Spot Price Formation in the Brazilian Wholesale Electricity Market: Challenges and Perspectives

The Brazilian electric system operator (National Electric System Operator - ONS) has been facing an increasing challenge in scheduling an accurate operation for the day-ahead due to the growing integration of non-dispatchable renewable energy sources into the Brazilian electricity mix. The spot price of the Brazilian electricity wholesale market (known as Settlement Price for Differences - PLD) is calculated for each hour of the next day, employing audited data from market agents and forecasts provided by ONS. The electricity is cleared in a single-settlement system in which the consumed or generated amount of electricity measured in real-time is valued at the PLD, calculated by the Brazilian electricity market operator (Chamber of Electric