporter to the North during
this period, with higher wind speeds. In the heatmap bluish colours denotes negative values, thus indicat-
ing that electricity flows from the Northeast to the North for most of the second semester at the rated ca-
pacity of 5 GW.
This interesting result explains a larger expected use of the Belo Monte DC Link bi-pole, examined next.
Figure 104: North>Northeast energy exchanges for a normal hydrological year (GW)
9.8 Belo Monte’s DC link

We now examine flows of the Xingu DC Link, designed to export Belo Monte hydropower production to the
Southeast region, where the highest load is located. Once again results are shown for a normal hydrologic
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year (1994). Examining Figure 105, it stands out how frequently the link operates close to its maximum ca-
pacity (red). This behaviour is closely related to the Northeast>Southeast renewable energy exchange,
caused by a large production of Northeast’s VRE projects. It is also noticeable that there is a reduction of
flows from Xingu during the low hydrology season, sometimes leading to an inversion of the flow direction.
Figure 105: Heatmap of total Xingu DC link flow (GW)

Another way to visualize this result is by examining the flow duration curve of each pole of the Belo Monte
DC Link, as shown next. As seen, more than 92% of the time the flow is either zero or in the direction
Xingu -> Estreito. Moreover, 80% of the time there is flow is either zero or follows the Xingu -> Terminal
Rio direction.
5
4
3
2
1
0
GW
0%
2%
5%
7%
10%
12%
14%
17%
19%
21%
24%
26%
29%
31%
33%
36%
38%
41%
43%
45%
48%
50%
53%
55%
57%
60%
62%
64%
67%
69%
72%
74%
76%
79%
81%
84%
86%
88%
91%
93%
95%
98%
-1
-2
-3
-4
-5
Figure 106: Power flow distribution of DC Link for Xingu->Estreito

5
4
3
2
1
GW
0
0%
2%
5%
7%
10%
12%
14%
17%
19%
21%
24%
26%
29%
31%
33%
36%
38%
41%
43%
45%
48%
50%
53%
55%
57%
60%
62%
64%
67%
69%
72%
74%
76%
79%
81%
84%
86%
88%
91%
93%
95%
98%
-1
-2
-3
-4
-5
Figure 107: Power flow distribution of DC Link for Xingu ->Terminal Rio
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10 CONCLUSIONS
The objective of this report was to identify and assess state-of-the-art methodologies and computational
tools that may be useful to EPE and ONS in their studies and decision-making process. Product 4 of this
project will then strengthen methodological recommendations with respect to current practice in these insti-
tutions. The focus is on Variable Renewable Energy (VRE) generation sources such as wind and photovol-
taic solar for the following reasons:
· The cost of those sources has been falling steeply, and they are already economically competitive
with more traditional sources such as hydro and biomass;
· Brazil has a very large potential for VRE sources;
· The country’s large and diversified hydro storage capacity and very robust transmission network could
allow a very fast penetration of VREs;
· Because VREs are mostly non-dispatchable and they are located in a wide range of sites, the distri-
bution of power flows in the high-voltage grid may be very different from the current situation; as a
consequence, it is necessary to consider jointly generation, transmission and hourly resolution in the
planning and operational studies;
· The substantial insertion of VRE sources requires a more detailed probabilistic modelling of genera-
tion reserve requirements; in particular, those requirements should consider the deviations of renewa-
ble production with respect to forecasted values;
The above aspects were evaluated with the aid of a comprehensive generation and transmission plan-
ning/operations study, where demand at the horizon was assumed to be double the current value. De-
pending on the load growth assumption, this would roughly correspond to the years 2038-2039. It was felt
that this more distant horizon would allow the impacts and insights from VRE penetration to be more
clearly perceived.
Figure 108 shows the diagram of methodologies and tools used in the planning study.
Figure 108: Analytical tools used in the planning study
We present next the lessons and insights from the application of each of those tools.
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10.1 Candidate projects

The use of candidate locations from wind and solar projects not selected in auctions followed by the ad-
justment of the MERRA hourly data based on regionalized power production of existing plants was found
to be effective in the development of a realistic set of VRE candidate projects.
The study showed - through the sensitivity case which relaxed the constraint of maximum wind power pen-
etration per cluster in the South region, which dramatically changed the results - that it is important to es-
tablish criteria to better assess the feasible capacity of projects that can be selected in each region.
As discussed, a process should ideally combine layers of relevant information, such as the wind speed,
available area, distance to roads, terrain slope, existence of conservation or indigenous areas, and others,
to perform a “screening” with GIS related tool of the potential wind or solar capacity that could be explored
in each cluster. With such process, the preparation of candidates for the system expansion is improved as
they will limit the resources, including those with highest capacity factors, to more sensible levels.
10.2 Renewables and inflows scenarios

The joint modelling of renewable and inflow scenarios has allowed the representation of multiple time
scales (monthly in the case of inflows and hourly for VRE) and of the spatial correlation among renewables
in different regions. This latter aspect is important because of the “portfolio effect”, i.e. the total variability of
several groups VREs may be reduced if their spatial correlation is small. It is interesting to observe that the
portfolio effect for hydro plants was one of the reasons for the historical development of hydro in eleven
major basins across the country. In other words, a well-proven planning scheme can be extended to the
planning of VREs. The VRE scenarios were also fundamental for the definition of probabilistic reserve gen-
eration criteria for VREs used in the expansion planning study described next.
10.3 Expansion planning study

The first modelling issue in the expansion planning study was the joint representation of generation and
transmission reinforcements. Due to the very large size of Brazil’s HV network, the optimal generation-
transmission plan was determined using a seven-region representation. In conceptual terms, this was
equivalent to ignoring the limits of transmission lines inside each region; only the regional tie-lines, plus
their reinforcement options, were represented.
The second modelling issue was the representation of distributed generation (DG) at the distribution level.
This was done through the creation of additional nodes for each distribution company. Due to lack of more
detailed information about DG insertion in Brazil, EPE’s forecasts of DG capacity penetration were used as
a fixed input data. In the future, this modelling could be revisited, possibly by an iterative scheme in which
the system expansion is carried out for a given hypothesis of DG penetration; this DG insertion hypothesis
is then revised with basis on the energy cost component for tariffs in each distribution company; and the
system expansion is re-run with the revised DG insertion.
10.4 Main insights from the expansion planning study

· Massive penetration of renewables: Wind power and solar PV accounted for most of the genera-
tion additions until the end of horizon with 42GW of wind and 50GW of PV, respectively. (As
mentioned, 30 GW of DG were fixed.) As the portfolio selection is driven by expansion and oper-
ation cost minimization, which includes reserves requirements that increase due to the resource
intermittence, it is expected that VRE will continue increasing its share in Brazil’s electricity ma-
trix in the years to come.
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· Role of hydropower and gas fired plants to manage VRE variability: the exercise showed that
Brazil’s hydropower base made the massive VRE insertion more economic because it reduced
the need for gas-fired plants used for generation reserve.
· Seasonal complementarity between wind and inflows in the Northeast reduces the need for hy-
dro storage: the basic role of hydro storage is to transfer water from the wet period to the dry pe-
riod. The amount to be transferred depends, among other factors, on the demand to be served in
the dry period. Because wind generation in the Northeast is higher in the dry season, this means
that the net load (i.e. load minus wind generation) decreases as the amount of wind power in the
region increases. Therefore, the need for seasonal water transfer using reservoirs also de-
creases.
· Seasonal wind inflow synergy with inflows in the Northeast increases the use of Belo Monte’s
transmission system: during the dry season, only a small fraction of Belo Monte’s generation ca-
pacity and transmission system is used. The idle transmission capacity is then used to bring wind
power from the Northeast to the Southeast through Belo Monte DC Link, thus increasing its value
to the system.
· Commercial impact of VRE curtailment: During the hourly simulation of system operation, some
VRE “spillage” was observed during the high-wind season. This “loss” of available generation is
certainly justifiable from the planning model’s objective of maximizing overall economic benefit.
However, this raises some regulatory and commercial issues. For example, the “Garantia Física”
(GF) of a wind plant is based on its expected power generation. If part of this generation is
“spilled” by the National System Operator (ONS), the plant’s GF may be reduced, which has ad-
verse commercial consequences. This regulatory issue should be addressed.
· Given this expansion, by the end of the horizon roughly 90% of the generation will be clean (88%
renewable, including hydropower and 2% nuclear). Hydropower will remain an important source
with 50% of the total production despite the modest expansion considered in the study (based
solely on the PDE 2026).
· Power sector greenhouse gas emissions: the emission intensity of the Brazilian power sector will
be on the lower end in the global scale, with just around 51 grams of CO2eq per kWh. As a refer-
ence, this is about a tenth of the global average.
· Need to increase the range of generation technologies eligible for AGC: because the reserve re-
quirements increase substantially with the VRE penetration, the current set of plants eligible to
be connected to the AGC will be insufficient. This observation motivated a discussion between
the consultants and ONS regarding extensions to the current criteria. As a result, it was consid-
ered in this study: (i) the inclusion of OCGT and CCGT in the AGC; (ii) a limit to the maximum
individual allocated reserve (per hydro unit) of 40% for its capacity, to avoid significant efficiency
loss; and (iii) the use of batteries and other energy storage devices as candidates. In the refer-
ence case 2.4 GW of capacity - just under 2 GWh of energy - of Lithium-Ion were selected.
10.5 Stakeholder engagement

A key aspect of this project has been the strong interaction between the Consultants and Brazilian institu-
tions EPE, ONS and MME, with coordination of GIZ. Component 2 of this project was covered in three
workshops, several group meetings, several e-mails and occasional calls on technical aspects. The work-
ing group was very active on relevant topics, including:
· Preparation of existing generation and transmission plan considering the PDE 2017-2026
· The list of decommissioning projects after 2026, thus not included in the PDE
· The definition of the consumption for the end-of-horizon as twice the size of 2017 (1200 TWh).
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· The support with the regionalization of VRE for use by OptGen and suggestions / recommenda-
tions of public data that could be used
The support of Working Group 2 team members was critical for the robustness of the study with several
requests for change being made after broad discussions between members. Some possibilities were
noted, despite not advancing to the next stages. Others were considerations regarding methodological as-
sumptions which could impact results but, again, were not subject to revision. In this latter category:
· It was suggested that the load profile in the future could change with respect to the data used
from 2015, just as the profile of 2015 was different from that of 2005 and 2010
· It was argued that perhaps the number of regions (seven) should increase. The Northeast region,
for instance, could be divided in subregions to improve the internal trade-offs as to where to build
the wind farms, if in the states of Rio Grande do Norte or Bahia, considering the location of the
wind parks with respect to the load.
· It was also argued that by changing the interconnections arriving in the subsystems there could
have an impact on the transmission expansion planning results within each subsystem. The com-
ment was in the context of comparing the options between DC and AC alternatives and how they
could be impacted depending on the bus bar of reference.
· Connection of the candidate gas thermals in the large network could also be done by consulting
the results of recent auctions, as in the case of VRE.
Additional results were requested by ONS and EPE but were not included in this report. The Consultants
organized and sent a shared directory with the raw output data results for the case study. An accompany-
ing document was prepared describing the complete list of results (Excel files) and formats, to enable fur-
ther analysis to be made by any interested party. For example:
· The operation of reservoirs (Sobradinho and others)
· The flows in the interconnection lines
· The operation of the thermal power plants
Changes of assumptions (or additional analysis) were requested and then included in this report as part of
the Chapter regarding sensitivity cases. For example:
· The minimum outflow of Sobradinho (increased to 1300 m³/s) requested by ONS.
· The minimum storage of battery systems, to be set as 20% of the energy amount.
· The possibility to evaluate sensitivities with respect to the CAPEX of VRE in the end of horizon
and how these changes impact the portfolio selection.
· The economic lifetime of 25 years for all projects was also questioned by some participants who
believed for wind power this value is excessive. Though there could be changes of +/- 5 years to
this parameter depending on the technology, the practical results are small because of the rather
small impact on the project annuity. We did change this value for nuclear (to 40 years) with no
practical effect because this technology was not competitive for the expansion planning model.
· The suggestion to present intraday complementarity of solar power with wind power, when char-
acterizing these sources.
· The preparation of snapshots for two intermediate years between 2026 and the end of horizon to
provide insights regarding the timing of investments per technology. As it revealed, wind power is
the first wave, followed by solar PV (utility scale and growth of DG) and, finally, at the end of the
horizon a selection of CCGT plants as well as storage though Li-Ion batteries.
There were also specific training sessions in the areas of generation capacity planning, transmission plan-
ning, renewable energy modelling, dynamic probabilistic reserve modelling and hydrothermal dispatch.
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11 ANNEX: OPTGEN METHODOLOGY

Traditional long-term planning models, for conventional sources of electricity, considers load duration
curves, with no chronology, not being able to represent intra-day constraints, such as Unit Commitment
(UC). Because of that, they are not able to capture the effects caused by the intermittency of VRE sources,
not being suitable for modern power systems necessities.
In systems with high penetration of intermittent renewable sources, the variability presented by these
sources in a short period of time needs to be considered in the decision making of the expansion planning
model. VRE sources cause significant effects on the operation (and operating costs) of the system, which
in turn affect the generation expansion plan. For this reason, a model with hourly representation is needed.
This type of representation can result in a large, computationally intractable problem given the size of stud-
ies that envision long-term horizons in the planning process. The model proposed solves a Mixed-Integer
Linear Programming (MILP) that aims to minimize investment costs and the expected value of operating
costs, subject to uncertainties in hydrology and generation of intermittent renewable sources. The opera-
tion is solved with hourly representation. In order to reduce the computational effort required by these opti-
mization problems, it is necessary to introduce the concept of representative (typical) days, which in addi-
tion to enabling the solution of these problems in acceptable computational times, captures the effects of
intermittent generation in the system.
11.1 Problem formulation

The expansion model uses MILP techniques, where both investment and operation problems are solved
together. However, the direct use of a single optimization problem for the entire horizon is computationally
intractable for large scale applications. It is thus necessary to find solution methods of the original problem
that will not be discussed in here.
In order to make the problem tractable, the model considers annual investment decisions steps, under a
rolling horizon scheme, where an optimization problem is solved for each year, considering the investment
decisions in previous year as fixed and complementing the plan as necessary. Besides that, a time cluster-
ing scheme is proposed to reduce the number of hours analysed within each year, aggregating months
into seasons (for example, summer, autumn, winter and spring) and the days within each month into typi-
cal days (for example, week and weekend days).
The equations below show the mathematical formulation problem, considering thermoelectric generators,
hydroelectric and renewable power plants. The complete problem formulation of OptGen has many more
details (that is, many more variables and constraints) that would add little to the general understanding of
how the problem is solved, thus will not be presented here.
Min , + , + , , + , , (01)
, , ,
Subject to:
+ + + = ∀
, , , (02)
= + − − + + ∀ ,∀
, , , , , , , (03)
()
∀ ,∀
, ≤ ̅ , (04)
∀ ,∀
, ≤ , (05)
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∀ ,∀
, ≤ ̅ , (06)
∀ ,∀
, ≤ ̅ , (07)
≤1 ∀
, (08)
≤1 ∀
, (09)
≤1 ∀
, (10)
Equations (2) define that total generation must be equal to demand at all stages of the study horizon, oth-
erwise there is a load cut, represented by the variable . Equations (3) are the water balance of the reser-
voirs of the hydropower plants: the water storage of reservoir i, in time t+1 is the initial storage plus the in-
flow volume , minus the turbined volume , and the eventual spillage , . If the set of upstream plants
from reservoir ( ) is non-empty, then the outflow of these plants must be included as well. Equations (4)
to (7) related operation resources with investment decisions. Equations 4 and 5 limit the storage of the res-
ervoir and the turbined outflow. Variables , are one if there an investment in plant i is made in period
and 0 otherwise (for existing plants , = 1). Equations (6) and (7) establish capacity limits for the thermal
and renewable plants. Both equations have an associated investment variable, like the hydroelectric
plants. Equations (8) to (10) ensure that a project is built only once.
The resolution of these problems for with 8760 hours of operation is computationally unfeasible. It is also
necessary to consider uncertainties such as hydrologic flows, fuel prices, renewable production and others
that only aggravate the problem complexity (not included in the formulation, for simplicity). It becomes nec-
essary to use a strategy that decreases the problem size without jeopardizing the quality of the results.
The first step of this strategy is to group the months of the year into seasons, for instance, quarters. Repre-
sentative days are then used for each season, such as typical working days, Saturday, Sundays and holi-
days, etc. to capture the diversity of the daily load profiles of the year. The underlying assumption is that
the daily demand profiles are similar in each season. This kind of representation is widely used in genera-
tion and transmission expansion planning models. It considerably reduces the number of constraints of this
optimization problem.
The general formulation above is complemented in a few aspects below. We denote the day (e.g. typical,
weekend) with index d. We denote scenario with index s. Finally, the hours of the day are indexed with h.
Thermal power plants have traditional unit commitment constraints and variables. Their generation limits
(minimum and maximum capacity) are multiplied by variable , , , investment decision variable , , the
variable of commitment and the generation ramp.
, , , ≤ , , , ≤ ̅ , , , ∀ , , , ℎ, (11)
S,, , ≥ γ,, , −γ, , , ∀ , , , ℎ, (12)
γ,, , ≤ , ∀ , , , ℎ, (13)
g,, , − g , , , ≤ Δr ∀ , , , ℎ, (14)
g,, , −g,, , ≤ Δr ∀ , , , ℎ, (15)
The decision variable of commitment, , , , , determines when the plant is being dispatched. It is a binary
variable, with value equal to one while the plant is dispatching and zero otherwise. The variable , , , de-
termines the hour the plant starts up. There is an associated fixed startup cost in this moment. The model
also includes ramping constraints for the generation Δr and Δr (equations 14 and 15).
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Since this formulation applies both to investment and operation decisions, a reservoir operative policy must
be defined coupling decisions for a given year with the consequences for the remaining years, with effect
like the future cost functions used in dynamic programming schemes.
In the proposed formulation, the reservoir storage at the beginning of each year of the study horizon is
equal to the final storage of the same year, which means that the water usage is limited to the annual in-
flow and can be interpreted as a steady state solution to the operative problem. This logic is applied to all
scenarios s, for which decisions are made. Thus, the hydrological uncertainty in captured by using an ap-
propriate number of inflow scenarios. This simplification has a bias, but its application indicates that it is an
approximation that presents satisfactory results for decision making of Investment and calculation of the
expansion plan. The hydro power plant modeling section is presented next.
v, = v, +a, − u, +s, + u , +s , ∀i, t, s (16)
∈
v, = v, ∀i, s (17)
D g,, , =ρu, ∀i, t, s (18)
, ,
v, ≤ V , ∀i, t, s (19)
u, ≤ U , ∀i, t, s (20)
g,, , ≤G , ∀i, t, s (21)
v , + δv , = V , ∀i, t, s (22)
u , + δu , = U , ∀i,t,s (23)
u , + s , + δus , = US , ∀i,t,s (24)
δu , ≥ 0 ∀i,t,s (25)
δv , ≥ 0 ∀i, t, s (26)
δus , ≥ 0 ∀i, t, s (27)
11.2 Project investment cost calculation

he following data is used to evaluate the annuity of the investment cost of project j, which defines the cost
coefficient in the objective function :
Project data:
investment cost MUSD
electric integration cost USD/kW
& operation & maintenance cost USD/kW
installed capacity MW
Lifetime Years
Payment schedule:
number of disbursements
year for entrance in operation
disbursements (as percentage of total cost) %
Additional parameters:
discount rate factor %
study horizon years
The cost associated to the construction decision of each project in each investment stage is evaluated as
the total investment cost discounted by the terminal value , which corresponds to the cost refund as-
sociated to the project’s lifetime period after the end of the study horizon.
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In other words, the investment cost used in the optimization problem is associated to the period in which
the project is available for operation. This way, in the optimization process, both investment and operation
costs are accounted for the same period within the study horizon.
For the sake of the investment cost evaluation, annual disbursements are assumed. The total investment
cost is evaluated by the following procedure:
The sum of investment cost and grid-connection cost is referred to (discounted for) the year of entrance in
operation considering the payment schedule:
∙
0= + ∙ ∙ (1 + )
1000 100
The annual investment cost is calculated as a cash flow during the project’s lifetime period. Then the oper-
ation & maintenance cost is aggregated to this value:
&
∙ (1 + ) ∙
= 0∙ +
(1 + ) − 1 1000
Finally, the net present value is calculated for this cash flow:
(1 + ) − 1
= ∙
∙ (1 + )( )
where is the stage when the project starts operation:

= + ( − 1) − 1
For the evaluation of the terminal value , we define as the remaining years of the project’s lifetime af-
ter end of the study horizon:
= {0, − ( − )}
If = 0 then:
=0
Otherwise, the terminal value is calculated as the net present value of the annual disbursements associ-
ated to years after the end of the study horizon:
(1 + ) − 1
= ∙
∙ (1 + )( )
Then, the investment cost of project in stage is calculated as the difference between the total cost and
the terminal value:
= −
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12 ANNEX: AGC POWER PLANTS

The AGC power plants are listed in the table below.
Table 10: AGC power plants

HYDRO PLANTS THERMAL PLANTS
ITAIPU ESTREITO TOC BAIXADA FLU NORTEFLU-4
BELO MONTE SALTO OSORIO CANOAS NOVAPIRAT
TUCURUI SOBRADINHO CCBS OE CANOAS 1
COMP PAF-MOX LAJEADO DO ATLANTICO P. SERGIPE I
ILHA SOLT EQ HENRY BORDEN ELETROBOLT PARNAIBA IV
XINGO CAMPOS NOVOS FORTALEZA PROSPERIDADE
ITUMBIARA FOZ CHAPECO IBIRITERMO ST.CRUZ NOVA
TELES PIRES SAO MANOEL JUIZ DE FORA TERMOCEARA
SAO SIMAO BARRA GRANDE LINHARES TERMOPE
G. B. MUNHOZ CACH DOURADA MACAE MER TERMORIO
JUPIA CAPIVARA MARANHAO III UTE INDGAS1
MARIMBONDO TAQUARUCU MARANHAO IV UTE INDGAS10
ITAPARICA NOVA PONTE MARANHAO V UTE INDGAS15
ITA ITAUBA MAUA 3 UTE INDGAS18
SLT.SANTIAGO PEIXE ANGICA MC2 N VENECI UTE INDGAS21
A. VERMELHA MASC. MORAES NORTEFLU-1 UTE INDGAS5
FURNAS ITAPEBI NORTEFLU-2 VALE DO ACU
SERRA MESA CANA BRAVA NORTEFLU-3 W.ARJONA G
SEGREDO JAGUARA
SALTO CAXIAS CHAVANTES
EMBORCACAO MIRANDA
MACHADINHO SINOP
ESTREITO GDE
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13 ANNEX: ASSUMPTIONS BOOK

The objective of this annex is to concentrate all the assumptions made during the preparation of the Case
Study (Chapter 6) and the Sensitivities Cases (Chapter 7).
· Power system configuration

The departing point is the system configuration expected for 2026, as defined by the Ten-Year Brazilian
Expansion Plan 2017-2026 prepared by EPE (PDE 2026). All new generation and transmission capacity
planned up to this horizon were assumed to be in full operation.
· Demand
The end of horizon yearly demand is assumed as twice the observed in 2017 (~600 TWh), thus 1200 TWh.
ONS hourly demand data for year 2015 is used as a profile for future years. The 2015 hourly profile per
region will be used to disaggregate monthly load block values into hourly values. As it happened, this year
is “well behaved”, in contrast with recent years that experienced load shedding that distort typical data.
· Discount rate: 8% per year (in real terms)
· Technical and economic data of generation candidate projects per technology:
CAPEX Fuel Cost Efficiency

Technology OPEX Others
(USD/kW) (USD/MWh) (%)
850 22 wind invest-
Wind power (30% reduction wrt 26 USD/kW/year - - ment areas
current costs) Lifetime: 25 years
Single-axis
636 (-40% wrt cur- tracker. DC/AC
Solar PV rent)
8 USD/kW/year - - ratio=1.3
Lifetime: 25 years.
Southeast &
84% energy eff. = Centre-West
USD 26/kW/year
Biomass 1550
(fixed) - (electricity + heat) regions. Lifetime
/ fuel energy Input of 25 years. Har-
vest May to Nov.
Not optimized.
Projects already
considered in
PDE 2026.
Project specific (see Ramping rate
Hydro PDE 2017/2026)
3 USD / MWh - Project specific.
constraint: 4h for
hydro > 1000 MW.
Min. flow con-
straints per plant
10.45 USD /
USD 10.50/kW/year MMBTU = Start-up cost: fuel
(fixed) & USD [9.0 (commodity) + use of 0.5hrs at
250 MW OCGT 582
4.00/MWh 0.5 (distribution 36% rated power.
margin)] x 1.1
(variable) (10% taxes) = Lifetime: 25 years
100 USD / MWh
6.05 USD/MMBTU
(inflex.), 8.25 USD /
MMBTU (semi-flex),
USD 10.50/kW/year 10.45 USD/MMBTU Start-up cost: fuel
(fixed) & USD (flexible) (incl 10% use of 1.5hrs at
500 MW CCGT 800
2.75/MWh taxes) = 39.33 USD 52% rated power.
(variable) / MWh (inflex), Lifetime: 25 years
53.63 USD / MWh
(semi-flex), 67.93
USD/ MWh (flexible)
USD 15.00/kW/year Start-up cost: fuel
(fixed) & USD use of 8hrs at
500 MW Coal 2120
2.00/MWh USD 33/MWh 36% rated power.
(variable) Lifetime: 25 years
USD 55.00/kW/year
Nuclear 5000
(fixed)
10 USD/MWh 33% Lifetime: 40 years
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· Technical and economic data of storage candidate projects per technology:
Li-Ion BESS NaS BESS

Rated capacity (MW) 2.0 2.0
0 / 2 (reference)
Minimum / maximum storage capacity (MWh) 0.4/1.6 (sensitivity)
0 / 12.0
Round-trip efficiency (%) 95% 82%
Ramping rate limits (% of rated capacity/min) 100% 100%
Estimated CAPEX 2035 (USD/kWh) 250 180
Estimated Fixed O&M cost 2035 (USD/kW-year) 6 7
Calendar lifetime (years) 12 16
Cycle lifetime 5000 7000
· Projects Decommissioning
2762 MW of fuel oil, 925 MW of diesel, 646 MW of inefficient gas plants and 1310 MW of PROINFA wind.
· Regional grid modelling

For the portfolio selection purposes, the grid was modelled considering seven regions as shown next the
following power flow capacities between them (table below).
· Regional reinforcement
An addition of 9 GW between the Northeast and the Southeast is assumed. Additional regional transfer
reinforcements are considered decision variables with unit cost (USD /kW) of an interchange based on the
circuit length L and technology (AC or DC), as follows:
a) AC 500 kV: USD 24/kW + USD 0.50/kW/km ´ L (for L < 400 km)
b) AC 500 kV: USD 54/kW + USD 0.50/kW/km ´ L (for 400 km < L < 800 km)
c) DC-links: USD 218/kW + USD 0.16/kW/km ´ L
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where the length L considered in each interchange is the mean value of the existing circuits which connect
substations of the neighbouring regions. Therefore, for distances less than 400 km, the unit cost is given
by the first equation. If distance is between 400 km and 800 km, the second equation is applied. Above
800 km, DC-link unit cost is applied. The current ratio of stability limit and nominal limit for transmission
lines connecting substations between regions is maintained for the study horizon.
· Distributed Generation
Rooftop solar photovoltaic was explicitly considered as a source of Distributed Generation (DG) in this
study. Biomass cogeneration and small hydropower connected to the distribution concession are included
indirectly through the load profile, considered by ONS on monthly operation planning. The total DG capac-
ity forecast provided by EPE for the end of horizon was 30 GW, with a breakdown per state. Although the
DG capacity is given, the production is variable and modelled by scenarios using the same approach as for
utility scale VRE, using MERRA2/NASA solar hourly radiation time series. However, unlike centralized so-
lar projects, DG projects will not assume solar trackers and (due to space limitations common) assumes a
smaller DC to AC factor of 1.1. As a result, the 30 GW capacity forecast correspond to 4.8 GW of mean
production (3.5% of the total consumption). The process of producing electricity scenarios from MERRA2
is adjusted to match the reference production factors provided by EPE for each state.
· Automatic generation control
The automatic generation control (AGC) is a system for adjusting the power output of generators, in re-
sponse to changes in the load so that total generation and load are matched in real time in order to main-
tain the electric system at the rated frequency (60 Hz). In Brazil, the AGC considers only hydropower
plants from 400 MW. The following assumptions were assumed for the AGC requirement:
a) Primary and secondary reserves shall be respected within each control area. As a criterion we will
not allow reserves in one region to be provided by power plants in another region, which would, in
turn, also require a reserve to be allocated in the transmission lines (e.g. an idle capacity is
maintained in the transmission lines to accommodate variability in one region to be compensated
by generators in another).
b) New AGC participants (in addition to the 2018 list) include all hydro plants with capacity greater
than 400 MW (as in the grid code) and with a water head higher than Estreito hydropower plant
(18.94m). The AGC list increased from 23 (current selection) to 45 plants37. Differently from the
current grid code, this study assumed that natural gas fired plants are also included in the AGC
(existing and candidates).
c) The allocated reserve must be less than 40% of the available capacity of each hydro power plant.
d) Allocated reserves must meet, in each hour, the sum of the reserve associated with demand
variability (1% primary + 4% secondary) plus the probabilistic dynamic reserve, related to
uncontrolled VRE.
· Minimum water outflow for Sobradinho
The minimum outflow downstream of the Sobradinho reservoir, in the São Francisco river, considered in
the simulations, was 650 m3/s. This outflow is lower than the current constraint defined by ANA/ONS, as it
considers a change in regulations. It is higher than the value that was used during several months of a
drought in the São Francisco river without any consequences to other uses of water.
· Capacity factor adjustment for wind and solar projects
37
The AGC power plants considered in the simulations are listed in Annex 12.
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Wind and solar PV hourly production of parks is not public information in Brazil. As an alternative, hourly
values for solar irradiance, temperature and wind speed data obtained from MERRA-2 - a global
atmospheric reanalysis data from NASA from 1980 with spatial (cells) with resolution of 50 km by 65 km.
MERRA-2 reanalysis data when applied to wind power applications are calibrated with observed data from
310 parks to remove bias. Wind candidate projects modelled in OptGen are not the individual projects but
22 projects, one for each area, as shown next:
Area 1 2 3 4 5 6 7 8 9 10 11
Class III I III III III II III III II III III
Area 12 13 14 15 16 17 18 19 20 21 22
Class I II III III III I III II III III III
The individualized representation will be used in a later stage, in the transmission reinforcement phase,
through the disaggregation of the bulk capacity of each cluster into the individualized projects.
The mechanism to determine the solar PV historical series for either existing or candidate projects, is
analogous to the wind power procedure described above. Solar PV candidate projects are modelled
through 9 projects, one for each cluster. The individualized representation is used in a later phase of the
planning, when transmission reinforcements are determined. The 400 projects are then used to
disaggregate the expansion of each cluster into capacities connected to the bus bars. Ideally, we would
calibrate the PV data of each cluster so that, after converting MERRA-2 data into energy production, the
resulting capacity factor matched the observed one. However, due to lack of public data of solar PV
production for a sufficiently long period of observations, this calibration was not performed.
Single axis trackers are considered in the energy conversion process of utility scale plants, because this is
the standard practice of the projects in Brazil as the yearly production increase (higher than 20% with
respect to fixed axis) more than compensates the additional costs.
For utility scales, the assumed DC to AC ratio is 1.3. The same conversion process is assumed for DG
solar PV projects, but in this case without a tracker and with a DC to AC ratio of 1.1.
For DG, an adjustment to the MERRA-2 simulated capacity factor was linearly adjusted to match the
values per state provided by EPE.
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ENERGY SYSTEMS OF THE FUTURE:

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ENERGY SYSTEMS

Processing No.: 15.2126.9-001.00

Energy Systems of the Future: Integrating Variable Renewable Energy Sources

Document Title: Product 2 – Energy Studies

Prepared by: Lahmeyer International GmbH

Authors: Mario Pereira, Rafael Kelman, Juliana Pontes (PSR)

Date: May 2019

Coordination: Florian Geyer (GIZ)

Este estudo foi elaborado no âmbito da Cooperação Alemã para o Desenvolvimento

Processing No.: 15.2126.9-001.00

1. Todas as indicações, dados e resultados deste estudo foram compilados e

Processing No.: 15.2126.9-001.00

List of Participants / Lista de Participantes

Steering Committee / Comitê Gestor

Technical Committee / Comitê Técnico – EPE

Technical Committee / Comitê Técnico – ONS

Technical Committee / Comitê Técnico – Consultant / Consultor

Processing No.: 15.2126.9-001.00

Enjoy the reading.

Processing No.: 15.2126.9-001.00

O estudo sobre a Integração de Fontes Renováveis Variáveis na Matriz Elétrica

Processing No.: 15.2126.9-001.00

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), thanks the

Many thanks to all.

Special thanks to the friend and colleague Juarez Castrillon Lopes

Thank you very much from the entire team.

Processing No.: 15.2126.9-001.00

A Deutsche Gesellschaft für Internationale Zusammenarbeit – GIZ, agradece aos

Um muito obrigado a todos.

Agradecimento especial ao amigo e colega Juarez Castrillon Lopes

Na conclusão deste estudo, a equipe não poderia deixar de registrar

Muito obrigado de toda a equipe.

Gesellschaft für Internationale

Client Deutsche Gesellschaft für Internationale Zusammenarbeit

Project title Energy systems of the future:

Consultant: Lahmeyer International GmbH

PSR Soluções e Consultoria em Energia

Date May 2019

Revision Date Status Author Verified Approved

2.1 Variable renewable electricity 11

2.2 Global trend 11

2.3 VRE in Brazil 14

2.4 The renewable transition 16

2.5 Objectives of this product 18

3 OVERVIEW OF THE METHODOLOGY 20

3.1 Step 1 – Design of VRE candidate projects 20

3.2 Step 2 – Stochastic modelling of renewables and inflows 21

3.3 Step 3 – Co-optimize new electricity and gas investments 22

3.4 Step 4 – Optimal stochastic operation 26

3.5 Step 5 – Optimal network planning under uncertainty 27

4 CASE STUDY DATA ASSUMPTIONS 28

4.1 Market size 28

4.2 Supply options 28

4.3 Decommissioning of existing power plants 36

4.4 Regional grid modelling 36

4.5 Distributed Generation 38

4.6 Automatic generation control 39

4.7 Minimum water outflow for Sobradinho 39

5.1 Characterization of renewable energy resources 40

5.2 Production of integrated hydro, wind and solar scenarios 44

5.3 Capacity factor 46

Processing No.: 15.2126.9-001.00

6.2 Expansion planning problem size 53